On Friday, President Barack Obama announced his proposal to increase investment in renewable energy through a crude oil tax at $10 a barrel.
“The basic proposition is that right now gas is $1.80 and gas prices are expected to be low for a while,” he said during a press conference at the White House. “That overall can be a good thing for the economy. But what is also important is we use this period where gas prices are low to accelerate a transition to a clean energy economy because we know it’s not going to last.”
That revenue from the tax, $300 billion, could fund high-speed rail expansion and mass transit, updates to the country’s freight network and research for self-driving cars.
There are some concerns that companies will try to compensate their now increased transportation costs and production cost by increasing the cost of their services or products.
Raising the industry’s taxes would also push oil and natural gas investment elsewhere, increasing our dependence on foreign imports. This in turn could diminish job-creation and stifle economic activity here at home.
Moreover, according to the American Petroleum Institute, America’s oil and natural gas industry already returns more than $85 million to the federal Treasury every day and pays taxes at far higher effective rates than most other industries. It is one of the few industries that created jobs throughout the economic downturn.
Whether or not the proposal passes is uncertain as it must go through a Republican-led Congress, which has fought the president’s climate change initiatives on more than one occasion.
Article written by HEI contributor Aliyah Cole.