Proposition 87 is the next on the agenda. The proposition is titled, “Alternative Energy, Research, Production, Tax on California Oil Producers.” The initiative would increase the tax on oil pumped from California (or, under the state) by at least 25%. The measure also bans oil producers from passing the tax on to consumers.
Allow me to make some points about basic economics. Assume that Joe has a barrel of oil that costs $50, but I have a barrel that costs $50 + $8 in taxes. BigOilCo is going to purchase a barrel; which barrel will they purchase? The $50 barrel, of course. And if they do buy the $58 barrel of oil, they have to pass that cost on to consumers, either directly or indirectly. You can’t legislate gainst economics.
Looking at this logically, this measure, if passed, will decrease California oil production, increase the amount of imported oil into California, and will likely increase the cost of petroleum-based products in California. It’s simple economics, something that those who wrote this initiative appear to have flunked.
And don’t get me started on the new bureaucracy that this initiative, if passed, would thrust on the state.