The federal government estimated Tuesday that gasoline will cost less than $2 a gallon in 2016, the lowest prices in more than a decade– that is, unless President Obama gets his way.
Just last week, Obama proposed a $10 fee on every barrel of oil, which he wants to spend on greener transportation. In practice, this policy would function as a severely regressive tax, transferring money from poor households to the pocketbooks of politically trendy companies.
Already, poor and minority families spend a much larger share of their money on energy. In fact, households earning less than $30,000 can expect that nearly a third of their pre-tax income will go to utilities and gasoline.
Subsidies and public assistance offset some of this, but families struggling financially still keenly feel the pinch of rising energy costs. JPMorgan Chase recently reported that gasoline alone consumes 5.6 percent of the income of those in the lowest 20th percentile. And black families still spend 50 percent more of their income on utilities than white households do.
Beyond the statistics, energy costs mean impossible choices for many poor families. A recent PBS article described the dilemma of Betty Lanning, a North Carolina woman caring for her infant grandchild alone after her husband died and her daughter fell on hard times.
At the time, the fuel oil Lanning used to heat her home cost $3 a gallon, driving her utilities over $300 a month. Living on a $1,100 Social Security check, she quit taking her medications and began visiting food pantries. Even so, she struggled to provide a warm home from her granddaughter. Despite taking advantage of government support programs for the poor, she found some financial relief only after local charities also chipped in, too.
For families in such strained positions, the American energy renaissance has been an extraordinary blessing. Cheap gas meant the average driver enjoyed $550 in savings last year. But the fee proposed by Obama could add 25 cents to the cost of every gallon of gas, and that sort of nickel-and-diming adds up fast.
It’s little wonder that such a callous policy is coming out of the Beltway. The strongest proponents of the oil tax can afford the extra cost—and also, a lot of them don’t even drive. Four out of 10 DC residents don’t own a car, but nationwide, 90 percent of us still do.
For the majority of Americans who can’t avoid time behind the steering wheel, this tax is, unsurprisingly, not a popular idea. Even in super-liberal California, 63 percent of voters last fall opposed a 12-cent gas-tax increase, one University of California Berkley poll found.
And while some polls show taxpayers are hesitantly supportive of gas taxes that go directly to improving road conditions, their enthusiasm significantly dampens when the revenue raised would be spent on green initiatives.
The White House was fairly explicit about its intentions. A memo mused that this tax would create “a clear incentive for private-sector innovation to reduce our reliance on oil and invest in clean-energy technologies that will power our future.”
Which is a fancy way of saying, this policy will distort the market, making traditional energy more expensive to create conditions where otherwise prohibitively expensive green sources finally stand a chance.
The money would not only be taken disproportionately from America’s poor; it would almost inevitably end up in the hands of politically connected companies.
From Fisker Automotive to Alcoa to Tesla, examples abound of how green companies have leveraged their political influence into huge taxpayer backing. With the Obama administration’s signature combination of big green money, minimal transparency and small oversight, expect any new environmentally motivated spending sprees to also become a crony bonanza.
Fortunately, it’s unlikely Obama will get his way on his $10-per-barrel proposal. A Republican-dominated Congress is expected to swiftly reject the notion.
Nonetheless, this policy idea deserves attention. Obama and his Democrat allies are so committed to their radical climate agenda that they are wiling to build it off the backs of America’s working poor—the same low-income and minority families they purport to protect.
Melchior is a senior fellow at the Independent Women’s Forum.