President Barack Obama announced a plan to implement a fee oil companies would pay to fund investments in alternative energies. The plan would impose a $10 fee on every barrel of oil paid by oil companies, which would be "gradually phased in over five years," according to the White House.
The funding would be used to build a "21st Century Clean Transportation System," which would involve developing a system to "expand transportation options, and integrate new technologies like autonomous—or self-driving—vehicles while at the same time reducing our reliance on fossil fuels, cutting carbon pollution, and strengthening our resilience to the impacts of climate change."
According to the White House, the system would save both time and money by improving traffic congestion, which it estimates costs $160 billion to Americans and $30 billion to businesses.
The plan would also reduce carbon pollution by focusing efforts on alternative fuel options. "The plan would make public investments and create incentives for private sector innovation to reduce our reliance on oil and cut carbon pollution from our transportation sector, which today accounts for nearly 30 percent of U.S. greenhouse gas emissions," the White House said.
Additionally, Obama believes the plan would strengthen the economy by creating new jobs and making it "less expensive to move American-made products" thanks to the improved transportation infrastructure.
Finally, the plan would also improve access to public transit and rail, which would help Americans "get to work, access new jobs, and take their kids to school—reducing the 7 billion hours that American [sic] waste in traffic each year."
Impact on the Oil Industry
Because the fee imposed to fund this plan would fall on the oil companies, it would not directly impact taxpayers as an extra expense. However, the fee would likely be passed on to taxpayers in the form of higher energy and gasoline costs, as oil companies seek to recuperate the expense.
This is likelier to happen now than ever before, as energy companies are already suffering low or negative operating margins because of the falling price of oil. The commodity crisis, which has seen oil prices plummet by over 60% in the last year and a half, has resulted in several large energy companies in facing massive losses and turmoil on their balance sheets. Most recently, Conoco Phillips announced a historic 65% dividend cut because of its reduced profitability and fears that the oil market will not recover.
Several pundits have noted that the president is approaching lame duck status as the last year of his presidency ends. With turmoil in Congress and continued political divisions throughout Washington, many expect this plan will never come to fruition.
However, some of those pundits note that the suggestion does at least lay the groundwork for a future president to impose a fee on oil to help the country shift to alternative energy sources and improve its transportation infrastructure without plundering the public coffers.