On March 3, Senator Murkowski (R-AK), released an analysis from the Congressional Research Service (CRS) on President Obama’s proposed $10.25-a-barrel tax on crude oil, which would be applied to transportation infrastructure and investments in public transportation. Although lawmakers passed a $305 billion surface transportation reauthorization bill in December, Congress failed to raise the 18.4 cent per gallon gas tax, even as consumer gasoline prices dip below $2 per gallon.

The gas tax funds the Highway Trust Fund (HFT), which neared insolvency several times over the past few years, due to a combination of decreased miles travelled by U.S. drivers and increasing vehicle efficiency resulting in less gasoline being consumed. The HFT provides the bulk of federal dollars for surface transportation infrastructure; the American Society of Civil Engineers most recently graded road infrastructure in the United States at a D level.

The $305 billion, five year infrastructure bill was signed by President Obama in late 2015, ending a decade of stop-gap measures to deal with the HTF. The measure was substantially less than the $478 billion that the President proposed for the transportation bill; the White House called the infrastructure bill a good “down payment” on the needed funds for infrastructure improvements and investments in public transportation.

The $10.25-a-barrel tax on crude oil was proposed in the President’s 2017 Budget.  According to the budget, the tax would raise $319 billion over 10 years, with $32.4 billion going towards mass transit, clean vehicle research, as well as research on urban planning and self-driving cars. Republican lawmakers have declared the proposal “dead-on-arrival,” with Senator Murkowski (R-AK) stating that the tax would “further imperil the American energy renaissance.”  As chair of the Senate Energy & Natural Resources committee, she has vowed to release several reports that examine “unaddressed aspects of the fee.”

According to the latest CRS analysis, it is unclear from the President’s proposal whether the funds would provide for the long-term solvency of the Highway Trust Fund, or fully fund the President’s proposed clean transportation program.  An Act of Congress would be required for an oil tax to become a reality.

The White House states that a per-barrel tax would fully consider the “integrated, interdependent nature of our transportation system” which is dependent almost entirely on oil, and spur innovations to reduce domestic oil use.  The proposal is unlikely to gain traction in this Congress, but has received attention on the Presidential campaign trail, with both Hillary Clinton and Sen. Sanders (I-VT), calling for significant infrastructure investments.


For more information see:

$10 Fee/Tax on Oil, Congressional Research Service

Fact Sheet: President Obama’s 21st Century Clean Transportation System, The White House

Obama's $10 Oil-Tax Pipe Dream, The Atlantic