The climate and tax spending deal announced last week by Senate Majority Leader Chuck Schumer and Senator Joe Manchin could cost billions in new taxes.
The legislation, which may get a Senate vote as soon as this week, would reinstate and increase a long-lapsed tax on crude and imported petroleum products to 16.4 cents per barrel, according to a summary of the plan released Sunday by the Senate’s tax-writing committee.
The fee would be paid by US refineries receiving crude oil and importers of petroleum products, according to the Congressional Research Service, which said proponents of the taxes believe they reflect a “polluter pays” mentality.
The 725-page spending bill, which includes some $370 billion in spending to help fight climate change, would also impose other costs on the oil and gas industry, including a first-time fee on methane emissions and increases in the royalty rate payable on oil and gas produced on federal land.
Nevertheless, the legislation has won support from the oil industry, with Exxon Mobil Corp. CEO Darren Woods calling it “a step in the right direction.” The bill would see more lease sales for drilling on federal land — something that the US oil and gas industry had consistently lobbied for — and a separate, future agreement to streamline environmental permitting for projects such as pipelines.
The proposed levy on imports is a revival of the Superfund tax, which helped fund the clean-up of hazardous waste sites and previously stood at 9.7 cents per barrel until it lapsed at the end of 1995. In addition to reinstating and increasing the tax, the Senate proposal would index the fee to inflation.
A similar proposal, included in the Build Back Better Act that has already been passed by the House of Representatives, would have raised nearly $12 billion, according to a congressional estimate.
It remains to be seen whether the legislation will be backed by the full Democratic caucus in the 50-50 Senate. It would also have to pass the House, where progressives sought a much more expansive plan.
Source: Bloomberg
