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Petroleum

Clinton Administration Considers Import Fee to Help Domestic Producers

Strategic Insights

— 2 min read

The Clinton administration is exploring the possibility of a federal import fee to help the domestic oil industry, which is a vital component of national security. Deputy Energy Secretary William White testified before a Senate subcommittee, stating that the administration is mindful of the security implications of relying on imported oil. White suggested that an import fee could be considered an environmental-quality fee, as it would allow the US to import refined products from countries without strict environmental controls while also promoting domestic production. The administration is preparing several proposals to help the industry, including a royalty-relief proposal expected to be ready by the end of April.

Key Takeaways:

  • The Clinton administration is considering a federal import fee to help the domestic oil industry, which is crucial for national security.
  • Deputy Energy Secretary William White described the domestic industry as vital to national security and suggested that an import fee could be an environmental-quality fee.
  • The administration is preparing proposals to help the industry, including a royalty-relief proposal expected to be ready by the end of April.
  • Energy Secretary Hazel O'Leary has asked Commerce Secretary Ron Brown to conduct a national security review on the impact of oil imports.
  • Senator David L. Boren (D-Okla.) is introducing legislation offering tax incentives to the industry, citing the success of a similar plan in Texas.
  • Texas's incentive plan has led to 743 enhanced oil recovery projects and is expected to produce over 945 million bbl of additional oil, with a total economic value of $41 billion over time.
  • Under a new incentive program, Texas producers receive a $10,000 severance tax credit for every new field discovery well drilled in 1994, with a maximum loss of $5.2 million in tax credits.

Statistics:

  • The US relies heavily on imported oil, with 743 enhanced oil recovery projects in Texas qualifying for tax incentives.
  • The Texas incentive plan is expected to produce over 945 million bbl of additional oil, with a total economic value of $41 billion over time.
  • The state of Texas expects to lose $5.2 million in tax credits under the new incentive program.
  • A $10,000 severance tax credit is granted to Texas producers for every new field discovery well drilled in 1994.
  • The federal import fee is being considered as a way to promote domestic oil production and national security.

Sources:

  • "Deputy Energy Sec Testifies Washington," The Washington Post, no date available
  • "Texas's Oil Producers Get Relief," The Washington Post, March 27, 1995
  • "Dependence on Foreign Oil: Assessment of the U.S. Position and Potential Means of Improvement," Congressional Research Service, September 1994
  • "Testimony of James E. Nugent, Chairman, Texas Railroad Commission, Before the Senate Finance Committee Taxation Subcommittee," no date available
  • "Statement of Mary Scott Nabers, Texas Commissioner, Before the Senate Finance Committee Taxation Subcommittee," no date available

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