More than 350 persons gathered in Sacramento at the Capitol to oppose AB 656, the proposed new oil severance tax of 12.5% on the gross at the wellhead. Most in attendance were from Kern County, which is responsible for about 70% of the state's oil production. Small, family owned companies are responsible for about 17% of this production.
"Passage would make oil extraction more costly in California than any other state and would drive business from the state," reported Fred Holmes, a leading independent oil producer whose family business has been a pillar of stability on the West Side for decades. He has already been forced to move parts of his operation to Arkansas and Colorado, "to a much more business friendly environment" to survive. Other small oil producers will most likely have to follow suit for the same reason.
Assembly member Jean Fuller agreed, and attacked AB 656 as being the "wrong tax in the wrong place at the wrong time." She spoke of the potential 10,000 jobs that would inevitably be lost throughout the state as a result. Her answer to the budget crisis was for Sacramento lawmakers "to get leaner and meaner" with respect to budget cuts.
Allan Krauter, Kern County's Legislative Analyst for the Board of Supervisors, reminded the news media and those gathered, "This tax is on the gross not the net. Why not give a similar tax to the Silicone Valley or to the fortunes made in Hollywood?" he argued, but quickly recanted as he opposes this also for the same reason: "It is unfair to single out one industry."
Attendees agreed that this tax unfairly targets a single county and a single industry. Among them was Dr. Harold Pease, 32nd Assembly candidate, who has vowed to work with Fuller and others to protect the tax paying middle class worker. "The state's irresponsible spending of the past should not be laid on the backs of the working class of Kern County," said Dr. Pease. "The county already has a 15% unemployment rate - some places over 35%. Adding to this the loss of thousands of jobs is more than irresponsible, it's sabotage."
Still others spoke of how big oil could dodge the new proposed tax law by simply importing more foreign oil. Such a move would leave thousands more Americans unemployed. However, small producers do not have the means of paying the tax or leaving the country, they just go under and so do their employees. Other industries would also be devastated by this tax increase, as almost all industries are affected by the availability of oil and energy costs.
This new tax leaves us wondering which industry will be sacrificed next because the government decides to extract needed funds as it grows bigger and bigger? For these reasons, our local oil producers are calling on other small businesses take a stand with them.