Heartland Institute Experts Comment on President Obama’s Proposed Oil Tax

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Heartland Institute Experts Comment on President Obama’s Proposed Oil Tax

Jay Lehr

It is no surprise that Obama in his lame duck year will propose every possible interference with American commerce he can think to do by executive order.

President Barack Obama has proposed a tax of $10 on every barrel of oil as part of his 2017 budget. The proceeds, says the White House, will go toward transportation projects and to fund the president’s climate change programs.

The following statements from energy and environment experts at The Heartland Institute – a free-market think tank – may be used for attribution. For more comments, refer to the contact information below. To book a Heartland guest on your program, please contact Director of Communications Jim Lakely at jlakely(at)heartland(dot)org and 312/377-4000 or (cell) 312/731-9364.

“It is no surprise that Obama in his lame duck year will propose every possible interference with American commerce he can think to do by executive order. He evidently feels he has not yet done enough to destroy the American economy, so he is piling more on. Obama will not get away with it – but even if he does, the next president is likely to undo the damage in his or her first day in office.”

Jay Lehr
Science Director
The Heartland Institute

“This proposal from President Obama is about as serious putting forward a proposal to reanimate the dodo. This move has more to do with the president signaling to the climate-activist portion of the Left that he is ‘with them’ than it does with putting forward serious policy.

“It’s a nod and a wink, nothing more. At least administration officials had the common courtesy to admit this tax would just simply be passed on to consumers at the gas pump and in their heating bills. Like the dodo, this proposed tax is already dead.”

Tim Benson
Policy Analyst
The Heartland Institute

“Only President Obama, with his fierce hatred of fossil fuels, would propose a tax on the very industry that is almost entirely responsible for the modest recovery we’ve experienced since the Great Recession. America is currently experiencing stagnant wages, record low workforce participation and underemployment rates, a stock market in free fall, and polls showing the public is most concerned about the economy. Yet Obama wishes to kill the energy goose that lays golden eggs. The oil industry already pays enormous sums in taxes, user fees, and leases. In fact, it is one of the largest sources of government revenue, second only to the income tax.

“By raising the price of oil via the tax, consumers would end up paying higher prices at the pump – but none of that money would go to energy companies to maintain or create new jobs. Rather, the money would be siphoned to perpetually money-losing schemes, such as mass transit that relatively few people use. Drivers already pay heavy gas taxes at the pump to support transportation. Yet they see hundreds of millions of dollars of these funds each year diverted to subsidize various forms of mass transit, bike trails, visitor centers, and museums.

“Rather than continuing to divert gas taxes from their intended purpose of building and maintaining the nation’s roads and bridges, transit passengers and bike riders should have to fund their own transportation preferences by paying fares on buses and trains that actually cover the costs of their operations. Bike riders, too, could pay a tax on bikes and associated equipment to fund bike trails and lanes. Tax bus and bike riders, not oil producers!”

H. Sterling Burnett
Research Fellow, Environment & Energy Policy
The Heartland Institute
Managing Editor, Environment & Climate News

“President Obama’s $10 tax on oil to fund transportation has a lot to do with pandering to unreliable and expensive renewable energy sources, and hurting oil production in the United States. It has almost nothing to do with funding transportation projects.

“This new tax on oil would become another inefficient government slush fund where funds will be diverted to fund other unnecessary, wasteful government programs. Does Social Security ring any bells? Besides, wasn’t the stimulus package rammed through by the Obama administration in 2009 full of ‘shovel-ready’ jobs to fix the infrastructure of the United States?

“Ironically, increasing the tax on oil would increase the cost of asphalt, which would increase the cost of building the roads. Oil is used for a variety of other products, such as jet fuel, heating oil, and fuel for off-the-road vehicles, such as farm equipment, snowmobiles, and lawnmowers. And why should people who aren’t using the roads be charged more to fly or keep warm in the winter?

“Everyone uses the roads, including those driving electric vehicles and flex-fuel vehicles. Drivers of these vehicles should pay their fair share for the maintenance of the roads. An interstate toll-way system would be a much fairer way to fund the roads than a $10-per-barrel tax on oil.”

Isaac Orr
Research Fellow, Energy and Environment Policy
The Heartland Institute

“This proposal faces no chances of passing in a Republican controlled Congress – which should make you wonder: Why, at this point in the history of the world, would President Obama propose a new tax? While consumers are enjoying the lowest gasoline prices in recent history – and the oil and gas industry is reeling from the current price rout – why does the president announce a plan that will hurt both?

“Time and time again, when faced with a choice to make a decision that is best for America’s struggling middle class or wealthy environmental donors, this president picks the later. Obama’s new fee on oil makes his priorities perfectly clear – and they are not the priorities of the American people.”

Marita Noon
Executive Director
Citizens Alliance for Responsible Energy

“President Obama’s proposed tax of $10 a barrel on oil, when fully implemented, will produce additional tax revenue of $70 billion per year. The nation has been in an economic malaise for years in spite of the nation’s great wealth in energy resources of coal, oil, and natural gas. This extra tax on our most valuable resources would cripple the nation’s economy. Why not just tax blood donations?

“The Obama administration has increased the national debt by $8 trillion in seven years. A lot of this is due to investments in renewable energy programs that have left a string of government-supported bankruptcies, such as Solyndra and Abengoa, and uneconomical projects such as cellulosic ethanol and the Ivanpah solar plant. This new tax is tantamount to giving more money to the likes of Bernie Madoff.

“With the Obama administration and the rest of the nation squandering about $1 billion per day on global warming propaganda and mitigation, these extra funds will be lost in the maze of ‘crony capitalism’ spending.”

James H. Rust
Professor of nuclear engineering (Ret.), Georgia Tech
Policy Advisor
The Heartland Institute

“As the current oil supply/demand situation comes into balance (with most industry players looking for that in the second half of this year), expect oil prices to reverse course and move materially higher by year-end. Thus, while the U.S. consumer may find such a tax increase palatable under current low oil price conditions, an extra $10 per barrel on top of a rise to $50 or so in the not-to-distant future will not be welcome by an already financially depleted consumer.

“Moreover, such a tax is more regressive in nature as its burden will fall more heavily on those earning lower incomes. In short, while the president may be priming the public to welcome a chance to ‘stick it to Big Oil,’ he will more likely wind up sticking it to the consumer, should such a measure be implemented.”

Paul Crovo
Energy Analyst, Policy Advisor
The Heartland Institute

The Heartland Institute is a 32-year-old national nonprofit organization headquartered in Arlington Heights, Illinois. Its mission is to discover, develop, and promote free-market solutions to social and economic problems. For more information, visit our Web site or call 312/377-4000.

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