Tax drive

Obama oil-tax idea deserves at least a test drive

President Barack Obama's oil-tax idea deserves at least a test drive. The proposed $10-per-barrel levy, which would be phased in over five years, is aimed at a host of worthy goals. Foremost among them: fixing the nation's roads, bridges and other creaky infrastructure.

It would hardly be an extravagance. The federal gas tax - a major source of highway funding - has been frozen at 18.4 cents per gallon since 1993. The resulting squeeze on the nation's transportation budget has taken a toll. A 2015 Business Roundtable study ranked the United States 16th in the world in overall infrastructure quality, well behind France, Germany, Japan and other advanced economies. Highway congestion cost the US economy more than $120 billion in 2011, the study found, and nearly one in four US bridges is "structurally deficient or functionally obsolete".

The proposal is predictably drawing jeers from the president's opponents. Yet, congressional Republicans might want to consult Detroit carmakers before dismissing the idea out of hand. The auto industry has been spending heavily to develop more fuel-efficient vehicles so it can hit federally mandated emissions targets. Yet cheap gas has encouraged drivers to buy sport utility vehicles (SUVs) and other gas-guzzlers. Slapping a fee on oil would help reverse the trend, giving carmakers more confidence to invest.

Granted, crude oil producers are reeling from a 70 per cent drop in oil prices since the middle of 2014 and wouldn't relish the idea of forking over $10 a barrel to Uncle Sam. The likes of Exxon Mobil and Chevron could, however, just pass along most if not all of the tax to consumers. Energy bills might go up, but at least the cost would be spread across the nation.

An additional $10 a barrel would still leave crude prices some 60 per cent below their 2014 peak - and should translate into only about 25 cents more per gallon at the pump. A well-crafted fee could also include rebates or tax breaks, minimizing the financial pain for low-income Americans.

The benefits of better transportation infrastructure and lower emissions would be substantial. The idea may never get past Congress, but outside Washington, there's plenty of reason to give it a green light.