Democratic Senate and House 'leaders' have agreed on a 300 percent increase in the oil excise tax. Get off your chair. It means, 32 cents a barrel from the current 8 cents.
The hike is as part of the tax and spending bill likely to be approved this week. So you can expect gasoline prices to rise down the road. Very Chicago.
The tax pays for the Oil Spill Liability Trust Fund, which now totals about $1.6 billion. The fund will likely be decimated by the economic damages arising from the BP oil spill. But, but, wasn't BP going to be solely responsible for... the... spill?
The new rate would be effective in the first quarter that begins 60 days after the bill is enacted, which could mean this October. It would last through the end of 2020.
The tax increase, which was included as part of a broader package that also extends jobless benefits, would be effective through the end of 2020. There is no way it won't get passed, in other words.
Ironically, some oil industry executives actually want a tax increase, hoping it will forestall efforts to raise the liability cap on companies responsible for offshore disasters. Joke's on them. Congress will tax and then hit the oil companies with the liability cap. But not until they take a couple 'meetings' and fundraisers from oil barons.
As for gasoline prices, the recent 20 percent drop in crude oil provides a positive note for consumers near-term.
"We expect retail gasoline prices to fall even as Memorial Day approaches," Tancred Lidderdale, a senior economist at the federal Energy Information Administration.
My recommendation would be to stock up on that gasoline - but it doesn't store too well. So instead buy a bike.