California oil tax would fund energy spending

Bob Tippee
Editor

"Senseless" half describes a ballot initiative on which Californians will vote in November calling for a tax on oil to pay for state-sponsored energy.

The aim of the Clean Alternative Energy Act is to accumulate $4 billion for 10 years of spending on programs to replace oil.

The money would come from a tax on oil production, the rate of which would vary with the price of crude. At $10-25/bbl, the rate would be 1.5% of the gross value of oil. The top rate, 6%, would apply when the crude price exceeded $60/bbl.

Proponents of the initiative, known as Proposition 87, include former President Bill Clinton, former Vice-President Al Gore, movie stars, and wealthy Hollywood executive Stephen Bing, who is reported to have contributed $40 million to the glitz blitz.

Prop 87's supporters say the measure would cut oil use, improve the environment, and make oil companies pay for clean energy.

They betray their shallow understanding of the issues by including in Prop 87 a prohibition against pass-through of the oil tax to consumers. They don't say how a tax on raw material is supposed to not find its way to consumers of the finished product. But this is the land of fantasy and deception, after all.

In the real world, Prop 87 would cut oil production in California, raise imports, and squander proceeds of the production tax on a political beauty contest among uneconomic fuels. It would yield little in the way of useful energy; only markets can do that. By putting large amounts of money up for grabs outside the reach of market discipline and beyond the limits of popular understanding, it also would invite corruption.

Among US states, California ranks first in gasoline consumption and third in distillate use, mostly diesel. If a majority of Californians really want to stop using oil, nothing is stopping them.

To do so by way of a punishing tax on oil production would be beyond senseless, however. In view of the measure's effect on producers of something for which Californians display a consistently strong need, it also would be hypocritical.

This feature will appear next on Nov. 3.

(Online Oct. 20, 2006; author's e-mail: bobt@ogjonline.com)

Related Articles

Norway liquids production declined in December, NPD says

01/16/2015

Norway’s oil, natural gas liquids, and condensate production averaged 1.916 million b/d in December, about 2% less than November.

Range cuts 2015 capital budget to $870 million

01/15/2015 Range Resources Corp., Ft. Worth., has reduced its capital budget for 2015 to $870 million from the previously reported $1.3 billion, which already...

Conoco’s Lance calls for repeal of US crude oil export ban

01/15/2015 The US crude export ban that was imposed in 1975 should be repealed 40 years later to ensure the US oil and gas renaissance continues, ConocoPhilli...

NPD provides Norwegian continental shelf summary for 2014

01/15/2015 The Norwegian Petroleum Directorate reported that oil production from the Norwegian continental shelf increased 3% in 2014, the first increase sinc...

Total starts production from West Franklin Phase 2 in UK North Sea

01/15/2015 Total SA has started natural gas and condensate production from its West Franklin Phase 2 project in the Central Graben area of the UK North Sea. T...

White House orders steps to curb oil and gas methane emissions

01/15/2015 The Obama administration set a new goal to cut methane emissions from the oil and gas sector from 2012 levels by 40–45% by 2025, and a set of actio...

Statoil lets FSU contract for Mariner field

01/14/2015 Statoil ASA has let a contract to OSM Offshore Aberdeen Ltd., a subsidiary of OSM Offshore AS, to operate the Mariner floating storage unit (FSU) i...

Suncor cuts capital budget by $1 billion (Can.) and 1,000 jobs

01/14/2015 Suncor Energy Inc., Calgary, is cutting $1 billion (Can.) from its 2015 capital spending program and reducing its workforce by 1,000 because of low...

EIA: Continued global oil stock build to keep pressure on oil prices

01/13/2015 In its most recent monthly Short-Term Energy Outlook (STEO), the US Energy Information Administration reported it expects global oil inventories to...

White Papers

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Available Webcasts



The Future of US Refining

When Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST



On Demand

Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

register:WEBCAST


Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected