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Oil money is ripe for the taking

By   /   Friday, August 14th, 2009  /   Comments Off on Oil money is ripe for the taking

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When it comes to running a business, it’s generally a bad idea to leave money on the table.

Not leaving money on the table means grabbing revenue that’s easy whenever it’s easy to grab it. And after witnessing the California budget meltdown this summer, it’s astonishing to see how much money the state left on the table.

Consider the oil industry. California and the Central Coast are notoriously anti-oil, but that means leaving billions of dollars on the table in revenue and taxes.

Even creating a green economy for the state won’t eliminate the need for oil production for decades to come — and yet California hasn’t found a way to act rationally about the oil industry.

Writing in the Los Angeles Times recently, columnist George Skelton said it appeared the political tectonic plates were beginning to shift a bit with regard to oil.

He argued that the oil industry would likely give up its longtime opposition to severance taxes in return for a reduce levy of perhaps 5 percent. It turns out that oil coming out of the ground is not as severely taxed in California as it is elsewhere — more money left on the table by Sacramento.

In return, the state might allow projects such as the Tranquillon Ridge off Santa Barbara — where oil would be produced for a limited time but a refinery and ultimately even an offshore platform would be dismantled — in return for billions of dollars in new tax money.

Not covered in this particular version of a grand bargain is a project such as Venoco’s proposed Carpinteria Bluffs plan. It would require new facilities, and the offsets would be more community amenities rather than an exit date for the oil company.

But both the Tranquillo Ridge project and the Carpinteria Bluffs plan have raised important questions about the political process of getting oil projects approved. In Tranquillon, the legislature tried to revive the effort after the State Lands Commission rejected it, and Venoco is angling to blast through local red tape by going straight to voters.

Those cases highlight an incoherence in California’s political consciousness — the proliferation of unelected, technocratic environmental commissions at the state and local balanced against more direct instruments of the electorate’s will such as representatives and ballot initiatives. Neither oil companies nor environmentalists are shy about playing off either impulse when it suits.

No matter how it’s accomplished politically, the issue of oil tradeoffs for money is not going away — not as long as the budget remains imbalanced. And the Central Coast is going to be ground zero for the debate.

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