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An oil severance tax bill, SB 1017, passed a California state senate committee yesterday. The bill would place a 9.5 percent tax on oil, with 50 percent of the money going to higher education (specifically, deferred maintenance, equipment replacement, and bond repayment) and the remainder divided between state parks and health and human services. The bill has attracted support from higher education - earnest young college students lobbied and Associated Student presidents testified for the bill in committee. The students lobbying for the oil severance tax are part of Generation Hot, the people most affected by climate change.

For emphasis: SB 1017 will not hire a single professor or lower a single student loan. It will simply go to deferred maintenance, equipment replacement, and bond payments.

If the state legislature doesn't pass an oil severance tax this year, Tom Steyer says he's preparing for a ballot initiative in 2016. His recent poll claims 64 percent support. It's high, albeit short of the 70 percent rule of thumb cited by consultants who assume that negative advertising will flip 20 percent of those initially favoring the idea. In 2006, California voters defeated Proposition 87 after oil companies spent nearly $95 million to oppose it.

Proponents of an oil severance tax cite statistics. California is the only state without an oil severance tax, while Alaska, Texas, and North Dakota tax their oil at 25-to-50, 7.5, and 6.5 percent respectively. The tax would raise an estimated $1 to $2 billion; for perspective, the 2014-15 Governor's proposed budget for California's higher education system is $26.3 billion.

Evans' bill needs a 2/3 supermajority (California rules for any new tax), and Governor Jerry Brown has rejected the idea for this year. So it's more likely that the oil severance tax will come before the voters in 2016 via Tom Steyer.

Tom Steyer sees a fracas over fracking, and in particular wants to see that

1) the oil and gas industry is paying their fair share of taxes, royalties, and impact fees for the natural resources they are already taking; and

2) the techniques in question can be performed safely, in each specific geologic location, supported by independent science and proven beyond a realistic doubt.

In other words: he supports a tax, not a moratorium, on fracking.

Would a 9.5 percent tax on the Keystone pipeline make it all right?

unfrackCal at CDP gnl session 2014Meanwhile, SB 1132, a bill to place a moratorium on fracking, is likewise advancing in the state legislature. It needs only a simple majority.

Is the oil severance tax in competition with the fracking moratorium bill for activist time and resources? Or is it a genuinely bad idea put forth by well meaning people?

Other states that benefit from oil severance taxes become reliant on those ongoing taxes, and thus their policies further the extraction of oil. Alaska's government is heavily dependent on the oil industry for its revenues. Fracking is making the North Dakota state government rich (while creating housing shortages and crime sprees). In Utah, a tar sands mine is being justified as "for the benefit of the children" - oil money funds the School & Institutional Lands Trust Administration.

Normally progressive California policymakers now want California to depend on continued fracking to fund deferred maintenance at California universities. California is being fracked for oil, not natural gas, and not just any oil, but oil that includes the most carbon intensive oil in the world - dirtier than the Canadian tar sands. Is that the message that California policymakers want to send to Generation Hot - "your continued education depends on our continued fracking"?

Progressive California groups and policymakers need to find other ways to fund deferred maintenance at the University of California without fracking up the Golden State. And California activists need to focus on passing SB 1132. California fracking needs to be not taxed, but stopped entirely.

Originally posted to Climate Hawks on Thu May 08, 2014 at 03:43 PM PDT.

Also republished by California politics and Los Angeles Kossacks.

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Comment Preferences

  •  In additions to our crumbling infrastructure (0+ / 0-)

    deferred maintenance at UC, and every other state institution, the  State of California is $340 billion in debt that must be retired in the next several decades. Here is a recent article:

    We already have the highest state individual income tax rate at 13.3%, the highest state corporate tax rate, and one of the highest sales tax rates. We also still have high unemployment, particularly in the Central Valley.  I think that Gov Brown hopes fracking will create an economic boon like North Dakota and boost tax revenues. Legislators are looking to an oil severance tax because that is one pocket that has not yet been tapped.

    "let's talk about that" uid 92953

    by VClib on Thu May 08, 2014 at 04:22:43 PM PDT

  •  fracking causes earthquakes (4+ / 0-)

    even in places that are nowhere near fault lines.

    California has the San Andreas Fault.

    Can you imagine what would happen if somehow fracking triggered "the Big One"?  Wait ... I don't need to imagine: lots of people would die, hundreds of billions of dollars in property damage and lost productivity, but fracking would continue.  Deus veult.

    Domestic politics is the continuation of civil war by other means.

    by Visceral on Thu May 08, 2014 at 04:51:53 PM PDT

  •  You said: (0+ / 0-)
    California is being fracked for oil, not natural gas, and not just any oil, but oil that includes the most carbon intensive oil in the world - dirtier than the Canadian tar sands.
    Would you please back that statement up with references, analysis and numerical comparisons that shows the basis for the claim?

    California is not going to ban hydraulic fracturing, and under that circumstance, why do you oppose setting a big severance tax on produced hydrocarbons?

    •  same California Air Resources Board (0+ / 0-)

      PDF I've been using in virtually every other piece I've written on Cal fracking. CARB calculates carbon intensity of Saudi Arabian "Arab Extra Light" oil at 6.86, Canadian "Suncor Synthetic" at 24.49, and Californian "Placerita" at 31.66.

      As for your sweeping statement that "California is not going to ban hydraulic fracturing," can you please provide facts supporting that, and sources supporting your facts? I have videotaped commitments from Democratic Party leaders to me that they will pass SB 1132.

      •  Your statement and your claim that the CARB (0+ / 0-)

        data supports your statement are both misleading and deceptive because you are trying to paint a picture that California crude oil production has a higher greenhouse gas emission intensity than Canadian tar sands crude sources without telling the reader all of the facts.

        In fact, the CARB data shows that the average California crude production greenhouse gas emission intensity is 12.9 gCO2e/MJ, which does not even come close to the average greenhouse gas intensity for tar sands crude sources shown in Table 1.

        Next, you cherry pick Table 2 selecting the highest value for California oil fields for Placerita and you are, in effect,  telling the reader that we should all think that is typical of the California crude oil production when that is for a field generating a very minor fraction of all California crude oil production (and nearly 3 times higher than the California average for greenhouse gas intensity for crude oil production.

        As far as passing a moratorium on hydraulic fracturing, there is not any reason to do that on the basis of the greenhouse gas emission intensity review and analysis claims you provide.  

        ntimate that California crude oil production has worse greenhouse gas emission intensity than Canadian tar sands production

        •  I always state that California includes (0+ / 0-)

          the dirtiest oil in the world. Some of California's oil is particularly carbon intensive - if you've lived here, you know that the drillers themselves call it "heavy sour crude." If you choose to believe that I'm intimating something else, that's your choice.

          Still waiting for the facts and support from Cal legislators to support your claim.

  •  no fracking during a drought. period. (1+ / 0-)
    Recommended by:

    we aren't freakin TX.

    I am tired of laughing at the irony of their stupidity.

    by stagemom on Thu May 08, 2014 at 08:05:51 PM PDT

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