Did you know that California is one of the few states, Los Angeles is one of the few cities, where oil is extracted from the ground and there is no extraction tax on each barrel of oil pumped? Proposition O added to the March 8 ballot by the Los Angeles City Council seeks to change that reality and close a small, $4 million, portion of the city’s deficit by charging a $1.44 tax on every barrel of oil extracted within city limits.
There isn’t an official website pushing Prop. 0, but it has been endorsed by the League of Women’s Voters who cite the city’s deficit and the almost complete lack of impact on Southern California consumers. However, the official opposition organization, “No on O, Stop the L.A. Oil Tax” foresees doom for Southern California jobs and consumers.
Instead of noting that the cost of the tax would be passed on to every person across the country who buys gas harvested from Los Angeles’ oil fields, “No on O” takes the opposite tact of noting that it increases the cost of extracting oil in Los Angeles and not elsewhere. The ripple effect will cost the area an untold amount of jobs by making Los Angeles oil less competitive with oil extracted elsewhere. They later claim that the tax will mean increased gas prices for all Californians.
“No on O’s” point would be well taken, if there were any sign that demand for oil wouldn’t easily absorb this small tax increase on one of the nation’s many oil extraction locations.
Which isn’t to say that there aren’t any good-government issues with the proposal. The $4 million that would be added to the budget isn’t dedicated toward any need, which will doubtless lead to charges of corruption and doesn’t inspire confidence in voters that the funds will be well spent.
The “No on Prop. O” campaign is a coalition of business interests, Chambers of Commerce and petroleum producers.