By February 24, 2016 Read More →

New report says Obama’s $10/b oil tax could damage US economy – Murkowski

White House calls $10.25/b levy a “fee” rather than a tax, says Murkowski

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Alaska Senator Lisa Murkowski (R-Alaska)

U.S. Sen. Lisa Murkowski, R-Alaska, on Tuesday released a second report prepared by the Congressional Research Service (CRS) raising key questions about President Obama’s proposal to levy a new $10-per-barrel tax on oil.

An earlier CRS analysis of that proposal concluded the plan would likely lower economic growth and raise costs to consumers. When the actual budget was unveiled on Feb. 9, the administration increased the fee to $10.25.

“This mathematical sleight of hand may look innocent, but that additional quarter actually raises the cost of the tax or ‘fee’ by nearly $8 billion,” Murkowski said.

“Far from a rounding error, this increase would only put an additional burden on America’s oil producers, which dampens our domestic energy production.”

The White House, which describes the tax as a “fee,” originally announced the proposal would charge oil companies $10 per barrel of oil.

“This report is only the beginning of the analytical work that my Committee staff will release as we review the administration’s budget proposal,” Murkowski said.

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President Obama at the COP 21 conference

Murkowski, chairman of the Senate Energy and Natural Resources Committee, noted that as indicated in the report by the White House National Economic Council, the $10-per-barrel oil tax “might result in a gasoline price increase of as much as $0.24 per gallon when fully implemented.”

Key issues raised in the CRS report:

  • Analysts are likely to be concerned with the macroeconomic effects of the oil fee. These effects might include those on employment and jobs, economic growth, and inflation.
  • Since it is likely that the oil fee would be shifted forward by the oil companies, and since petroleum products enter into many products, consumers will likely see higher prices, not only directly for gasoline and other consumer products, but, in general, for many products to varying degrees.
  • In general, the fee would likely result in decreased discretionary consumer purchasing power which may translate into lower expected economic growth.

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