The Obama administration's proposed $10.25 tax on each barrel of crude oil produced in the United States would be one of the biggest tax increases on gasoline in history, a report released Thursday showed.
Alaska Republican Sen. Lisa Murkowski, chairwoman of the Senate Energy and Natural Resources Committee, released a Congressional Research Service report showing historical increases in the federal gasoline tax in an attempt to put the oil tax in perspective. While the tax would be levied on oil companies, economists assume that oil companies would pass on the tax to consumers.
The tax could add between 20-25 cents per gallon, and the report shows that one-time increase would be the largest increase in the gas tax since it was passed in 1932.
The federal gas tax was raised 5 cents in April 1983 and December 1990, the biggest jumps in the climb from 1 cent per gallon in 1932 to the current 18.4 cents per gallon.
Murkowski pointed out that the increase from Obama's proposed oil tax would be bigger than the current federal gas tax.
"The administration's proposal is internally inconsistent and ambiguous, but if it was translated into an excise tax, it would be the largest increase in history," she said.
The House is set to vote Friday on a resolution expressing lawmakers' disapproval of Obama's proposed tax. The oil tax has not been included in any of the legislative budgets introduced into Congress and appears to not be playing a major role in the budget process.
Murkowski previously released a report from the Congressional Research Service, the nonpartisan policy research arm of Congress, that stated the oil tax would slow economic growth in the United States.
According to the report, the $10.25 tax on each barrel of oil would slow growth by about $320 billion over the next 10 years if it became law.
The Obama administration has not fleshed out many details of the proposed tax, such as what products made from a barrel of oil would be taxed and how much. A typical barrel of oil produces 19 gallons of gasoline and 12 gallons of diesel fuel when refined.
The service reported transportation and home heating costs would increase if the oil tax became law. Oil companies would be less likely to hire new workers and explore for new oil sources as well.