I 

111TH CONGRESS 

1ST SESSION H. R. 3379 

To amend the Internal Revenue Code of 1986 to impose a tax on transactions 

in oil futures and options and to deposit the revenues from the tax 

into the Highway Trust Fund. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 29, 2009 

Mr. DEFAZIO (for himself, Mr. OBERSTAR, Mr. GEORGE MILLER of California, Ms. SLAUGHTER, Mr. RAHALL, Mr. BOSWELL, Mr. CAPUANO, Mr. 

LIPINSKI, Mr. CUMMINGS, Mr. DICKS, Mr. HINCHEY, Ms. HIRONO, Mr. 

THOMPSON of California, Mr. KILDEE, Mr. HARE, Mr. BAIRD, Ms. KAPTUR, Mr. MOLLOHAN, Mr. STARK, Mr. WU, Mr. COSTELLO, Mr. 

PASCRELL, Mr. FILNER, Mr. PERRIELLO, Mr. BISHOP of New York, Mrs. 

NAPOLITANO, Ms. NORTON, Mr. LARSON of Connecticut, and Mr. 

OLVER) introduced the following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to impose 

a tax on transactions in oil futures and options and 

to deposit the revenues from the tax into the Highway 

Trust Fund. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; FINDINGS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Lowering Oil Price Speculation for Infrastructure DediVerDate Nov 24 2008 06:20 Jul 30, 2009 Jkt 079200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3379.IH H3379

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1 cated to Economic Development Act of 2009’’ or the 

2 ‘‘LOPSIDED Oil Prices Act of 2009’’. 

3 (b) FINDINGS.—Congress finds the following: 

4 (1) The price of oil has risen and fallen dra5 matically over the last decade without a clear con6 nection to the laws of supply and demand. 

7 (2) The price of a barrel of oil predictably 

8 stayed beneath $20 a barrel of oil for decades. In 

9 the beginning of 1999, the price was under $10 a 

10 barrel of oil, but since then the oil market has been 

11 plagued by speculation and fluctuated wildly. 

12 (3) In late 2004, the price of oil exceeded $40 

13 a barrel of oil, up 400 percent in 5 years. 

14 (4) In late 2007, the price exceeded $80 a bar15 rel of oil, up 800 percent in 8 years. 

16 (5) Nine months later, the price of oil peaked 

17 at $145 per barrel of oil, up 1450 percent in just 

18 under 10 years. While demand has risen, it has not 

19 to risen at those rates. 

20 (6) The price of oil collapsed in 2008, but the 

21 collapse preceded the greater economic downturn. In 

22 January 2009, the price had dropped to just over 

23 $30 a barrel of oil. 


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1 (7) The economy continues to slide downward 

2 pushing with it oil demand, but illogically the price 

3 of oil recently peaked at over $70 a barrel of oil. 

4 (8) Many economists have attributed this irra5 tional behavior of the oil market to the large in6 crease in speculative trading in oil derivatives. Crude 

7 oil is now the world’s most actively traded com8 modity futures contract. 

9 (9) In 2004, the New York Mercantile Ex10 change (NYMEX) facilitated 52 million oil futures 

11 contracts, and in 2008 NYMEX facilitated 134 mil12 lion oil futures contracts. Other exchanges have seen 

13 similar increases, and there is no accurate measure 

14 for over-the-counter trades. 

15 (10) On June 13, 2009, the finance ministers 

16 from G8 countries—Canada, France, Germany, 

17 Italy, Japan, Russia, Britain and the United 

18 States—said ‘‘Excess volatility of commodity prices 

19 poses risks to growth.’’ 

20 (11) Commodity Futures Trading Commis21 sioner Bart Chilton, said in June 2009, ‘‘Crude oil 

22 prices are up 60 percent on the year. Supplies are 

23 at a 10-year high, and demand is at a 10-year low. 

24 You do the math. Why should prices be over $70?’’ 


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1 (12) Many economists argue that a transaction 

2 tax on speculative trading will deter short-term spec3 ulation, which will reduce the volatility and price of 

4 oil. 

5 (13) James Tobin, a Nobel Prize winner in eco6 nomics, stated a security transaction tax ‘‘would 

7 automatically penalize short-horizon round trips, 

8 while negligibly affecting the incentives for . . . 

9 longer-term capital investments.’’ 

10 (14) Larry Summers, the current Chairman of 

11 the National Economic Council and the top economic 

12 adviser President Obama, wrote in 1989 that impos13 ing a securities transaction tax ‘‘would have the ben14 eficial effects of curbing instability introduced by 

15 speculation, reducing the diversion of resources into 

16 the financial sector of the economy, and lengthening 

17 the horizon of corporate managers. The efficiency 

18 benefits derived from curbing speculation are likely 

19 to exceed any costs or reduced liquidity or increased 

20 costs of capital that come from taxing financial 

21 transactions more heavily.’’ 

22 (15) A well-designed oil transaction tax could 

23 reduce the volatility of the oil futures market with24 out harming legitimate hedge traders. Oil prices will 


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1 then return to accurate price discovery following the 

2 supply and demand price curve. 

