California’s oily deal
It’s the only oil-producing state without an extraction tax
Alaska produces a lot of oil—and is well paid for doing so, as it charges a fee of 24 percent on all oil and natural gas extracted from the state. Other oil-producing states charge comparable extraction fees. But not California. It’s the only state in the nation that gives away its oil and natural gas for free.
And it does this at a time when its schools are ranked near the bottom in per-pupil funding, its infrastructure is in shambles, its colleges and universities are absorbing huge funding cuts, and tuition is skyrocketing.
Enter students at UC Berkeley, who, functioning as Californians for Responsible Economic Development, have drafted the California Modernization and Economic Development Act, or CMED. They will be attempting to raise $1.3 million in order to collect the 505,000 valid signatures to qualify it by July.
The act will generate between $2 billion and $2.5 billion annually from the implementation of a 9.5 percent extraction fee on oil and natural gas. About half—$1.2 billion—will go to education, from K-12 through the UC system. The rest will go for a variety of good purposes, from helping small businesses to go green to bolstering counties’ general funds so they can build more bike lanes, pave over potholes and conserve regional park lands.
One of CMED’s many backers is Robert Reich, Berkeley professor and former U.S. secretary of labor. “Using a tax on oil extracted from under California to help finance the education of Californians should be a no-brainer,” he has said. “It won’t affect fuel prices. It will only improve our schools. The real question is why California hasn’t done this long before now.”