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Dr. Shelley Luce, chief scientist and spokesperson, California Clean Energy Initiative
supporters of Proposition 87 say that oil companies will be legally barred from "passing-through" the $4 billion oil severance tax imposed by this measure to California gasoline buyers
California Politics Today yesterday interviewed Dr. Shelley Luce, Chief Scientist and spokesperson for the
Yeson87.com—The Clean Energy Initiative campaign and asked her if the $4 billion oil severance tax to be imposed on oil companies under the provisions of that ballot measure could be "passed-through" to California gasoline buyers.
You can watch and hear her answer by clicking on the first button in the "Proposition 87 Pro & Con Channel" player below. You can watch and listen to this interview with Dr. Luce in its entirety by clicking on the second button in that player.
the language itself
Here's the language in Proposition 87 that addresses the issue of oil severance tax pass-through"
"Sec. 42004 (c) The assessment imposed by this Part shall not be passed on to consumers through higher prices for oil, gasoline, or diesel fuel. At the request of the authority, the board shall investigate whether a producer, first purchaser, or subsequent purchaser has attempted to gouge consumers by using the assessment as a pretext to materially raise the price of oil, gasoline, or diesel fuel."
You can access the text of Proposition 87 in its entirety by clicking
here.
what opponents of Proposition 87 say about their ability to pass through the $4 billion oil severance tax imposed by that measure
Here's what the oil companies, which are opposing Proposition 87, have to say about their ability to pass through the $4 billion oil severance tax imposed by that measure, according to a statement posted on their
No on 87—The $4 Billion Oil Tax web site:
"
But the proponents say Prop 87 prohibits the tax from being passed on to consumers?
"Despite the promises, the reality is that Prop 87’s $4 billion oil tax increase will lead to higher fuel prices for all Californians. And, higher fuel prices hurt everyone. Drivers will have to pay more at the pump. Businesses will have to pay more to transport their goods via trucks and airplanes, which comes back again to consumers in the form of higher prices."
What's the take on the "no pass-through" provision of the proposed law from the libertarians who run the
Orange County Register editorial page? In a June 29, 2006, editorial, they vehemently opine:
"But get this: the initiative '[p]rohibits producers from passing [the]tax on to consumers.'
That's a socialist dream. In a free market, producers must pass on higher costs to consumers – or go broke. If producers somehow were to be prohibited from passing on the cost, the state could suffer 1970s-style shortages and lines at the pump."
can they and/or will they violate the terms of Proposition 87 by passing through the $4 billion oil severance tax?
Since oil companies, like any other corporation, are not required to file explanations with the government before raising (or lowering) prices, how will it be possible to know if any increase in gasoline prices following (or in anticipation of) the imposition of a severance tax on oil pumped out of the ground in California derives from a run-up in world oil prices; increased refining, marketing, or distribution costs; a desire for higher profit margins; a whim, or an unlawful pass-through of the aforementioned oil severance tax?
The language of the legislation allows the board set up under it to "investigate whether a producer, first purchaser, or subsequent purchaser has attempted to gouge consumers by using the assessment as a pretext to materially raise the price of oil, gasoline, or diesel fuel," but it doesn't set out any criteria or process for legally determining this, and it doesn't specify who will enforce its prohibition, nor what sanctions, civil and/or criminal, would be imposed upon individuals or corporations found to have violated that provision of the new law.
It would seem that the question of oil severance tax pass-through under the terms of Proposition 71 needs to be more fully examined if voters are to have a solid basis upon which to make up their minds about whether to support or oppose this ballot initiative.
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