US Needs Gas and Fuel Tax Overhaul

March 9, 2011 Taxation in USA

Speculators knock OPEC off oil-price perchThe head of a major international oil company has come forward to recommend that the US should heavily increase taxes on gasoline and carbon emissions, while expanding the country’s oil extraction capacity.

On March 8th John B. Hess, chief executive of the international oil company the Hess Corporation, spoke at the CERAWeek 2011 conference, saying that the US should consider instating a new carbon tax system, raising fuel tax by more than 500 percent, maintaining current oil drilling tax subsides, and mandating efficiency standards for automobiles.

Speaking at the conference John B. Hess said that, “…an energy crisis is coming, likely to be triggered by oil.” He elaborated, saying that the problem does not rest with a shortage of oil supplies, but a rapidly growing demand, which will outstrip the world’s overall extraction capacity within a decade. He suggested that the US begin instating policies now which will reduce demand on oil consumption and expand the countries oil production capacity.

According to John B. Hess, federal gasoline taxes should be raised to USD 1 per gallon, from the current level of USD 0.184 per gallon. The government should also reevaluate its policies regarding automobile mileage performance standards, raising the performance levels from the current 35 miles per gallon (approx. 14.88 km per liter) to 50 miles per gallon (approx. 21.26 km per liter). He encouraged the government to overhaul and improve its mix of policies and tax incentives for consumers, to encourage a greater use of light weight hybrid and diesel cars.

John B. Hess spoke out against proposals made by President Barack Obama to abolish tax incentives on oil drilling operations, which are needed to ensure an adequate supply of fuel in the future. He also suggested that more deepwater oil drilling permits be issued for the Gulf of Mexico,and that the US will need to instate a USD 10 per ton carbon tax before the end of the decade,in concurrence with other developed countries.

Photo by Barrybar