To Break Big Oil's "Stranglehold," Obama to Propose $10-a-Barrel Oil Tax

President Barack Obama will reveal his sweeping transportation proposal next week. (Photo: AP)

To Break Big Oil's "Stranglehold," Obama to Propose $10-a-Barrel Oil Tax

Budget plan, set to be announced next week, proposes investing $300 billion in public infrastructure

President Barack Obama is set to propose a $10-a-barrel tax on oil to fund clean energy infrastructure, a move that environmental groups said would bring the U.S. "into the 21st century."

"Obama's vision underscores the inevitable transition away from oil, and investments like this speed us along the way to a 100% clean energy future," said Sierra Club executive director Michael Brune in response to the announcement.

The proposal will be part of the final budget request to be released next week and will include more than $300 billion worth of investments over the next decade in public transportation, high speed rail, and other infrastructure aimed at reducing greenhouse gas emissions, Politicoreported on Thursday.

The $10 "fee" on every barrel of oil would help pay for those investments, although the charge to the oil companies would likely be passed along to drivers at as much as 25 cents a gallon, Politico's Michael Grunwald wrote.

Still, climate advocates say the more important outcome would be a step toward transitioning to a post-fossil fuel era.

"This is a big deal," said Jason Kowalski, policy director at the environmental group "President Obama is standing up to Big Oil and putting a price on pollution so we can fund the transition to a clean energy economy... The plan opens the door to more creative ways to get the fossil fuel industry to finally pay up for wrecking our climate."

And a White House memo outlining Obama's plan notes that it would also provide a "clear incentive for private-sector innovation to reduce our reliance on oil and invest in clean-energy technologies that will power our future."

The proposal comes just after the global climate pact was signed at the COP21 conference in Paris in December.

"When the world leaders joined together in Paris last year, they signaled the end of the fossil fuel era and the need to transition into a clean energy economy," Brune said. "Obama [has] laid out more of his vision of how we can meet this agreement by challenging Big Oil's stranglehold on how America powers its transportation sector."

As outlined in the plan, about $20 billion a year would go to "enhanced transportation options," such as public transit, high speed rail, and the Transportation Income Generating Economic Recovery (TIGER) stimulus program, which awards grants for transportation projects with "measurable economic and environmental benefits," Grunwald wrote.

Another $10 billion would go to local, regional and state governments to invest in green infrastructure and more livable cities.

"Providing clean, convenient, and affordable transportation choices will create American jobs and protect our climate," Brune continued. "From expanding public transit, to developing the vehicles of tomorrow, the president's plan will put people to work repairing our crumbling transportation system and moving it into the 21st century."

The plan is expected to fall on deaf ears in a Republican-controlled Congress. But as one senior administration official told Grunwald, "This is a new vision. We're realistic about the near-term prospects in Congress, but we think this can change the debate."

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