Victor Maccharoli - Right to left, Gina Goodhill from Environmental California, Assemblyman Pedro Nava, and Fran Gibson from Coastwalk California spoke in favor of a 10% severance tax on oil production in California yesterday at Shoreline Park.
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Assemblymember argues for oil severance tax
With half a dozen oil rigs visible in the Santa Barbara Channel behind him, Assemblymember Pedro Nava made an impassioned argument for his proposed severance tax on oil production in California yesterday at Shoreline Park.
Introduced on Monday at the start of a special session of the legislature, Nava’s bill would levy a 10 percent tax on the gross value of every barrel of oil extracted from state lands. The assemblymember said if approved it would dump an estimated $1.5 billion annually into state coffers.
“Oil companies in California are getting a free ride,” Nava said, noting that every other oil-producing state in the nation charges a severance tax on oil production.
He extolled the benefits of protecting the state’s coastline in particular, which he described as a major economic engine in terms of tourism and fishing industries.
“Allowing more oil and gas drilling will put all of that at risk, a risk that our state can’t afford to take,” he said.
Although the additional revenue that would be generated by such a tax wouldn’t come close to wiping out recent cuts made to various state programs, Nava said it could be used to backfill cuts in vital services, such as education, social services, foster care and mental health.
The bill would also prohibit oil companies from passing the tax on to consumers, in addition to exempting low-producing wells when the price of oil dips below $50 a barrel.
This isn’t the first time an oil severance tax has been proposed in recent months; Nava noted the governor proposed the concept in January but backed off.
But with state budget cuts starting to be felt by the average Californian, the assemblymember said he is confident that he’ll be able to drum up substantial support for the tax as a way to find new revenue in a stale economy.
“We’re not going to see any real turnaround in the California economy until late 2010,” he said.
Meanwhile, he said, oil companies continue to pull in multibillion-dollar profits. Nava cited Exxon’s $45.2 billion profits in 2008, in addition to decrying multimillion-dollar salaries and compensation for top executives.
“I want some of these executives to sit down with some of the folks who are losing their jobs and homes, and justify these salaries,” he said.
The assemblymember’s proposed tax quickly drew a response from the Santa Barbara County Taxpayers Association, which fired off a mass email authored by Joe Armendariz, a Carpinteria city councilmember and executive director of the association.
In his statement, Armendariz cited a rising unemployment rate as well as a rising under-employment rate as strong reasons for staying away from an oil severance tax.
“Why any politician would wage war on working families who are struggling to make ends meet simply makes no sense to me,” he said. “And make no mistake, if you make energy more expensive in California, all things in California become more expensive.”
Armendariz referred to Alaska’s current severance tax, pointing out that it is only applied to net profits, not gross revenue. Companies are also allowed to deduct $12 million in net revenues and very few companies actually pay the tax, he said.
“Nava’s 10 percent tax has no such exemption, which means it wouldn’t just hit ‘big oil’ but our state’s smaller independent companies would also be hit and this will drive many of them out of California and the good paying jobs they provide will leave right along with them,” Armendariz wrote.
Confronted with some of the arguments being made against an oil severance tax — namely that it would increase gas prices, cause job losses in the industry and force oil companies to move out of the state — Nava scoffed at each and offered up counterarguments.
Oil is traded on a worldwide market, he said, and California produces less than 1 percent of the world’s oil, meaning a severance tax would have little impact on the overall price of oil or gas.
As far as job losses, Nava argued that an increase in Alaska’s severance tax — a 2.5 percent bump in 2007 — appeared to have no effect on oil jobs, which increased to an all-time high the following year.
Comment on this article
crime scene investigator : 10/30/2009
You can also make yourself more marketable by earning a degree in Crime Scene investigation check http://bit.ly/3fyWG4
manuelberk
Suck out more money out of the economy : 10/30/2009
Obviously Nava missed that day in economics class about how you don't raise fees and taxes during a recession, especially one as severe as this.
John Q
Nava is a fool! : 10/30/2009
Nava is a fool! In Alaska they not only allow but encourage new oil production in that state so of course they aren't experiencing job losses. And the increase in the cost of energy to consumers is directly mitigated by an annual check each Alaskan resident receives which is paid for with the 25% oil severance tax on the oil companies NET Revenues!
jon bennett
TAX TAX TAX : 10/30/2009
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TAX AND SPEND
: 10/30/2009
Good god, will they get it? Nava and company just keep looking for more ways to tax, tax, tax! He's an idiot to think that that tax will not in someway end up coming out of our pockets. What a fool!
