Obama to push $10-per-barrel oil tax for green transportation plan

President Obama will propose a $10-per-barrel fee on oil production to fund a new green transportation plan, the White House announced Thursday. 

The proposal would go toward a $32.4 billion annual push to green the transportation sector by funding public transit, an urban planning initiative and clean vehicle research, the White House said in a fact sheet. Obama will include the plan in the budget request he releases next week.

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The plan will likely die in the GOP-controlled Congress, which will vet Obama’s budget request before writing spending bills later this year.

But the proposal represents a new front in Obama’s climate change end-game: After finalizing carbon reduction regulations for the electricity sector last year, he is turning his attention back to the transportation sector, which accounts for 30 percent of American carbon emissions every year.

“The president’s plan does what we need to once again have a transportation system that is a source of American strength while at the same time taking steps to reduce carbon emissions and fight climate change,” Jeff Zients, the director of the National Economic Council, told reporters Thursday.

Charging the fee to oil companies, the White House said, is both a funding mechanism for the transportation initiative and an incentive for the private sector to move toward cleaner fuel. 

“By placing a fee on oil, the president’s plan creates a clear incentive for private sector innovation to reduce our reliance on oil and at the same time invests in clean energy technologies that will power our future,” the White House’s fact sheet said.

The plan, the White House said, would lead to new investments in clean vehicle research and expand funding for public transportation.

Nearly $20 billion annually would go toward public transit, according to the fact sheet. Another $10 billion would be put toward new federal funding streams for cities and states that cut carbon emissions from their transportation sectors.

The plan would invest another $2.4 billion annually into clean vehicle research and innovation.

Obama has looked to cut transportation sector emissions over the course of his term. He worked with the auto industry on raising fuel efficiency standards for cars and heavy-duty trucks in 2012, and the 2009 stimulus act included investments in emissions-free transit. 

But Obama’s oil fee plan will likely fail in Congress, where Republicans have looked to both support the oil industry and prevent new taxes and fees proposed by Democrats and the Obama administration. 

“President Obama's proposed $10 per barrel tax on oil is dead on arrival in the House,” Majority Whip Steve Scales (R-La.) said in a  statement. “The House will kill this absurd proposal, and instead focus on lowering costs and growing our economy.”

The oil industry, which has seen declining profits as it fights oil prices that are near their lowest levels in a decade, was already pushing back against the plan on Thursday, warning that the tax would eventually be passed on to consumers.

“The White House thinks Americans are not paying enough for gasoline, so they have proposed a new tax that could raise the cost of gasoline by 25 cents a gallon, harm consumers that are enjoying low energy prices, destroy American jobs and reverse America’s emergence as a global energy leader,” American Petroleum Institute President Jack Gerard said in a statement.

“On his way out of office, President Obama has now proposed making the United States less competitive.”

—This post was updated at 4:55 p.m.