COURSEY: When it comes to oil, California should be more like Texas
Published: Friday, February 15, 2013 at 5:22 p.m.
Last Modified: Friday, February 15, 2013 at 5:22 p.m.
Uh-oh, there they go again.
That’s the typical reaction to state Sen. Noreen Evans’s call this week for a tax on oil extraction in California, a new revenue source that could provide $2 billion a year primarily for higher education, with a small share set aside for parks.
The legislation, proposed by Evans, D-Santa Rosa, and Sen. Mark Leno, D-San Francisco, was immediately met with howls of protest from the oil industry and accusations from anti-tax groups of over-reaching by the new Democratic super-majority in the Capitol.
But California’s oil industry has had a free ride in the Golden State for too long, and it makes sense for America’s third-largest oil-producing state to start insisting that Big Oil pay its fair share.
Every other oil-producing state in America charges some kind of tax on oil pumped out of the ground. California has tried to join the club at least twice before — a failed attempt by Evans to get legislation passed in 2009 and a statewide initiative in 2006 that voters turned down after a campaign in which the oil industry spent nearly $100 million against Proposition 87.
Now Evans is proposing a 9.9 percent tax on the natural resource that oil companies reap from California. That’s higher than the 6 percent proposed by Proposition 87, but much lower than Alaska’s 25-percent rate, imposed under Gov. Sarah Palin.
Why shouldn’t oil companies pay to extract this highly profitable resource in California when they are taxed for that privilege in every other state? And why shouldn’t that tax be imposed now? After all, there is a finite amount of oil to be drilled in California, and it’s being pulled out of the ground at the rate of some 550,000 barrels a day, according to Derek Moore’s story on Wednesday’s Page 1.
“It’s just common sense,” Sen. Evans said of her bill, SB 241, which would require 93 percent of the new revenue to be used to bolster the budgets of the University of California, California State University and community colleges, with the rest going to state parks.
The oil industry, led by Chevron, vigorously opposed Proposition 87 with a campaign that focused on convincing voters that they would pay for the extraction tax through higher gas prices at the pump. In Moore’s story this week, industry spokesman Tupper Hull said a new tax not only would increase gas prices, but reduce production and cost jobs.
But economists dispute such claims. Oil is a hugely profitable business, and the only thing that affects production is demand. As far as an extraction tax’s impact on prices at the pump, gas prices are affected by a myriad of factors (including, many suspect, manipulation of the market by oil companies). One such factor is the price of crude oil, but that price is set by the worldwide market, which is unlikely to be changed by a tax on California’s share of that market.
Californians already pay some of the highest gas prices in the nation. But oil companies that drill in California are getting a free ride. It’s time to bring our state into line with places such as Texas, Oklahoma and Wyoming and require Big Oil to pay its fair share.
(Chris Coursey’s blog offers a community commentary and forum, from issues of the day to the ingredients of life in Sonoma County.)