In Depth:

At roughly 37 percent, petroleum is currently America’s leading source of energy. By 2040, petroleum is still projected to be the leading source of energy, but its share will have fallen to around 32 percent.

The revenue collected from the excise tax on these new oil sources would fund the Oil Spill Liability Trust Fund that goes to cleanup costs for oil spills around the country.

The per-barrel excise tax, reinstated in 2005, was raised from 5 cents to 8 cents for 2009-2016 and will rise to 9 cents in 2017. Democrats on the House Natural Resource Committee estimated the revenue from the excise tax expansion would be $58.5 million in 2014 and $61.5 million in 2015.

Under current law, oil from tar sands or shale formations isn’t covered by the excise tax on conventional crude oil. This legislation may set a precedent. As costs of energy climb higher and higher, new forms of oil extraction (like tar sands and shale) have become economically viable. Supporters of S. 187 contend that the bill would keep the IRS tax code up to date with those innovations. Rep. Earl Blumenauer (D-OR) noted in support of the bill: 

“We should be moving as quickly as possible and through every legislative avenue to reduce the tax breaks and exemptions that we give to Big Oil, which has raked in record profits in recent years. This bill ensures that we don’t let tar sands — which are a costly, environmentally destructive source of oil — to slip through the cracks and avoid fair taxation.”

"Supporters of the tax increases complain that the companies have 'too much' money and that the government is entitled to seize money from them if it believes it can spend the funds more wisely. In a free society, however, government collects revenue from companies and individuals under neutral tax rules, not based on an ad hoc determination that politically disfavored companies or individuals have too much money."

Media: