Obama Wants $10 A Barrel Oil Tax To Fund Roads

A new federal budget President Obama plans to present to Congress next week will propose charging oil companies a $10 a barrel fee to help fund improvements to the nation's transportation system.

The oil tax, detailed in a fact sheet released Thursday on the proposal, would be phased in over five years as part of a White House initiative to build what it calls a "21st century clean transportation system." The plan calls for a 50 percent increase in investment in solar, wind and other alternative-energy infrastructure.

"The new fee on oil will also encourage American innovation and leadership in clean technologies to help reshape our transportation landscape for the decades ahead," the White House said, adding that the plan would reduce U.S. reliance on foreign oil, encourage investment in "clean" energy technologies and create jobs.

House Majority Whip Steve Scalise said in a statement that the proposal is "dead on arrival" in the House.

"From day one of President Obama's administration, he has waged open warfare on American energy, and his radical policies have cost jobs while increasing costs on hardworking families," the Louisiana Republican said in a statement. "Washington spending is already too high, and the best way to create more jobs and get our economy back on track is by cutting taxes and controlling spending. The House will kill this absurd proposal, and instead focus on lowering costs and growing our economy."

The transportation sector, a major driver of the U.S. economy, accounts for roughly a third of U.S. greenhouse gas emissions, according to the White House. "A new approach to our transportation system can help to speed goods to market, expand transportation options, and integrate new technologies like autonomous -- or self-driving -- vehicles while at the same time reducing our reliance on fossil fuels, cutting carbon pollution and strengthening our resilience to the impacts of climate change."

A fee on oil production would cut down on greenhouse gas emissions and lead to a stronger, more sustainable transportation system, the White House said.

Obama outlined his administration's goals in improving the country's transportation system during his State of the Union speech in January, saying at the time that he would "push to change the way we manage our oil and coal resources so that they better reflect the costs they impose on taxpayers and our planet."

Although oil companies remain profitable, their earnings have plunged in recent months as the cost of crude has slumped. Royal Dutch Shell (RDS.A) said Thursday that its profits in the last three months of 2015 had fallen $1.4 billion, down 44 percent from the year-ago quarter.

Exxon Mobil (XOM) also reported a sharp downturn in earnings this week, with its fourth-quarter profits falling to their lowest level in more than a decade. BP's (BP) earnings tumbled 91 percent in its latest quarter, spurring the British oil giant to announce thousands of job cuts.

The American Petroleum Institute, an industry trade group, attacked Obama's plan, saying it would hurt consumers and make the U.S. less competitive.

"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," API president and CEO Jack Gerard said in a statement.

A new gasoline tax of 25 cents a gallon would raise an estimated $35 billion a year for infrastructure spending, based on annual U.S. gasoline sales of around $140 billion.

The White House budget cited $20 billion a year in new revenue that it said would be used to reduce traffic congestion and to develop new modes of transportation, such as high-speed rail. Other funds would go toward cutting carbon-dioxide emissions from regional transportation systems and to foster the use of self-driving cars.