The climate and tax spending deal announced last week by Senate Majority Leader Chuck Schumer and Senator Joe Manchin could cost the oil industry $25 billion in new taxes.
The legislation, which may get a Senate vote as soon as next week, would reinstate and increase a long-lapsed tax on crude and imported petroleum products to 16.4 cents per gallon, according to a summary of the plan released Sunday by the Senate’s tax-writing committee.
A similar proposal, included in the House-passed Build Back Better Act, would have raised nearly $25 billion over a 10-year period, according to a congressional estimate.
The Superfund tax, which previously stood at 9.7 cents per barrel until it lapsed at the end of 1995, is paid by refiners and other importers to help fund the clean-up of hazardous waste sites. In addition to increasing the tax, the Senate proposal would index the fee to inflation.
The 725-page bill released last week would also impose other costs for the oil and gas industry. It places a new first-time fee on methane emissions rising to as much as $1,500 a ton and increases the royalty rate companies pay to the government for oil and gas produced on federal land.
The legislation, which includes some $370 billion in spending to help fight climate change, also has benefits for the oil and gas sector such as requiring more lease sales on federal land.
It remains to be seen whether the legislation will be backed by the full Democratic caucus in the 50-50 Senate. It would also have to pass the House, where progressives sought a much more expansive plan.
— With assistance from Erik Wasson