President Obama's plan to put a carbon tax on the oil industry may be dead on arrival in the Republican-controlled Congress. But the proposal is really about the message and setting expectations for the future, energy experts say.
The tax would charge oil companies $10.25 per barrel of crude oil, which would raise the cost by one-third based on current prices. The revenue would be used to pay for everything from "clean" highway projects to spurring the transition from home heating oil in the Northeast to cleaner energy.
"By placing a fee on oil, the president's plan creates a clear incentive for private-sector innovation to reduce America's reliance on oil and invest in clean energy technologies that will power our future," according to Obama's fiscal 2017 budget, where the plan is proposed.
But the budget is short on details on how his plan would work, and critics say it is more about political messaging than putting forth an enactable policy.
Obama needs Congress to approve the measure. But since Republicans control both chambers, it is unlikely the oil tax will ever see the light of day.
"It's dead on arrival," said Tom Pyle, director of the conservative American Energy Alliance. "I think it is a rhetorical device to condition the landscape," he added, explaining that the president wants to popularize the idea of a fossil fuel tax, more so than proposing a measure that could gain bipartisan support.
A Capitol Hill lobbyist agreed that the plan is not serious, because it offers nothing Republicans like. "It's DOA. The Republicans are going to have fun with it."
Some activists see subsequent Democratic administrations having more time to push an oil tax or a similar tax on carbon. Others suggest it would have to be worked out in a broader debate about tax reform, which is not likely in an election year.
The proposed oil tax is more about timing than anything else, observers say. It was announced during the 2016 campaign season when environmental activists such as 350.org and billionaire activist Tom Steyer have been waging national campaigns to pressure the fossil fuel industry to address climate change and for leading presidential hopefuls to back a policy that keeps oil and coal in the ground.
David Turnbull, with the activist group Oil Change International, said climate change proponents want more analysis done on any measure resembling a fossil fuel or carbon tax. Turnbull said $10 is a good start, but more is preferable given the high cost of oil on the nation's environment and the toll it has taken on the climate.
He said the fee likely would not please environmentalists unless all subsidies given to the industry are taken away first. Turnbull said it would be ironic to put a tax on oil, if drillers still receive the tax incentives to produce it. Obama has attempted to kill the oil industry's subsidies for nearly his entire time in the Oval Office, but has not succeeded.
Environmental economists with Resources for the Future say a true carbon tax would not be limited to oil, but would be applied to all fossil fuels.
The proposal has engendered a lot of opposition from the Right. Senate Energy Chairwoman Lisa Murkowski, R-Alaska, said the proposal is "yet another way to damage our nation's oil production."
Murkowski argued that the oil tax would drive up energy prices and cost jobs. She said it's the wrong policy in a time of low oil prices, even though many argue it is the perfect time for such a fee because it wouldn't be felt as much by consumers. Tax economists say oil prices won't always be low, and the tax probably would make U.S. oil less competitive with crude from the Middle East and Russia.
Murkowski likely will address the policy at her committee's first hearing on the Department of Interior's budget request this week. The Interior Department would likely have a hand in collecting the tax.
The Obama administration hasn't laid out completely how it would allocate the money among plans to stave off high home energy bills, invest in cleaner transportation infrastucture and fund the federal highway trust fund.
"In addition to transportation investments, 15 percent of revenues would be allocated to provide assistance to families with burdensome energy costs, including a focus on supporting households in the Northeast as they transition from fuel oil for heating to cleaner forms of energy," the budget proposal reads.
That suggests a program such as the federal low-income heating program that provides money to families who can't afford to pay their energy bills, which was greatly reduced under the president's new budget.
Pyle said the White House sees the tax as a "green slush fund" to foot the bill for clean energy since the administration sees fossil fuels as a cash cow for funding clean energy initiatives.
Observers say they don't believe that upping the cost of oil by a third, which would raise the cost of heating oil, is a smart way to raise money to help residents with high energy bills.
Others say the revenue derived from the fee should be used for deficit reduction, not new spending.
At the same time, most of the criticism of the plan has been aimed at its added costs at the gas pump. Critics say it's popular to say the tax would be on "Big Oil" companies, but the fee would be passed onto consumers.
"They're going to tax oil to give money to pay for the tax on heating oil," Pyle said. "Everyone knows this is not a tax on oil companies. Corporations don't pay taxes. This cost is going to be passed down. This is a straight up gasoline tax."