By Gary Walker
An Assembly bill that would generate much-needed revenue for California’s coffers is stimulating a variety of reactions in the state capital as well as in Culver City.
Assemblyman Pedro Nava (D-Santa Barbara) has introduced legislation, Assembly Bill 1604, also known as the Oil Industry Fair Share Act, that would collect a 10% tax on the value of every barrel of oil produced in the state.
“California oil companies are getting a free ride. Right now, California is the only major oil-producing state that does not charge a severance tax on oil extraction,” the assemblyman said in January when he introduced his bill, adding “it is time for California to catch up with Alaska, Texas, Alabama and Arkansas.”
“We need to collect the people’s share of this revenue source by forcing Big Oil to pay its fair share,” he said.
Nava said funds from the tax on oil exploration could be used for education, social and health services and programs for seniors and children.
State Sen. Curren Price (D-Culver City) says that given the current budget difficulties, it makes sense not to rule out any suggestions that will increase revenues.
“I think we have to be open about it,” the senator told the News. “I think that we should look very closely at any proposal that’s creative.”
Culver City Chamber of Commerce President Steven Rose, who said his organization has not taken a position on AB 1604, thinks the proposed legislation is intended for a different purpose.
“The ability to tax is the inherent right of government,” Rose, a former Culver City councilman acknowledged. “The question is, is this the best way to maintain the standards of living of most Californians or is this a way to maintain the standard of living for government employees?”
Nava’s bill is not the first time that legislators have sought to place what some call a severance tax on oil exploration in California. The most recent attempt was Proposition 87 in 2006, which would have diverted taxes derived from oil and gas production into funds for alternative fuels.
California would join high-producing oil states like Alaska, Texas and Wyoming in charging oil and gas companies fees on oil production if Nava’s bill passes the state Legislature. Alaska charges 25% on oil exploration, the Lone Star State pays 7.5% on oil and 4.6% on gas and Wyoming charges 6% severance on crude and natural gas and oil and 16.6% on oil produced in state lands.
According to the state Energy Commission, about 240 million barrels of crude were extracted from oil fields and coastal waters of California in 2008.
Culver City is one of a small number of cities that is surrounded by an oilfield in a suburban area. The Inglewood Oil Field, where Plains, Exploration and Production operates, has produced oil and gas for nearly 90 years, but recently has become entangled with controversy and a series of lawsuits stemming from a contested set of oil regulations that the Board Of Supervisors approved for the oilfield in November 2008. Homeowners in Culver Crest, nearby Baldwin Hills, Windsor Hill and Ladera Heights have complained about the oil company’s drilling, safety and environmental practices.
On Aug. 9, the City Council reinstated a municipal moratorium on oil drilling after PXP submitted plans to acquire drilling permits in Culver City in 2008.
Read the conclusion of Gary Walker’s article in next week’s Culver City News.
