Obama to seek new tax on oil in budget proposal

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President Obama to Call for Big Tax on Oil Barrels

WASHINGTON, Feb 4 (Reuters) - U.S. President Barack Obama will launch a long-shot bid next week to impose a $10-a-barrel tax on crude oil that would fund the overhaul of the nation's aging transportation infrastructure, the White House said on Thursday.

The proposed fee, which would be paid by oil companies and phased in over five years, was quickly met with scorn by lawmakers in the Republican-controlled Congress.

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In the last year of his presidency, Obama has said the country must stop subsidizing the "dirty" fossil fuels of the past and focus on clean, renewable fuels that do not exacerbate climate change.

"By placing a fee on oil, the President's plan creates a clear incentive for private sector innovation to reduce our reliance on oil and at the same time invests in clean energy technologies that will power our future," the White House said in a statement.

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Obama to seek new tax on oil in budget proposal
Pumping units, also known as 'nodding donkey's' or pumping jacks, stand alongside storage tanks at an oil plant operated by Moravske Naftove Doly (MND) AS in Damborice, Czech Republic, on Friday, Jan. 8, 2016. Oil capped the biggest two-year loss on record in 2015 as the Organization of Petroleum Exporting Countries effectively abandoned output limits amid a global glut. Photographer: Martin Divisek/Bloomberg via Getty Images
Photo by: Dennis Van Tine/STAR MAX/IPx 1/11/16 The price of crude oil Monday plummeted another 5% to $31.41 a barrel Monday based on WTI Crude Oil. That's the commodity's lowest closing price since hitting $30.73 a barrel on Dec. 5, 2003, according to Bloomberg data. Talk about a brutal implosion that keeps raging. Oil prices are down 16%, just this year. That's coming off a brutal 2015 when oil prices dropped 30%. Oil prices have been falling in a historical collapse. Oil prices are now down a staggering 79% from the 20-year high of $145.29 notched on July 3, 2008, according to Bloomberg data.
Photo by: Dennis Van Tine/STAR MAX/IPx 1/11/16 The price of crude oil Monday plummeted another 5% to $31.41 a barrel Monday based on WTI Crude Oil. That's the commodity's lowest closing price since hitting $30.73 a barrel on Dec. 5, 2003, according to Bloomberg data. Talk about a brutal implosion that keeps raging. Oil prices are down 16%, just this year. That's coming off a brutal 2015 when oil prices dropped 30%. Oil prices have been falling in a historical collapse. Oil prices are now down a staggering 79% from the 20-year high of $145.29 notched on July 3, 2008, according to Bloomberg data.
Pumping units, also known as 'nodding donkey's' or pumping jacks, stand silhouetted against the sun at an oil plant operated by Moravske Naftove Doly (MND) AS in Damborice, Czech Republic, on Friday, Jan. 8, 2016. Oil capped the biggest two-year loss on record in 2015 as the Organization of Petroleum Exporting Countries effectively abandoned output limits amid a global glut. Photographer: Martin Divisek/Bloomberg via Getty Images
A Pumping unit, also known as a 'nodding donkey' or pumping jack, stands silhouetted against the sun at an oil plant operated by Moravske Naftove Doly (MND) AS in Damborice, Czech Republic, on Friday, Jan. 8, 2016. Oil capped the biggest two-year loss on record in 2015 as the Organization of Petroleum Exporting Countries effectively abandoned output limits amid a global glut. Photographer: Martin Divisek/Bloomberg via Getty Images
Pumping units, also known as 'nodding donkey's' or pumping jacks, stand silhouetted against the sun at an oil plant operated by Moravske Naftove Doly (MND) AS in Damborice, Czech Republic, on Friday, Jan. 8, 2016. Oil capped the biggest two-year loss on record in 2015 as the Organization of Petroleum Exporting Countries effectively abandoned output limits amid a global glut. Photographer: Martin Divisek/Bloomberg via Getty Images
A control wheel sits near a pumping unit, also known as a 'nodding donkey' or pumping jack, at an oil plant operated by Moravske Naftove Doly (MND) AS in Damborice, Czech Republic, on Friday, Jan. 8, 2016. Oil capped the biggest two-year loss on record in 2015 as the Organization of Petroleum Exporting Countries effectively abandoned output limits amid a global glut. Photographer: Martin Divisek/Bloomberg via Getty Images
