by Kevin Singer/Calitics.com
In 2011 alone, California produced a grand total of approximately 200 million barrels of oil and 230 billion cubic feet of natural gas, making our state the fourth largest producer of oil and the tenth largest producer of natural gas in the country. Yet, despite this, California does not get a dime for the resources that are extracted from our state and sold on the global market. This is because, unlike every other major oil and natural gas producing state in the nation, California has not enacted an extraction fee on the energy that is taken right from under our feet.
Let’s think about this for a moment. California, the ninth largest economy in the world, is ranked 43rd in the country in terms of K-12 spending per pupil. The University of California, the flagship public university system of the nation, has seen a 14% decrease in funding since 2010. And at a time when a quality college education has never been more important, tuition is skyrocketing, making a diploma unaffordable for an increasing number of young Californians. Meanwhile, at 9.8% unemployment, even those who have graduated from college find themselves without work or working at jobs they are tremendously over-qualified for. The appalling disrepair of our municipal infrastructure only discourages employers from bringing more jobs to our state. But our state government has its hands tied behind its back. The $250 billion dollar state debt all but assures that there will be no additional funding for education and infrastructure in the near future.
And we are giving away our oil and natural gas. We have the wealth to fund the investments that California needs and deserves and we are giving it away. This is to say nothing of that fact that by not charging an extraction fee on oil and natural gas, our state, which prides itself as a leader of reducing CO2 emissions, is not putting a price on the CO2 that eventually makes its way into the atmosphere. To say this is ridiculous would be an understatement. It is an outrage.
The California Modernization and Economic Development Act (or CMED) would put an end to it. By implementing a modest 9.5% extraction fee on oil and natural gas (Alaska, hardly an enemy of big oil, has implemented a fee of 24% on oil and natural gas that’s extracted from the state), CMED would raise between 2 and 2.5 billion dollars in revenue for California. A little more than half, 1.2 billion dollars, would be allocated in four equal parts for K-12, California Community Colleges, Cal State Universities, and the University of California for the purposes of increasing quality and restoring tuition to 2010 levels. 400 million dollars will be used to support small businesses by aiding their transition to cheaper, carbon-free and carbon-reduced forms of energy, which would in turn empower them to expand, hire additional workers, and reinvest. An additional 300 million dollars would be apportioned to the general funds of California County Governments for the purpose of upgrading and better maintaining municipal infrastructure, funding the conservation of regional park land and providing a multitude of other public services.
These are more than investments, they constitute a complete vision for responsible economic development in California. Making that vision a reality is as easy as ending the giveaway of our oil and natural gas, but it’ll take a popular movement if we truly want to realign the policies in Sacramento with the wishes and desires of Californians. Simply by taking a few moments, right now, and visiting www.cmedact.org, liking our Facebook, following us on Twitter, telling your friends or donating anything you can, even $5, you can provide the crucial grassroots support we need. It’s that easy. You could be the difference between failing to qualify and qualifying CMED on the 2014 ballot, so that Californians can have a chance to pass it democratically.
We can do this California, but not without your support. If you think it’s ridiculous that we are giving away our oil and natural gas at a time when California is more cash-strapped than ever, join our cause. It won’t be easy, but together we will qualify and pass the California Modernization and Economic Development Act and put our state back on the right track.
Kevin Singer is the Communications Coordinator for Californians for Responsible Economic Development
John Lawrence says
Most countries charge a royalty for extraction of natural resources. In Norway, for example, it’s 50%. That 50% goes into Norways’s Sovereign Wealth Fund and funds Norwegian pensions among other things.
True Blue Republican Alaska is not so far to the right that the state doesn’t write a socialist check to every citizen once a year with the money they get from their oil royalties.
The much vilified Hugo Chavez did the same thing in Venezuela; he charged the oil companies an arm and a leg to extract Venezuelan oil and then gave the money to the poor.
I wrote on Will Blog For Food in an article Sovereign Wealth Funds, State Capitalism and Corporate Socialism:
Also see Norway’s Lesson on Being Financially Sovereign by Frank Thomas.
As the espouser of free market capitalism, the US has ended up essentially not with free market capitalism but with corporate socialism in which various private corporations use the state as a tool for furthering their own interests. The state, on the other hand, as it facilitates the enrichment of corporations while undermining its middle class, has not taken on the role of wealth accumulation as other countries have. Instead the US central government has financed itself in the traditional manner by taxation, and, since it is controlled by wealthy private interests, it has only lowered taxes thus driving up deficits and debts. It has not been fiscally prudent or responsible. With no other means of accumulating wealth, it has only run itself into debt. If it had natural resources such as oil that it could sell to the rest of the world or if it had manufactured goods that it could sell to the rest of the world or if it hadn’t overreached itself militarily by supporting the world’s largest military-industrial complex or if it had raised taxes to cover expenses, the present situation might not have occurred.
But then all resources in the US are under private corporate control so there is nothing that would serve as a source of national wealth. Contrast that with Norway in which the state has a 50% interest in all oil sales. That still leaves 50% for Big Oil. The US gives essentially all the profits from oil finds on its property to Big Oil. Other nations share the profits among their citizens and private enterprise. The US essentially has a weak central government controlled by lobbyists representing corporate interests. The US government itself, supposedly a democracy, does nothing to accumulate wealth in behalf of its citizens the way other nations do. Even Kazahkstan, the butt of the movie Borat’s jokes, has a Sovereign Wealth Fund. Kazahkstan may get the last laugh while the US has to eat crow. Are you ready for Borat, the sequel?