The president’s budget contains at least eight different tax hikes on domestic oil production. From removing tax breaks to the implementation of cap-and-trade, the budget is sure to reduce domestic oil production.
Obama said during his democratic nomination speech, “I will set a clear goal as president: in ten years we will finally end our dependence on oil in the Middle East.” The only ways we’re going to reduce dependence on Middle Eastern oil while simultaneously reducing American production through tax increases is either by high trade barriers to foreign oil or by heavily taxing the use of all oil–foreign and domestic. Both would cause significant harm to the American economy.
High trade barriers harm all American consumers by driving up the price of oil. What we need is not higher tax and trade barriers, but lower taxes and less red tape so American companies and workers can compete internationally to produce oil at lower prices.
Taxing the use of oil to purposely reduce its use, possibly through cap-and-trade, will place high burdens on consumers. Even if the poorest in our society are compensated by government handouts with cap-and-trade dollars, oil production and use would be reduced which would drive up prices for all consumers.
Obama or the Congress should strip from the budget all tax hikes including the ones on oil companies.