An employee works on a pumping unit, also known as a 'nodding donkey' or pumping jack, at an oil plant operated by Moravske Naftove Doly (MND) AS in Damborice, Czech Republic, on Friday, Jan. 8, 2016. Oil capped the biggest two-year loss on record in 2015 as the Organization of Petroleum Exporting Countries effectively abandoned output limits amid a global glut. Photographer: Martin Divisek/Bloomberg via Getty Images
An employee uses a screw key to adjust a valve on a pumping unit, also known as a 'nodding donkey' or pumping jack, at an oil plant operated by Moravske Naftove Doly (MND) AS in Damborice, Czech Republic, on Friday, Jan. 8, 2016. Oil capped the biggest two-year loss on record in 2015 as the Organization of Petroleum Exporting Countries effectively abandoned output limits amid a global glut. Photographer: Martin Divisek/Bloomberg via Getty Images
An employee walks across snow in front of pumping units, also known as 'nodding donkey's' or pumping jacks, at an oil plant operated by Moravske Naftove Doly (MND) AS in Damborice, Czech Republic, on Friday, Jan. 8, 2016. Oil capped the biggest two-year loss on record in 2015 as the Organization of Petroleum Exporting Countries effectively abandoned output limits amid a global glut. Photographer: Martin Divisek/Bloomberg via Getty Images
An employee takes an oil sample in a jar near oil pumping machinery at an oil plant operated by Moravske Naftove Doly (MND) AS in Damborice, Czech Republic, on Friday, Jan. 8, 2016. Oil capped the biggest two-year loss on record in 2015 as the Organization of Petroleum Exporting Countries effectively abandoned output limits amid a global glut. Photographer: Martin Divisek/Bloomberg via Getty Images
An employee stands on a platform beside an oil storage tank at an oil plant operated by Moravske Naftove Doly (MND) AS in Damborice, Czech Republic, on Friday, Jan. 8, 2016. Oil capped the biggest two-year loss on record in 2015 as the Organization of Petroleum Exporting Countries effectively abandoned output limits amid a global glut. Photographer: Martin Divisek/Bloomberg via Getty Images
An employee carries a wrench as he walks between a storage tank and snow covered barrels, at an oil plant operated by Moravske Naftove Doly (MND) AS in Damborice, Czech Republic, on Friday, Jan. 8, 2016. Oil capped the biggest two-year loss on record in 2015 as the Organization of Petroleum Exporting Countries effectively abandoned output limits amid a global glut. Photographer: Martin Divisek/Bloomberg via Getty Images
Graphic shows the price of crude oil; 2c x 3 inches; 96.3 mm x 76 mm;
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Set to be officially announced in Obama's fiscal 2017 budget plan on Tuesday, the fee would provide nearly $20 billion a year to help expand transit systems across the country and more than $2 billion a year to support the research and development of self-driving vehicles and other low-carbon technologies.

Republican lawmakers, who have repeatedly clashed with the Obama administration over energy policy, panned the proposal on social media. House of Representatives Majority Whip Steve Scalise asked on Twitter whether the proposal was "Obama's worst idea yet?"

The $10 tax would come at a time of tumbling oil prices.

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Oil prices fell last month to below $30 a barrel, the lowest level since 2003, as demand fails to keep pace with a glut of new supply and the world's biggest oil producers resist cutting production.

"At a time when oil companies are going through the largest financial crisis in over 25 years, it makes little sense to raise costs on the industry," Neal Kirby, a spokesman for the Independent Petroleum Association of America, said in a statement.

Kirby said the tax would ultimately be passed along to U.S. consumers, who have benefited from low gasoline prices.

Jeff Zients, director of the White House National Economic Council, pushed back against assertions the oil tax would place U.S. crude producers at a disadvantage. He told reporters on a call that the fee would be applied to domestically produced and imported barrels of oil but not to crude exported from the United States. (Additional reporting by Roberta Rampton in Washington and Ernest Scheyder in Houston; Editing by Eric Beech and Peter Cooney)

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