By a vote of 51-43, Democrats fell nine votes short of moving the bill ahead.
The oil-tax proposal was one of two energy-related bills that failed to advance, The New York Times reported.
The second bill would have amended the Internal Revenue Code by providing incentives for energy production and conservation. The vote to consider the bill was 50-44, 10 votes shy of the required 60 to proceed.
GOP opponents of the oil-tax measure argued higher taxes on the oil companies would drive up gasoline prices and discourage new domestic oil production and exploration.
If the bill were approved, the American people "will get exactly what they don't want," said Sen. Pete Domenici, R-N.M., in higher prices and greater reliance on imports.
"They just don't get it. We can't drill our way out of this crisis and we can't ignore it," Senate Majority Leader Harry Reid, D-Nev., said after the votes. "Each day Republicans wait to act costs American taxpayers billions of dollars and the opportunity to create millions of good-paying jobs."