Obama's Proposed Oil Tax Would Cripple the Economy
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By David Williams
President Obama recently sent a budget proposal for the upcoming fiscal year to Congress. It's a vast document, touching everything from medical research and agriculture to American manufacturing and space travel.
But buried under all those details is a little-discussed provision that would impose a $10.25 per-barrel tax on oil. This tax comes with good intentions: the proceeds would be directed to public infrastructure projects. But it would have devastating consequences on the American economy, destroying jobs, and driving up energy prices for hardworking American families.
The energy industry is a central pillar of the American economy. In total, energy firms employ more than nine million people and generate billions in annual growth.
But recent global trends have left the energy industry on shaky grounds. The price of oil has fallen nearly 40 percent over the past year. Today, the average barrel costs about $37.
This falloff has driven down industry revenues and forced firms all over the country to contract. Over the last year, American companies cut over 104,000 positions. In January alone, the energy sector laid off over 20,000 workers.
This tax couldn't come at a worse time. First it would hit every American because energy firms would compensate for the new tax by raising prices at the pump. The average gallon of gas would cost about 25 cents more.
Drivers would have to shell out even more money just to get to work. Jason Furman, the President's chief economic advisor, has acknowledged this sad reality. He recently told CNBC that "some of [the tax] would certainly be passed along to consumers."
Second, it would also further sap firms of revenues, forcing them to inflict further layoffs. Hard-working Americans would be thrown out of the job market.
While this tax proposal is discouraging, it's not surprising. The President has condemned traditional energy since the day he took office. In recent years, he's ramped up his crusade, taking every opportunity possible to hobble domestic energy growth.
In November, he denied approval for the Keystone XL pipeline, which would have connected crude oil fields in Canadian with American refineries in the Gulf Coast. Keystone XL would have created 42,000 jobs and generated $3.4 billion in new economic growth. And most Americans supported the project.
Then in January, the White House proposed new rules that would restrict greenhouse gas emissions produced on federal lands. If enacted, energy companies could be forced to cut methane emissions by nearly half over the next ten years -- costing them up to $161 million every year.
In March, President Obama scrapped a plan he drafted last year that would have allowed offshore energy development in the Atlantic. The reversal will deprive the country of thousands of new jobs and billions of dollars in revenue.
Fortunately, leaders in Congress have mounted a counter campaign against the President's anti-energy agenda.
"The president should be proposing policies to grow our economy," House Speaker Paul Ryan stated in response to the proposal. Ryan added, "instead of sacrificing it to appease progressive climate activists." House Majority Whip Steve Scalise rightly noted "his radical policies have cost jobs while increasing costs on hardworking families."
The President should heed the message coming from Congress. This tax will destroy jobs and drive up costs for everyday Americans. Our public infrastructure could certainly use an upgrade, but without squashing an energy industry that fuels the American economy.
David Williams is president of the Taxpayers Protection Alliance, a nonprofit, nonpartisan organization dedicated to educating the public on the government's effects on the economy.