Notes on Obama’s $10-per-barrel Oil Tax, Part 1: Math Are Hard

Yes, I know that Obama’s $10-per-barrel tax proposal is DOA in Congress. What irritates me is that it is a thoughtless proposal, more about instigating division than about practical benefit. It is as if important policy issues have been entrusted to children, or worse, Internet trolls.

A few years back, I had a colleague who was good at identifying oil prospects, not so good at evaluating them. He’d say,”My prospect could hold 250,000 barrels of oil. That’s $25 million worth!” While that statement is superficially true, it’s also intellectually lazy because it fails to take into account the myriad costs and risks of an oil-drilling venture. (God made petroleum engineers to keep geologists honest.)

Perhaps more tellingly, he only made the statements when oil was near $100 a barrel. It’s easy to do that calculation in your head. When Oil costs $142, or $32.57, you might have to put a pencil to paper to do the hard work of ciphering.

In a similar vein, President Obama’s budget proposal of a phased-in, $10-per-barrel tax on oil shrieks of intellectual laziness.

In 2014, the US produced 3.2 billion barrels of oil. How much tax revenue will Obama’s proposal generate? $32 billion. Easy-peasy.

Math is like kryptonite to anti-capitalist policy makers. We’ll explore why this is dumb in the next installment.

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One Response to Notes on Obama’s $10-per-barrel Oil Tax, Part 1: Math Are Hard

  1. Romeg says:

    This proposal is yet another attempt by Obama to Troll the GOP Controlled Congress and distract from the absolute horror show that is the Hillary Clinton campaign. As you point out, this proposal doesn’t have a snowball’s chance in hell of seeing the light of day beyond the controversy that may erupt in the media. Obama’s relevance exists to the extent that he can inflict damage to the people and the economy via executive orders and that serves as a reminder that we MUST nominate and elect a true Constitutionalist and conservative so that the damage that this one-man wrecking crew has done to the country and the economy.

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