Assembly Bill 656 is a 9.9 percent oil and gas severance tax that would go directly to California’s higher education system. On one side of the issue are educators, such as the California Faculty Association (CFA), who are looking to balance or at least supplement the $564 million deficit the system is facing. On the other are oil and business-oriented organizations, such as the California Independent Petroleum Association (CIPA) and Cal-Tax, who fight for fair taxes and business freedom.

As I interviewed people on both sides of the bill, it became clear that the issue has much more depth than I expected.

One of the first things that David Kline, communications director for Cal-Tax, said was that it is very misleading to say that there is no oil tax in California. It is true that there is no severance tax, but there are several other taxes in place. Property tax and sales tax on all oil-producing tools are already in place and, according to Kline, keep California competitive with other states in terms of oil taxation. Kline also pointed out that a potential 10,000 Californian jobs would be lost.

One of the students I interviewed, Taylor Lobdell, a social sciences junior, pointed out something that I hadn’t discussed with anyone or thought of yet.

“I’m for anything that’s going to help education, especially if it’s taxing something that I see as the old way of getting energy,” he said. “More people would be getting jobs in the new industries. Oil is outdated.”

Lobdell said he thinks it is a good thing when people are forced to change in a less-than-ideal situation. He noted people’s gas-buying habits when it comes to oil prices across the country.

“I think it forces people to find other sources of energy,” Lobdell said.

But can that really be used as a reason for imposing the tax? Probably not. Forcing people out of business would probably ruffle feathers of free-market advocates. If it is a byproduct of such a bill, would it be such a bad thing?

Who knows? We’ll just have to see how AB 656 plays out.

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2 Comments

  1. Good post Will – I’m not sure what Mr. Lobdell means by “outdated”? We use millions of gallons of gasoline a day in California. We fly on jet fuel and move goods with bunker fuel. We use natural gas to heat our homes, cook our food and create electricity. Thousands of products we use are petroleum based including the clothes we wear and the plastic goods we use. Petroleum products are used in pharmaceuticals that keep us healthy. The list is endless.

    Yeah, oil is not the sexy new thing. Yes, we need to create more energy here at home from a variety of sources. But if you think oil is outdated, you need to hit the road. … oh that’s right. The road is made of asphalt. My bad.

    1. Oil is outdated in respect to other new promising sources of energy. People still “hit the road” before asphalt, and many of these roads exist today.

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