State Sen. Noreen Evans is making another run at the oil industry, and this time she’s bringing in reinforcements.
The Santa Rosa Democrat is joining forces with California college students, including local product Harrison “Jack” Tibbetts, in an attempt to get a tax on oil extraction in California.
Evans has failed several times to get similar legislation passed. “I will keep proposing this until it is passed,” she said Tuesday.
Tibbetts, a senior at UC Berkeley, has been leading a parallel statewide campaign in the past year seeking to qualify a ballot initiative for a levy on oil extraction.
The former Montgomery High School student has abandoned that effort, at least for now, to work with Evans on SB 1017. The pair were scheduled to appear at a student rally today at Sacramento State University to introduce the bill.
“Part of the reason we floated the ballot initiative was to create a soapbox to talk about the issue. In that sense, it really worked,” said Tibbetts, 23, son of local Democratic Party strategist Nick Tibbetts.
“We’re hoping that will carry momentum into this Legislative session,” he said.
Evans is proposing a 9.5 percent severance tax on the extraction of oil in California, which the senator estimates will generate about $2 billion annually.
That estimate is based on the current average price of $100 for a barrel for crude oil.
She noted that the big five oil companies — BP, Chevron, ConocoPhillips, ExxonMobil and Shell — earned a combined $30.2 billion during the first quarter of 2013, or $331 million per day.
The tax revenue would go into an endowment fund, with half allocated to the state’s three higher education systems, and the rest divided equally between the California parks system and health and human services programs.
Evans cited a proposed $500 fee at Sonoma State University — what administrators there label an academic success fee — as reason to support a new revenue stream for higher education. SSU students already pay some of the highest campus fees in the state university system.
“Obviously, there’s a critical need right now,” she said.
California, which produces about 550,000 barrels of oil a day, is the only oil-producing state in the nation that does not levy a severance tax on the enterprise.
But California’s oil industry argues that it already pays about $6 billion annually in corporate, property and other taxes, as well as fees to fund state regulation.
That’s aside from royalty payments to the state, which total about $500 million annually, said Tupper Hull, spokesman for the Western States Petroleum Association.
He argues that a severance tax would reduce oil production, cost jobs and raise oil and gas prices.
“It seems to have a certain appeal as a sound bite when you say California doesn’t have a major oil severance tax, therefore we need one,” Hull said. “But history would suggest that upon closer inspection, the Legislature, governor and voters understand that raising the cost of producing energy when companies are already subject to significant taxation is not in the best interests of consumers or the state of California.”
Other experts say such a tax would not lead to higher energy costs for Californians, primarily because the price of oil is set on the world market.
Hull said Evans should be “given marks for consistency” for pressing the issue.
Advocates of the severance tax, sometimes called a depletion tax, contend that California’s current taxes on oil companies amount to a fraction of what some most major oil-producing states collect.
The senator failed in 2009 to get similar legislation passed. California voters also turned down Proposition 87 in 2006 that would have taxed oil extraction mainly for the purposes of funding alternative energy.
The senator’s most recent attempt, SB 241, died in committee in January. That was despite Democrats enjoying a two-thirds majority in the Legislature
Political observers say tax increases of any kind are going to be a hard sell in an election year.
Tibbetts, however, predicted it’s only a matter of time before advocates of an oil-tax succeed with their efforts. If the current attempt doesn’t work out, there’s always 2016, he said.
“It’s an unrelenting issue that is now becoming more and more understood by the general public,” he said.
(You can reach Staff Writer Derek Moore at 521-5336 or email@example.com. On Twitter @deadlinederek.) ___