The U.S. should consider imposing a $1-a-gallon gasoline tax and boosting average auto fuel economy to 50 miles a gallon to help avert a global energy crisis, the head of oil company Hess Corp. said.
“As demand grows in the next decade, we will not have the oil-production capacity we will need to meet demand,” Chief Executive Officer John B. Hess said in a speech today at CERAWeek, a Houston conference held by IHS Cambridge Energy Research Associates. “The $140-per-barrel oil price of three years ago was not an aberration -- it was a warning.”
Amid unrest in the Middle East, oil futures touched $106.95 a barrel yesterday in New York, the highest intraday price since Sept. 26, 2008. The average price of regular gasoline at the pump in the U.S. has risen 12 percent in the last three weeks to $3.509 a gallon, the most since Oct. 5, 2008, according to AAA.
Hess said the debate on raising gasoline taxes should wait until the economy recovers. The U.S. government currently imposes an 18.4-cent-a-gallon levy, about 38 percent of average per-gallon gasoline taxes, according to the American Petroleum Institute. Hess, based in New York, produced an average of 419,000 barrels of oil equivalent a day last year.
“Until the economy’s growing and people are put back to work, I would not encourage the country to have a debate on energy taxes,” Hess told reporters in a news conference after his speech. “Once our economy is back on its feet and people are back to work, it should be something that gets full examination and full consideration.”
Keep Tax Incentives
The American Petroleum Institute, a trade group for oil companies of which Hess is a member, hasn’t taken a position on the $1 gasoline tax, spokesman Bill Bush said in an e-mail after reviewing the speech. Climate solutions should be efficient, market-based and comprehensive with the costs and burdens distributed equitably across society, he said.
The National Petrochemical and Refiners Association hasn’t endorsed a specific proposal for an increase in gasoline taxes, Charles T. Drevna, president of the trade group, said in an e-mailed message. Hess is a member, David Egner, a spokesman for the group, said.
The U.S. needs to “moderate” demand for oil and increase supply, Hess said. That includes boosting current corporate average fuel-economy standards that call for a 35 mile-a-gallon target for cars and light trucks by 2016, he said.
The government shouldn’t eliminate tax provisions that encourage drilling and should allow the industry to “get back to work” in the Gulf of Mexico, Hess said.
The U.S. also needs to “get serious about climate change once our economy recovers,” Hess said. Increasing the gasoline tax and levying a $10-a-ton tax on power-plant emissions would raise $200 billion a year to reduce deficits and fund alternative fuel research, he said.
Carbon taxes should be “introduced over a five-year period and only when other major industrial powers” do the same, Hess said.