California taxes on oil drilling and freeway jams
|June 17, 2009||Posted by Staff under Progress Report, The Progress Report|
California taxes on oil drilling and freeway jams
Nearly Naked Riders Protest Oil Dependency
May the protesters learn of the geonomic progress on the other side of the country. We trim and blend three 2009 articles from: (1) Washington Post, June 14, on nude riding by Lori Aratani; (2) Los Angeles Times, June 15, on taxing oil by Michael Hiltzik; and (3) Los Angeles Times editorial, June 13, on congestion pricing.
by Lori Aratani, by Michael Hiltzik, and by Los Angeles Times editors
- Nearly Naked Riders Protest Oil Dependency
The District of Columbia’s ran its fourth annual World Naked Bike Ride.
The goal of the two-mile trip downtown was to protest oil dependency and promote bicycles as a transportation alternative.
Technically, folks on hand for the event weren’t naked. But several of the 30 or so riders shed their street clothes and used latex paint and other techniques.
- A California tax on oil drilling? Why not?
The oil severance tax — a levy on every barrel that drillers take out of the California ground — is back on the table in Sacramento.
At least twice since 1981 Californians have considered proposals to impose a severance tax on oil. Both times they went down to defeat — most recently in a $150-million initiative campaign. The 2006 defeat of Proposition 87 preserved California’s status as the only one of the 22 major oil states to give the industry a free ride. And we’re the third-biggest producer in the country.
Alaska Gov. Sarah Palin, in 2007 raised her states tax to 25% of the value of extracted oil and gas. Proposition 87 would have capped California’s levy at 6%.
California oil production has declined steadily from its 1985 peak of 424 million barrels. Since 2002 the states known reserves have been depleted to about 3.3 billion barrels from more than 3.6 billion.
Oil companies can’t pack up the oil and move it to a state where rates are lower. Oil creates wealth — enormous wealth at times of elevated market prices, like now. Any jurisdiction has a right to claim a piece of it.
The public’s main fear about Proposition 87 was that the industry would pass the tax on to consumers in the form of higher gas prices at the pump. However, oil economist Severin Borenstein of UC Berkeley said California producers couldn’t raise their prices to cover the tax, because “California refineries can buy from anywhere in the world.” (Only 38% of the states crude supply comes from within our borders, with 13.4% coming from Alaska and the rest from overseas.) “Producers would have to absorb the tax,” Borenstein says.
One other argument against the severance tax is the claim that it will drive marginal producers out of business. UC Riverside economist Mason Gaffney says industry always trots out marginal victims of a tax bite. “These are the ‘widows and orphans’ of every tax debate, advanced to distract attention” from the big oxen getting gored. Chevron acknowledged that Proposition 87 would have cost it $200 million a year.
An oil severance tax in this state is long overdue. It might even serve as the vanguard of a new approach to overlooked sources of revenue. Gaffney mentions sand and gravel, undertaxed timberlands, water pumped for commercial sale and, yes, marijuana.
Why not? California has bestowed much of its natural wealth on the rest of the country for free. We deserve to get something back.
- Congestion pricing on freeways benefits all
As Los Angeles gears up to conduct its first experiment with congestion pricing, the notion is fueling angst among proponents of economic justice — who fret that charging a toll for faster freeway access would consign the poor to gridlock while CEOs fly past in their BMWs.
LAs demonstration project involves high-occupancy toll lanes. These work very much like carpool lanes in that vehicles with one or more passengers can use them for free, but they also allow lone motorists to use them by paying a toll. The prices will probably vary by time of day, at their highest during peak demand and their lowest when traffic dwindles.
Critics argue that highways are a public benefit and that toll lanes primarily advantage the rich because low-income people can’t afford to use them.
But most highway improvements are paid for with state and federal taxes on gasoline. This is an extremely regressive tax, not only because rich and poor alike pay the same amount, but because poor people typically can’t afford modern gas-sipping vehicles — there are a lot more Priuses in Santa Monica than in South L.A. Congestion pricing, though, imposes a user fee; only the people who use toll lanes pay the cost, and the people who use them tend to have higher incomes.
Some argue that roads are a public resource and should be free for all. L.A.’s toll lanes are being paid for by the federal government with taxpayer money. So shouldn’t rich and poor benefit equally?
Low-income commuters stand to benefit a great deal from L.A.’s experiment. Only 25% of the project’s budget will be spent on developing the new toll lanes; the bulk of the money will pay for public-transit improvements.
The toll lanes will provide people of all incomes with a choice they don’t currently have. It’s true that choosing to pay the toll will be easier for people of means, but it’s senseless to argue that even low-income people are better off having no choice at all.
More livable communities are an Rx, but what makes them?
Perpetual motion? Driving cars to make energy?
If it costs you more to jam up traffic, would you?
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