Oil prices closed at $95.17 a barrel today on the New York Mercantile Exchange, ending a steep decline from a summer high of $147.27. In the wake of U.S. economic decline and turmoil on Wall Street, oil prices have lost nearly all their 2008 gains.
Bad press can be a good thing. Just ask the California Democrats who are pushing for a new tax on oil production in the state. Each day the TV news broadcasts heartbreaking images from the disaster in the Gulf of Mexico. Not good P.R. if you're a company that drills for oil. But if you're trying to sway public opinion and get people behind a new tax on oil production, those images might be just what you need.
Democrats in Sacramento are counting on it. They understand the type of emotions those pictures elicit. They also know that oil companies aren't exactly viewed in the highest regard. Just ask the California School Employees Association. That union has been conducting polls to find out how the general public views oil companies. Turns out the oil companies are about as popular as Jerry Brown at a Whitman family picnic.
The state is $19.1 billion in the hole and both sides are still proposing ways to get out. The Democrats are pushing for this new tax on oil production, citing California as the only state that doesn't tax for oil that's being sucked out of it's soil.
The governor has opposed any new taxes this year. Back in 2008, however he supported the idea of an oil extraction tax.
Meanwhile guess who's one of the Republican party's biggest financial contributors? The oil industry. Even as the republican governor continues to bash that industry and speaks out against the "greedy oil companies out of Texas." Under the democratic proposal Chevron, the largest California based oil company, would have to pay the production tax. So far Chevron isn't taking sides.
Governor Schwarzenegger proposes to cut day care programs for 142,000 kids from low income families. Taxing oil production would add an extra $1.2 billion to the state's bottom line. Democrats point out that that would be enough to spare those day care programs. The new fiscal year begins Thursday. Prop Zero will be watching closely.