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Here’s A Tax That Can End Pain At Pump: Bradley, Ridge, Walker

Sunday, August 7, 2011 - 3:43 PM
http://www.bloomberg.com/news/2011-08-03/here-s-a-tax-that-can-end-pain-at-pump-bradley-ridge-walker.html
Security Fee

To accomplish this, we propose establishing a value-added oil-security fee at the refinery or point of importation. This fee would be a fixed percentage based on the price of a barrel of oil. In addition to the levy, there would be a varying retail tax on gas. When oil prices increase, the gas tax is reduced. When they decline, the gas tax would rise, thus offsetting diminished oil-security fees due to lower oil prices.

For example, if a 5 percent oil-security levy were assessed when oil costs $100 a barrel, the fee would be $5 a barrel and yield, at present levels of oil consumption, about $28.3 billion a year. At $115 a barrel the gas tax per gallon could be abated by 5 cents (assuming abatement at 1 cent for every $3 increase in oil price) but the oil fee would rise to $5.75 a barrel, offsetting the lost gas-tax revenue. If the price of oil fell to $90 a barrel, the oil fee would also drop 50 cents a barrel, but the gas tax would rise by 10 cents a gallon, more than offsetting the lost oil-fee revenue. Thus, oil companies pay more when their profits increase, and consumers would bear more cost when oil prices -- and prices at the pump -- fall.

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MikeMike327 posts since
Feb 22, 2010
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