POLITICS

Obama Proposes New Tax On Oil To Pay For Clean Transportation

Republicans aren't likely to approve of this proposal.

WASHINGTON (Reuters) - U.S. President Barack Obama will propose a $10-a-barrel fee on oil in his budget plan next week, as the White House seeks to boost the nation's investments in clean transportation projects, the White House said on Thursday.

The fee, which would be paid by oil companies, is likely to fall flat 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.

The long-shot proposal for the oil fee, set to be announced in Obama's fiscal 2017 budget plan on Tuesday, would provide nearly $20 billion a year to help expand transit systems across the country and more than $2 billion a year to support research and development of self-driving vehicles and other low-carbon technologies.

The Obama administration's energy policies have been a lightning rod for Republicans in Congress, who have blasted the White House for not doing enough to support America's oil and gas producers. Republicans have thwarted previous administration proposals to end certain tax breaks for oil producers.

(Reporting by Ayesha Rascoe and Roberta Rampton; Editing by Eric Beech and Peter Cooney)

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