3 (16) Since 70 percent of oil consumed in the 

4 United States is for transportation, the revenue 

5 raised on oil transactions is an ideal additional 

6 source of funds for the Highway Trust Fund. 

7 SEC. 2. TAX ON TRANSACTIONS IN OIL FUTURES AND OP8 TIONS. 

9 (a) IN GENERAL.—Chapter 36 of the Internal Rev10 enue Code of 1986 is amended by inserting after sub11 chapter B the following new subchapter: 

12 ‘‘Subchapter C—Tax on Transactions in Oil 

13 Futures and Options 

‘‘Sec. 4475. Tax on transactions in oil futures and options. 

14 ‘‘SEC. 4475. TAX ON TRANSACTIONS IN OIL FUTURES AND 

15 OPTIONS. 

16 ‘‘(a) IMPOSITION OF TAX.— 

17 ‘‘(1) FUTURES.—There is hereby imposed a tax 

18 on each covered transaction in an oil futures con19 tract of 0.2 percent of the value of the futures in20 struments involved in such transaction. 

21 ‘‘(2) OPTIONS.—There is hereby imposed a tax 

22 on each covered transaction in an oil option of 0.5 

23 percent of the premium paid on the option for a fu24 tures instruments involved in such transaction. 


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1 ‘‘(b) BY WHOM PAID.— 

2 ‘‘(1) IN GENERAL.—The tax imposed by this 

3 section shall be paid by— 

4 ‘‘(A) the trading facility on which the 

5 transaction occurs, or 

6 ‘‘(B) if such transaction does not occur on 

7 a trading facility, by the buyer of the trans8 action. 

9 ‘‘(2) WITHHOLDING IF BUYER NOT UNITED

10 STATES PERSON.—See section 1447 for withholding 

11 by seller if buyer is foreign person. 

12 ‘‘(c) EXCEPTION FOR COMMERCIAL TRADERS.—The 

13 tax imposed by this section shall not apply to any trans14 action if— 

15 ‘‘(1) either party to the transaction is— 

16 ‘‘(A) classified by the Commodity Futures 

17 Trading Commission as a commercial trader 

18 with respect to oil, or 

19 ‘‘(B) a financial institution acting on be20 half of such a party (but only if the financial 

21 institution does not at any time acquire owner22 ship of the security), and 

23 ‘‘(2) the transaction is a bona fide hedging 

24 transactions (within the meaning of section 4a(c) of 

25 the Commodity Exchange Act). 


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1 ‘‘(d) DEFINITIONS.—For purposes of this section— 

2 ‘‘(1) IN GENERAL.—The term ‘covered trans3 action’ any purchase or sale of an oil futures con4 tract or an oil option if— 

5 ‘‘(A) such purchase or sale on a trading fa6 cility located in the United States, or 

7 ‘‘(B) the purchaser or seller is a United 

8 States person. 

9 ‘‘(2) FUTURES.—The term ‘oil futures contract’ 

10 means any contract of sale of oil for future delivery 

11 (within the meaning of the Commodity Exchange 

12 Act). 

13 ‘‘(3) OPTIONS.—The term ‘oil option’ means 

14 any option on a oil futures transaction. 

15 ‘‘(4) TRADING FACILITY.—The term ‘trading 

16 facility’ has the meaning given to such term by the 

17 Commodity Exchange Act. 

18 ‘‘(e) ADMINISTRATION.—The Secretary shall carry 

19 out this section in consultation with the Commodity Fu20 tures Trading Commission.’’. 

21 (b) WITHHOLDING.—Subchapter A of chapter 3 of 

22 such Code is amended by adding at the end the following 

23 new section: 


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1 ‘‘SEC. 1447. WITHHOLDING OF TAX ON TRANSACTIONS IN 

2 OIL FUTURES AND OPTIONS. 

3 ‘‘In the case of any acquisition of an oil futures con4 tract or an oil option (as such terms are defined in section 

5 4475) by a foreign person, the transferor shall be required 

6 to deduct and withhold a tax equal to the tax which would 

7 be imposed on such acquisition under section 4475 if the 

8 transferee were a United States person.’’. 

9 (c) TAX REVENUES DEPOSITED INTO HIGHWAY

10 TRUST FUND.—Paragraph (1) of section 9503(b) of such 

11 Code is amended by striking ‘‘and’’ at the end of subpara12 graph (D), by striking the period at the end of subpara13 graph (E) and inserting ‘‘, and’’, and by inserting after 

14 subparagraph (E) the following new subparagraph: 

15 ‘‘(F) sections 1447 and 4475 (relating to 

16 taxes on transactions in oil futures and op17 tions).’’. 

18 (d) CLERICAL AMENDMENTS.— 

19 (1) The table of subchapters for chapter 36 of 

20 such Code is amended by inserting after the item re21 lating to subchapter B the following new item: 

‘‘SUBCHAPTER C. TAX ON TRANSACTIONS IN OIL FUTURES AND OPTIONS.’’. 

22 (2) The table of sections for subchapter A of 

23 chapter 3 of such Code is amended by adding at the 

24 end the following new item: 

‘‘Sec. 1447. Withholding of tax on transactions in oil futures and options.’’. 


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1 (e) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to transactions occurring on or 

3 after October 1, 2009. 

Æ 


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