Schwarzenegger Stuck on Oil

by Bill Leonard, Member State Board of Equalization

Last Month Governor Schwarzenegger joined the governors of Oregon and Washington at a public event to announce their united opposition to new offshore oil drilling. It has been noted many times the Schwarzeneggers are still mindful of the 1969 oil spill off the coast of Santa Barbara, which some credit with starting the environmental movement worldwide.
That is all well and good, but oil production technology has come a long way since 1969. The thing that is rarely mentioned in these discussions is that oil companies do not want oil spills. The 1989 Exxon Valdez spill off Alaska cost Exxon $5 billion in fines and $2.5 billion for clean-up and economic mitigation in Alaska. The spill caused Exxon to slip from being the number one oil company in the world to number three. In short, oil spills are terrible for oil companies. Unlike government, companies like Exxon take it very seriously when they lose lots of money. There is so much irony in elected officials protecting us from oil spills when oil companies have more than enough incentive to do so already.
Alternative energy is wonderful. To the extent it is affordable, go for it. However, it is the height of unreason to exclude new oil sources from our energy portfolio; especially considering we have great private American companies that are willing to go get it. In doing so they will remit even more taxes than the $59 billion paid in 2004, $2.2 trillion in excise taxes alone over the last 25 years. Oil companies also pay billions more to the federal government in royalties from leases. Gasoline and diesel is taxed yet again. We ought to be thanking this industry for their huge contribution to public services, and doubly thankful their profits are not funding terrorism.