Oil companies face an immediate tax rise of 1 cent per barrel to help to pay for the clean-up in the Gulf of Mexico under proposed legislation rushed out by the White House.
The measure, unveiled as BP began a new attempt to contain the ruptured well that has leaked millions of gallons of crude oil into America’s southern coastal waters, would put an extra $500 million (£340 million) over ten years into the Oil Spill Liability Trust Fund, which covers damage caused by such disasters.
Under a $118 million spending plan outlined in the package, people affected by the spill ”” such as fishermen who have lost their livelihoods because of the contamination ”” will be granted financial assistance, and federal agencies will get additional funds to monitor the slick and assess its impact.
President Obama, said by a spokesman to be “deeply frustrated” that the leak has still not been plugged three weeks after it erupted, intends that BP will pick up most of the cost of his new plan.
The fund will be heavily depleted by clean-up of this spill. The barrel tax has been around since 1990. It ceases to be assessed when the Fund is topped off and then kicks in again if the fund is drawn down. While the fund itself is replenished by a direct tax on oil, the actual spill costs are funded directly by vessel operators and offshore facility operators. These are usually insured costs, but, in the case of BP, BP is large enough to self-insure (although we’ll see what the final bill comes to).
To finish the thought that I failed to convey clearly in the prior comment, I don’t see an adjustment of this tax as having any punitive content. They are faced with the reality that the Fund will be depleted and must be replenished. There are years that go by with very little outlay by the Fund. This won’t be such a year.
Like BP won’t pass it on to the pump? Obamanomics.
This isn’t a charge against BP particularly, No. 3. It is a tax on every barrel of oil, regardless of who is dealing it. It is expected that the Oils pass it on at the pump. The program has been around since Bush the Elder. It has nothing to do with “Obamanomics.”