There are several problems with Pedro Nava's proposed approach to oil energy resource taxation policy in California. First, if California continues on the path of  "changing the rules after companies make investments in CA energy, business will begin to look at CA like Venezuela- you can't trust any deal you negotiate, because after the fact they will change the rules." 

 

That is what happened in Alberta last year- Alberta raised the royalty rates after significant investments, and Alberta oil industries moved new investments out of Alberta to BC and other places. California needs to produce more energy, not less. We should encourage all forms of intelligent energy sources- oil, gas, solar, wind, geothermal. Oil is still the source of 95% of CA's transportation energy- and will be the primary source for a very long time- and Pedro's proposal will reduce incentives for more CA oil and gas production.

A better approach is to encourage new onshore and offshore oil and gas production and lift the offshore moratorium and apply a reasonable but higher royalty rate on offshore production- like ~ a 20% royalty tax. This will increase production, allow an increased royalty and higher tax revenue, reduce foreign oil imports, increase jobs, and send a signal to business that CA honors its existing contracts.

 

When you add up all the income taxes, offshore royalty taxes, property taxes and a very high CA gasoline & sale tax, the state is already getting a very large percentage of tax revenue from oil production in CA. We all know CA's problem really stems from out-of-control state spending the last 8 years, not a shortage of tax revenues. And we also now know that CA's biggest source of marine hydrocarbon pollution and wildlife deaths are offshore seeps, not offshore oil production.