California needs a Sarah Palin Empowerment Act

June 17, 12:46 PMSF Energy Policy ExaminerAnn Garrison

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California refineries buy crude oil, and natural gas at market price, from drillers in both Alaska and California. Alaska charges a 25% oil and gas severance tax; California charges none. 

Republican California State Senator George Runner calls Democratic State Assemblyman Alberto Torrico's Assembly Bill 656, the Oil and Gas Severance Tax to Fund Higher Education, the Hugo Chavez Empowerment Act. 

However, AB 656 proposes only a 9.9% tax, for the "privilege of severing oil or gas from the earth or water in this state," a privilege that famously oil'n gas friendly Alaska charges 25% for.  Alaska Governor Sarah Palin, of Drill Baby Drill!!! fame, succeeded in hiking Alaska's oil and natural gas severance tax to 25% in 2007, the year after California voters, overwhelmed by Chevron and its oil'n gas allies, in a $150 million campaign, defeated Prop 87, which would have levied a mere 6% oil'n gas severance tax, for fear of a price rise at the pump. 

What a sweet deal California gives its oil'n gas drillers, and refiners, and, its northern neighbor, Alaska, which enjoys the pubic benefits of its 25% oil'n gas severance tax, and much more, without worry that Californians might add any pressure to their own prices at the pump.

Anyone hear the State of Alaska calling for a federal bailout, or closing its public parks to pay the bills?

Alberto Torrico's AB 656 is no Hugo Chavez Empowerment Act; it's greatest fault is that 9.9% is nowhere near enough.  Near bankrupt California needs a Sarah Palin Empowerment Act, a 25% oil'n gas severance tax, at least, especially after all these years of unparalleled generosity with its oil'n gas drillers.  California is the only state that charges no oil'n gas severance tax, at the wellhead, and, were it a nation, it would be the only nation.  

Here's hoping Governor Palin herself may come to California's aid, by insisting that we match Alaska's 25% tax before federal taxpayers shell out one thin dime to bail out California.

As to the wornout, hackneyed, clichéd, $150 million argument that an oil'n gas severance tax will raise the gas prices Californians pay at the pump: 

California and Alaska both sell crude oil to California refineries at the same market prices.  (Ever heard the business reports?  "The price of crude oil today is . .  "   Alaskan crude, and Californian crude, are sold to California refineries for crude market prices.   At the wellhead, Alaskans tax theirs 25%; Californians 0%.

Last night I received a message that California State Budget conferees have also proposed a 9,9% oil'n gas severance tax, for the State's General Fund, and I certainly hope this proposal won't be viewed as a competitor to AB 656, because our legislators would have to add another 5.2% oil'n gas severance tax----perhaps to fund renewable energy infrastructure?----to match Alaska's 25% tax. 

And, without the rest of Alaska's tough bargain with its oil'n gas drillers, a 25% tax would only be the beginning of a real Sarah Palin Empowerment Act.