Gov. Brown, Why No Oil Tax?

Tue, Jan 11, 2011 at 7:40 pm

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Gov. Brown, Why No Oil Tax?

The draconian budget proposed Monday by new Gov. Jerry Brown–loaded with cuts hittingĀ  the poorest and sickest Californians–could have been more than $1 billion a year less painful. All it would take isĀ  a little extra revenue from the industry most able to afford it. I’m sure OilWatchdog wasn’t the only voice urging the new governor to get something back from the state’s black gold.

California is the only major oil-producing state that doesn’t apply a set fee to the extraction of oil from state lands. Alaska gets an astounding 25% tax on the market price of every gallon (though more like 15% when all the financial finagling is done). Texas, Louisiana, Oklahoma–you name it–all get dollar or percentage amounts off the top.

With oil companies getting about $90 on every 42-gallon barrel, a few bucks off the top won’t bust the budget.

Adding injury to insult, California heaps extra tax breaks on companies that have a headquarters in California but do most of their business out of state. Including Chevron. And it taxes corporations at a lower rate, measured by percent of GDP, than Texas

The only thing holding back an oil extraction tax–perhaps the only tax that Californians could widely agree on–is the oil lobby. And didn’t the November defeat of Proposition 23, an oil-backed proposition to curb green energy, show that Californians are willing to push back against Big Oil when they know the stakes?

It’s not too late. The Legislature, which has shown little spine in the past when it comes to the oil industry, could take the lead. Oil extraction tax bills have surfaced and quickly drowned for years, including another half-hearted effort in January. So the language is all written.

The money could save in-home care. Or the UC and Cal State systems. Or mental health treatment. Or some of all of these.

Jerry Brown has the political skills to keep Californians focused on what the state has to do–even on hard choices. I’m betting he could persuade voters, if not the Legislature, on the benefits of an oil severance tax without breaking much of a sweat–no matter what the obscenely rich oil lobby throws at him.


This post was written by:

Judy Dugan

- who has written 655 posts on Oil Watchdog.

Judy Dugan concentrates as an advocate on health care reforms, oil industry issues and telecommunications. She also writes and edits foundation publications and conducts media outreach.

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2 Responses to “Gov. Brown, Why No Oil Tax?”

  1. Earl Richards Says:

    There is very little difference between these budget proposals and previous budgets, because the proposals are mastered-minded by Chevron et al. There is no provision for closing corporate tax loopholes, no oil extraction tax and no oil company windfall profits tax. Californians paid the highest costs for gasoline of all the states. These proposals are the same as previous budgets, because again, it picks on the most vulnerable. End Big Oil’s free ride so that, Big Oil will pay their fair share of tax. Jerry appears to be working for Big Oil and not the grassroots.


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