Obama's $10 per barrel oil tax 'dead on arrival in Congress’ - Republicans

A crude oil train sits parked outside the Philadelphia Energy Solutions refinery owned by the Carlyle Group in south Philadelphia. © David M. Parrott
The White House has proposed a clean transportation spending plan, which is intended to be funded through a $10 a barrel fee on oil producers. However, the initiative is unlikely to pass through Republican-controlled Congress.

"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 said in a statement.

The Republicans have already severely criticized the initiative. Rep. Steve Scalise of Louisiana, House majority whip, said the House would put down the "absurd" plan.

Republican House Speaker Paul Ryan said the tax was "dead on arrival in Congress" and added it would hurt consumers by raising energy prices.

Jeffrey Zients, Obama's chief economic adviser said the proposed tax would apply to oil that is imported into the US. Zients added that oil pumped in the country for export would not be taxed, ensuring a "level playing field" for domestic producers.

Despite lifting the 40-year ban on oil exports, the US continues to be a large importer of oil with exports accounting only a tiny fraction of crude produced domestically.

America imported 7.4 million barrels per day in November. At the same time, daily domestic production was 9.3 million barrels with exports of just 320,000 barrels per day.

The plan will arrive in Congress next week as part of Obama's last budget submission, indicates the President's long-standing discontent over Congress's inability to pay for transportation improvements.

"For too long there's been strong bipartisan agreement that we need more funding for infrastructure, but that hasn’t been accompanied by the political will on how to pay for it," said Zients.