Barack Obama is set to propose a bill next week that will impose an oil tax of US$10 per barrel of crude oil. According to the White House last Thursday, the petroleum tax will be used in funding the country's renovation of its ageing transportation infrastructure.
The tax will be levied on petroleum companies and will be pro-rated in a five-year time period. However, the Republican-controlled US Congress immediately gave the proposed tax bill a cold shoulder.
In his last year in office, Barack Obama stated that the United States must discontinue its subsidy of 'dirty' fossil fuels and concentrate on new renewable and clean fuels that will not worsen climate change.
With the tax proceeds going to climate initiatives and transportation improvements, Obama's announcement strengthens his credentials on environmental issues. It also shows his aggressiveness in pursuing actions on climate change in his last year as U.S. president.
"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," said the White House in a statement.
The government has not yet revealed any detail as to how the petroleum tax will be structured. Officials have constantly stated that it will be shouldered by oil companies, but made it clear that it will not be levied at the wellhead. They also added that they expect to work with Congress regarding its details.
Barack Obama is set to announce the oil tax on Tuesday as part of his fiscal year 2017 budget plan. If passed by Congress, it will provide almost US$20 billion per year for the expansion of the country's transportation system and another $2 billion annually in supporting the development of self-driving vehicles and several low-carbon systems.
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