Don Geagan

Taxing Big Oil Could Mean Big Money

By Don Geagan

Why doesn’t California have a oil extraction tax? As the third largest oil producer in the United States, California is the only state that does not have such a tax on big oil and natural gas. Many attempts have been made to bring about such a tax, but due to the deep pockets of Big Oil, they have been able to block or forestall all efforts to enact such a common sense tax.

In 2006, proponents of such a tax failed to get the ballot initiative Prop 87 passed. Reason being, they were outspent 2 to 1 by Big Oil, and the false argument – or big lie – that such a tax would be passed on to the consumer. The reason that this is less than true is that the price of oil is set by the international market, not the California market.

But big money and big lies often work, thus Proposition 87 was soundly defeated 54 to 45%.

In 2012, there were three competing ballot initiatives to tax Big Oil and gas. The problem with so many competing ballot initiatives is that they confused voters just enough so that none was able to get the 500,000+ signatures necessary to get on the ballot. This time Big oil didn’t have to spend a dime.

In spite of such setback, all is not lost. There is currently an effort by UC Berkeley students to get the California Modernization and Economic Development Act on the ballot in 2014. The Act would implement a 9.5% severance tax on oil and natural gas extracted in California, and expects to create between $2 billion and $2.5 billion in revenue. The new revenues will be dedicated to increasing funding for education, state parks and county governments.

If you think that this tax is too large, remember that the great state of Alaska put a 25% tax on each barrel of oil taken out of the frozen ground of that state. Texas, the birthplace of modern oil, charges a 9% tax on its oil producers.

Again, only California gives the People’s resources away for free.

Whether you think another ballot initiative is a good idea or, as others have suggested, such a tax would have an easier time making its way through the California legislature, this giveaway to Big Oil has to stop.

It’s time for Big Oil to shoulder its responsibility and pay its long overdue debt to the people of California. The only real way to do that is through the levying of an oil severance tax.

If you would like more information on the California Modernization and Economic Development Act go to: and donate or volunteer today.

Categories: Don Geagan, Environment