Publications: Notes at the Margin

Obama's Brilliant Oil Fork (February 8, 2016)


President Obama has proposed a $10-per-barrel tax on oil. By doing so, he has forced the oil industry to choose between accepting an across-the-board tax that will not affect international markets or seeing a $10-per-barrel fee imposed on all imports. Put another way, the oil industry is now in much the same position as a condemned person who has to choose between the gas chamber and the guillotine. It can accept a per-barrel tax that can fund infrastructure improvements and promote conservation, a tax that has no impact on market relationships, or accept a crude oil import fee that benefits domestic crude producers and refiners but harms international oil companies and distorts market price relationships (particularly the Brent/WTI price spread).


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