Other Report

PrintPrint CiteCite
Style: MLAAPAChicago Close


Using Oil Taxes to Improve Fiscal Reform

A CFR Energy Brief

Authors: Daniel P. Ahn, Adjunct Fellow for Energy, and Michael A. Levi, David M. Rubenstein Senior Fellow for Energy and the Environment and Director of the Maurice R. Greenberg Center for Geoeconomic Studies

Using Oil Taxes to Improve Fiscal Reform - using-oil-taxes-to-improve-fiscal-reform

Publisher Council on Foreign Relations Press

Release Date February 2013

8 pages


Economists have long argued that taxing oil consumption would be the most efficient way to address U.S. vulnerability to overpriced and unreliable oil supplies. Yet energy taxes are a third rail in American politics. As a practical matter, then, significant increases in oil taxes have long been off the table as a policy tool. Mounting concern over rising U.S. deficits, however, has recently prompted some people to question whether that might change. Policymakers are confronting difficult choices. Shrinking the yawning U.S. budget deficit would require some mix of higher tax revenues and reduced government spending that extends well beyond the recent legislation that addressed the so-called fiscal cliff. In this Energy Brief, Daniel Ahn and Michael Levi model the potential consequences of substituting taxes on oil consumption for either higher nonoil taxes or reduced government spending, both as part of a larger deficit reduction package, and argue that doing so can improve economic performance while reducing oil consumption if done right.

More About This Publication

Daniel P. Ahn is an adjunct fellow for energy at the Council on Foreign Relations. He is also the chief commodities economist at Citigroup and adjunct associate professor at Columbia University's School of International and Public Affairs.

Michael A. Levi is the David M. Rubenstein senior fellow for energy and the environment at the Council on Foreign Relations and director of the CFR program on energy security and climate change. He is the author of the forthcoming book The Power Surge: Energy, Opportunity, and the Battle for America's Future.

More on This Topic


Higher Oil Taxes Would Lift the Economy

Authors: Michael A. Levi and Daniel P. Ahn

Michael A. Levi and Daniel P. Ahn say, "If lawmakers decide to go ahead with further deficit reduction, they would be remiss not to take a...

Expert Roundup Authors: Michael A. Levi, Daniel P. Ahn, Nicolas Loris, Daniel J. Weiss, and Robert McNally

Prices at the pump are emerging as a significant U.S. election issue. Five experts offer a range of policy options, from lowering regulations...

Other Report

Automobile Fuel Economy Standards in a Lower-Oil-Price World

Authors: Varun Sivaram and Michael A. Levi

Fuel economy standards are a central element of U.S. energy security and climate change strategy. Varun Sivaram and Michael A. Levi explore


Make Sure Fracking is Done Right

Author: Michael A. Levi

According to Michael Levi, the boom in American energy production could be short-lived, "if we don't get serious about the accompanying risks...