SBLover35
No tax : 10/30/2009
Nava should be pushing a broom! Let them drill if you're going to hammer them with a tax. Nava is part of the problem and his so called "solutions" will only make things worse!
Leo
California Democrats... : 10/30/2009
Yep, it figures... Let's tax more industry out of California! Look at all the industry that has left our once great state. Now we are bearly holding on to the Agricultural industry (that brings the highly skilled workers like ag pickers and truck drivers from out of state), oil industry and tourist industry.... The rest of Californians work for state and local government and the remaining are on the social services / welfare (8 million illegal aliens that are procreating at an alarming rate) that Nava wants the oil industry to pay for....Insane! I can't wait to leave this upside state!
Keeping it real
Government Tax and Waste : 10/30/2009
TAX SO WE CAN HAVE MORE GOVERNMENT WASTE. TAX AND WASTE. LET'S TAX AND WASTE. TAX AND GOVERNMENT WASTE. PEDRO NAVA IS AN IDIOT. TAX AND WASTE. KEEP SPENDING. POLITICIANS WASTE MONEY. TAX SO WE CAN HAVE MORE GOVERNMENT WASTE. TAX AND WASTE. LET'S TAX AND WASTE. TAX AND GOVERNMENT WASTE. PEDRO NAVA IS AN IDIOT. TAX AND WASTE. KEEP SPENDING. POLITICIANS WASTE MONEY. TAX SO WE CAN HAVE MORE GOVERNMENT WASTE. TAX AND WASTE. LET'S TAX AND WASTE. TAX AND GOVERNMENT WASTE. PEDRO NAVA IS AN IDIOT. TAX AND WASTE. KEEP SPENDING. POLITICIANS WASTE MONEY. TAX SO WE CAN HAVE MORE GOVERNMENT WASTE. TAX AND WASTE. LET'S TAX AND WASTE. TAX AND GOVERNMENT WASTE. PEDRO NAVA IS AN IDIOT. TAX AND WASTE. KEEP SPENDING. POLITICIANS WASTE MONEY. TAX SO WE CAN HAVE MORE GOVERNMENT WASTE. TAX AND WASTE. LET'S TAX AND WASTE. TAX AND GOVERNMENT WASTE. PEDRO NAVA IS AN IDIOT. TAX AND WASTE. KEEP SPENDING. POLITICIANS WASTE MONEY.
Freedom Lover
Get a LIFE Government : 10/30/2009
Hey I have an idea. Let's tax OIL revenue so that GAS is MORE expensive for consumers!!! What a novel idea Nava, you jacka$$!!!!! Government has zero credibility these days. They are bankrupting our nation and especially the individual. BTW, they are taxing revenue, not profits. That means that the cost will simply be passed back onto consumers.
Economist
The Ironies Abound : 10/30/2009
From the vantage of Shoreline Park, a beautiful place that attracts people to our coast, most of it bought and paid for by the Land and Water Conservation Fund which also pays for Los Padres National Forest improvements, acquistion of private land holdings in the forest, and Channel Islands National Park. Oh yeah, up to 90 percent of the funds paid into the LWCF come from federal offshore oil revenues. Ooops, another poliitician goes astray...
Thomas J
Oil Severance Tax : 10/31/2009
Why is it the anti tax folks are such ideologs they can't accept anything? Our State has been run into the toilet by that attitude. We aren't talking about luxyries, but necessities. There's so much profit in oil drilling there is no way they won't continue to drill. The industry just like to make up statistics and claim they are reality. Like saying that current technology is safe and ignoring what is going on in Australia right now. Or claiming that oil rigs stood up to huricane Katrina and there was little to no oil spilt when in fac, according to the U.S. Minerals Mangement Service, in bed with the oil companies, a conservative estimate was 470,000 gallons. We need these funds to help pay for basic services that can help our state get back on track. That's the best jump-start to the economy we can provide
Time to care about people not oil
Oil Tax : 10/31/2009
Pedro Nava's idea of creating an additional tax on oil companies is the same old ideas his party,the Democrats,have always done.All it does is make it more expensive to produce fuel here in California.The taxes will be passed down to the consumers in higher fuel prices.Instead of trying to pinch corporations for more money politicians,kike Nava,should make it easier for companies to expand and grow their business.All the massive regulations,taxes,and other "RED Tape" things do is strangle our economy.The bad guys aren't the oil companies-it's politicians ,like Nava ,who are draconian in their ideas and policies.Furthermore it is strange that Nava would say in his speech that the money from the oil tax would go towards helping tourism and fishing when his government is increasingly closing areas for fishing.
FRank Methmann
: 11/2/2009
Sure tax em more, instead of letting them drill more and get more revenue with current taxes. Nava is a fool.
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