Oil Severance Tax: Facts and Myths

Unknown-1California is the only major oil producing state, of 22 states, and the only place in the world, without an oil severance tax.

Texas reaps billions for its university system while California education is billions of dollars below national average per student spending.  Texas has an oil severance tax and no income tax.  In California, oil companies pay 1/3 the taxes they pay in Texas ($14.33 per barrel in Texas versus $4.22 per barrel in California), including regulatory fees, severance taxes, property taxes, income and franchise taxes.

1.  Myth:  a California oil severance tax will increase drivers costs at the pump.

Fact.  California is part of the world market that sets the prices.   An oil severance tax will not effect the price of oil or production.

2.  Myth:  a California oil severance tax will cause job loss and the industry pulling out of production in California.

Fact: New jobs would be created in California’s education and natural resource systems with the new state revenues.  When Alaska increased their severance tax to 25% in 2007, the Alaska labor department reported direct oil employment increased to an all time high adding 12,500 jobs.  Learn more