Wednesday, May 21, 2014
The governor has been polishing his eco-credentials lately by speaking about global warming. On the other hand, environmentalists have been critical of his stance on allowing fracking. Until recently, there has been an assumption that if California did permit fracking big time, there would be an oil boom in the state. An oil boom suggests that oil could be taxed and possibly replace the temporary Prop 30 taxes when they expire. So the governor has not endorsed any of the current oil tax proposals that are floating around but that doesn't mean that after the election he might look more favorably at them IF there is a boom.
Now the problem is that there may not be a boom, even if fracking is allowed:
Federal energy authorities have slashed by 96% the estimated amount of recoverable oil buried in California's vast Monterey Shale deposits, deflating its potential as a national "black gold mine" of petroleum. Just 600 million barrels of oil can be extracted with existing technology, far below the 13.7 billion barrels once thought recoverable from the jumbled layers of subterranean rock spread across much of Central California, the U.S. Energy Information Administration said. The new estimate, expected to be released publicly next month, is a blow to the nation's oil future and to projections that an oil boom would bring as many as 2.8 million new jobs to California and boost tax revenue by $24.6 billion annually...
Full story at http://www.latimes.com/business/la-fi-oil-20140521-story.html
In short, the game has been changed - along with the longer term state budget outlook.