WASHINGTON (TND) — Over the weekend, Sen. Ted Cruz claimed that the Inflation Reduction Act will ultimately raise the price of gas.
The Inflation Reduction Act includes several provisions to get more electric vehicles on the road but Cruz says it will also impose more new taxes that will raise the price of gas.
The National Desk’s Fact Check Team is digging into the facts to see if Cruz could be right.
Americans could see some higher prices. First, there’s the 15% minimum corporate tax for companies that make more than $1 billion per year for three straight years and this will hit at least 25 U.S.-based big oil companies that we rely on for gas like ExxonMobil, ConocoPhillips, Chevron and Shell.
The bill also reinstates and raises the superfund excise tax on crude oil and petroleum from 9.7 cents to 16.4 cents a barrel.
There are some other new fees impacting energy costs. Production rates would also increase for companies using federal land.
Both offshore and onshore production rates could rise by as much as 6%. The bill would also require companies to pay a higher bonus bid, the price paid at a lease sale for oil and gas, which would increase from $2 an acre to $10 an acre.
These companies also pay rent until the lease is in production and then they pay royalties on the oil and gas produced.
Under the Inflation Reduction Act, rates would double to $3 during the first two years of the lease then would rise to 5 dollars an acre for the next six years, eventually reaching $15 an acre.
With all of these new taxes and fee increases for energy, companies might raise their prices which means you could be paying more to fill up your gas tank.
A new methane fee in the Inflation Reduction Act could raise energy prices. In a letter to House and Senate leadership, a group of gas associations estimates that a new methane fee in the inflation reduction act could increase U.S. consumer natural gas bills by an average of 17%.
The bill sets the first direct federal methane fee, which will essentially penalize companies that put too much methane in the air.
These companies range from on-and-offshore petroleum and natural gas production facilities to underground storage facilities. The government would start charging the fees once producers exceed a certain amount.
The fees will start at $900 a metric ton for 2024 and will eventually hit $1,500 a metric ton in 2026. For some context, according to the Environmental Protection Agency in 2020, the U.S. methane emissions were 650.4 metric tons.
The future of this fee is unclear.
The Congressional Budget Office estimates that the charge will generate over a billion dollars a year in gross revenue through 2030 but the estimate isn’t black and white because of potential exemptions.
For example, facilities wouldn’t have to pay the fee if emissions have been approved and are in effect “in all states with respect to the applicable facilities” or if emissions are caused by quote “unreasonable delay.”
Also, facilities may qualify for an exemption one year but not the next, making it difficult to predict future revenue.
The fee could have some other implications.
The tax would be passed through to chemical companies, which could affect virtually all U.S. manufacturing because oil and natural gas provide these companies with feedstock and fuel.
Editor's note: This story has been updated with a correction on the superfund excise tax.