Obama to Propose $300B Clean Transportation Plan With Oil Tax

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DALLAS -- President Obama's fiscal 2017 budget request, set for release on Tuesday, will include a proposed $300 billion investment in transportation over the next 10 years fueled by a $10 per barrel tax on crude oil.While the proposal is unlikely to receive serious consideration from the Republican-led Congress in a presidential election year, White House officials said it will make clean transportation part of the political process.

The President's plan would increase American investments in clean transportation infrastructure by roughly 50%, White House officials said.

The transportation sector accounts for 30% of U.S. greenhouse gas emissions, they said.

The $32.4 billion per year plan focuses on innovative transportation technologies such as high-speed rail and self-driving cars, and puts a premium of reducing emissions of greenhouse gases while making transportation systems more resilient to climate change.

The proposed oil fee would be passed along to motorists, effectively making it a 25 cent per gallon increase in the federal gasoline tax of 18.4 cents. The average U.S. refiner converts a 42-gallon barrel of oil into 19 gallons of gasoline and 12 gallons of diesel, according to the American Petroleum Institute.

The oil fee would be phased in over five years, Jeffrey Zients, director of the National Economic Council, said during a conference call on the proposal.

"The plan would continue the President's call to use the one-time revenues from pro-growth business tax reform to fund a temporary near-term surge in investment, while the oil fee will play for the long-term investments needed to put us on the right path for the years ahead," the White House said in a fact sheet on the proposal.

The funding in the 21st Century Clean Transportation System proposal would be in addition to the federal grants to states provided by the $305 billion, five-year Fixing America's Surface Transportation (FAST) Act signed into law by President Obama in early December.

"The President's plan would increase American investments in clean transportation infrastructure by roughly 50% while reforming the investments we already make to help reduce carbon pollution, cut oil consumption, and create new jobs," the White House said. "The new fee on oil will also encourage American innovation and leadership in clean technologies to help reshape our transportation landscape for the decades ahead," it added.

Obama's five-year plan would provide $20 billion per year above current funding for expanded transit systems in urban and rural areas, investments to make high-speed rail a viable alternative, and modernized freight handling infrastructure. It would a boost the stimulus-era Transportation Investment Generating Economic Recovery grant program to $750 million per year from the current $500 million to support high-impact, innovative local projects.

Another $10 billion per year would be allocated to transformation of regional transportation systems by changing existing transportation grant programs.

A Smart Climate Fund would provide additional funding to states that use the current formula to cut carbon pollution. Three new competitive grant programs would include a 21st Century Regions effort for large-scale projects, a Clean Communities program to expand transportation choices in cities and towns, and a Resilient Transportation program to spur investments to protect transportation infrastructure from floods and other climate change impacts.

The proposal would provide $2 billion per year to launch a new generation of smart, clean vehicles and airplanes. It would accelerate the transition to cleaner buses and create regional fueling infrastructure for low- and no-emission vehicles.

A separate $400 million per year effort would help ensure that new technologies can be integrated safely into the transportation system.

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