Taxing oil is a good way to help reduce the federal budget deficit, but imposing an oil import fee is the wrong way to do it. A far better way is with a gasoline tax, such as I have proposed in Congress.
A tariff on imported oil, advocated in your editorial (July 29), "The Time Has Come," and which was considered by congressional budget negotiators, would lead to domestic producers raising their prices to match the extra cost of imported oil. Thus, the higher price of oil products would be paid, in part, to domestic oil companies. With a gasoline tax, on the other hand, all of the additional price would be paid to the U.S. Treasury.
A gasoline tax would also raise additional federal revenues in a more equitable manner: it would only affect driving costs, whereas an import fee would increase the cost of home heating oil and gasoline, a double burden for those who must heat their homes with oil.
And, an oil import fee would present many of the same kinds of problems as any trade protection measure, such as resentment and possible retaliation from trade partners as well as reduced incentives for our own industry to improve its efficiency and its international competitiveness. A tax on gasoline would avoid these problems.