The proposed fee, which would be paid by oil companies and phased in over five years, was quickly met with scorn by lawmakers in the Republican-controlled Congress.
In the last year of his presidency, Obama has said the country must stop subsidizing the “dirty” fossil fuels of the past and focus on clean, renewable fuels that do not exacerbate climate change.
“By placing a fee on oil, the President’s plan creates a clear incentive for private sector innovation to reduce our reliance on oil and at the same time invests in clean energy technologies that will power our future,” the White House said in a statement.
Set to be officially announced in Obama’s fiscal 2017 budget plan on Tuesday, the fee would provide nearly $20 billion a year to help expand transit systems across the country and more than $2 billion a year to support the research and development of self-driving vehicles and other low-carbon technologies.
Republican lawmakers, who have repeatedly clashed with the Obama administration over energy policy, panned the proposal on social media. House of Representatives Majority Whip Steve Scalise asked on Twitter whether the proposal was “Obama’s worst idea yet?”
The $10 tax would come at a time of tumbling oil prices.
Oil prices fell last month to below $30 a barrel, the lowest level since 2003, as demand fails to keep pace with a glut of new supply and the world’s biggest oil producers resist cutting production.
“At a time when oil companies are going through the largest financial crisis in over 25 years, it makes little sense to raise costs on the industry,” Neal Kirby, a spokesman for the Independent Petroleum Association of America, said in a statement.
Kirby said the tax would ultimately be passed along to U.S. consumers, who have benefited from low gasoline prices.
Jeff Zients, director of the White House National Economic Council, pushed back against assertions the oil tax would place U.S. crude producers at a disadvantage. He told reporters on a call that the fee would be applied to domestically produced and imported barrels of oil but not to crude exported from the United States.