State lawmakers consider oil extraction tax

April 21, 2011 11:28:31 PM PDT
State lawmakers are again considering a controversial tax on oil companies. It's an idea that's gone down to defeat in the past, including just last year.

It would levy a 12.5 percent tax on each barrel of oil extracted in California, generating an estimated $2-$3 billion a year. All of which could fund education from kindergarten through college, but critics say the tax will only raise gas prices and drive jobs out of California.

"I've seen some polling on the oil severance tax and people who are paying $4.15 for a gallon of gas are saying, 'No way I'm going to jack up the price of my fuel,' which this would do, this would clearly do," said Jon Coupal from the Howard Jarvis Taxpayers Association.

A provision in the bill makes it illegal for oil companies to increase prices to cover the money lost because of the oil extraction tax.