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Oil spill cleanup tax may quadruple

Associated Press / May 25, 2010

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WASHINGTON — Responding to the massive BP oil spill, Congress is getting ready to quadruple — to 32 cents a barrel — a tax on oil used to help finance cleanups. The increase would raise nearly $11 billion over the next decade.

Lawmakers want to increase the 8-cent-a-barrel tax on oil to make sure there is enough money available to respond to spills. At least 6 million gallons of crude have spewed into the Gulf of Mexico since a drilling rig exploded April 20.

President Obama and congressional leaders have said they expect BP to foot the bill for the cleanup.

BP executives told Congress last week that they would pay “all legitimate claims’’ for damages. But the government needs upfront money to respond to spills, as well as funds to pay for cleanups when the responsible party is unable to pay or is unknown.

Money spent from the fund can later be recovered from the company responsible for the spill.

The Oil Spill Liability Trust Fund has about $1.5 billion available. Under current law, only $1 billion can be spent from the fund on a single incident. The bill would increase the spending limit to $5 billion.

The American Petroleum Institute has not taken a position on the tax increase, though a spokeswoman said Congress should study the ramifications before acting because “we need to have a vital oil and gas industry.’’