Obama preparing 'larger speech' on $10 per barrel oil tax

Yesterday, President Obama took advantage of the low price of a barrel of oil (just about $31, today) to propose a $10 a barrel tax. As you might suspect, people have a lot of questions about this proposal, and during a Q&A with reporters yesterday after a briefing on the lower unemployment rate, the President said that he's going to address the issue with the American people soon.

"I'll probably make a larger speech about that and the direction we need to go on this," Obama said. "The basic proposition is that right now, gas is $1.80 and gas prices are expected to be low for a while, for the foreseeable future. That overall can be a good thing for the economy. But what is also important is that we use this period where gas prices are low to accelerate a transition to a clean-energy economy, because we know that won't last."

And that's the thing. While no one expects the price of oil or gas to go up a lot any time soon, low prices like the ones we see now are a perfect time to introduce a fee or a tax like this. After all, the oil industry was more than happy to pay $40 or $50 per barrel not too long ago, when that's the price the market set. The President continued:

Every one of us have seen the cycles where gas prices go down and pop back up, and the idea here is that if we're saying to oil companies, which by the way got a significant benefit in the omnibus and allowed them to export oil – until then domestic oil producers couldn't export. If we say to them, we know you need to re-tool, we'll allow you to export and we're going to impose a tax on a barrel of oil, imported or exported, so that some of that revenue can be used for transportation, some can be used for investments for basic research and energy sources of the future, and then 10-15-20 years from now, we're going to be in a much stronger position when oil starts getting tight again and prices go up again. We will have further weaned our economy off dirty fuels, and made not just environmental progress, but a stronger economy. We'll look back and say that was a smart investment. My point is it's right to do it now when gas prices are really low, and they will be low for quite some time to come.

The NRDC called what the President wants to do, "a worthy proposal," but you can bet that this is a discussion that will take a while to sort out.

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