Prop 87 is a ballot initiative that would impose a small fee on oil drilling in the state. The fee is indexed to the price of oil, making it essentially a tax on oil company profits. Those wells that went in when oil was $25 a barrel? They still cost the same to run. If they were profitable then, they are goldmines now.
Over 10 years, Prop 87 will raise $4 billion. The money will go toward kicking our oil addiction.
<pSounds good. And it is good.
But $4 billion in profits is $4 billion in profits, and no matter that this measure will fight global warming while developing energy independence — oil companies will spend what it takes, up to $3.99999999 billion, to make Californians think otherwise.
Here’s the spin: Won’t this tax raise gasoline prices? Aren’t prices high enough without new taxes?
The price of crude oil is set on a world market. A tax like this will have zippo effect on world crude prices. Alaska’s oil drilling fee is 15%, Lousiana’s is 12.5%, and Texas’s is 4.6%. What do these three states have in common? Gas prices waaay cheaper than California.
Ain’t no better way to keep gas prices high than to not develop alternatives.
California is the third-largest oil producing state in the country. Yet the state garners more revenue from selling hunting and fishing licenses than it gets from drilling fees — and this an industry with $78.3 billion in profits last year alone.
The more I think about this, the more I come to the conclusion that this is not a ballot initiative — it’s an intelligence test.