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Beverly Hills Tax on Oil and Natural Gas, Measure O (March 2011)

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A Beverly Hills Tax on Oil and Natural Gas, Measure O was on the March 8, 2011 ballot</noinclude> for voters in Beverly Hills in Los Angeles County, where it was defeated.[1]

If Measure O had been approved by voters, it would have:

  • Increased the tax on oil extracted from land in Beverly Hills.
  • Established a tax on natural gas extracted from land in Beverly Hills.
  • The proposed tax would have been a $2,000 flat tax plus 2.5% of the cost of each barrel of oil or unit of natural gas.[2]
  • Amended the definition of "gross receipts" in the business tax regulations of the Beverly Hills municipal code.

Beverly Hills City Treasurer Eliot Finkel estimated that an additional $1.3 million in taxes would flow into the city's coffers if Measure O was approved.[2]

Election results

Measure O
Result Votes Percentage
Defeatedd No 2,691 55.42%
Yes 2,165 44.58%


Election results from the Beverly Hills City Clerk as of 6:14 a.m. on March 9, 2011

Oil and taxes in Beverly Hills

  • Beverly Hills first passed an oil tax in 1977 when the price of a barrel of oil was $14.40/barrel.[3]
  • 439,000 barrels and 456,000 cubic feet of natural gas were produced outside of the city in 2009.[3]
  • In 2009, 143,000 barrels of oil and 109,000 cubic feet of gas were extracted from land in the city.[3]
  • Oil companies that extract oil or natural gas from Beverly Hills land would, under Measure O, pay a cumulative tax of $3.60 per barrel for oil, about 10 times what they currently pay.[3]
  • "Thousands of residents and property owners receive royalty payments from the oil and gas produced beneath their properties, but City officials cannot say if that income will be hurt by the proposal."[4]
  • The current tax rate for oil wells located within the City is $3,880.60 for the first 10,000 barrels produced (at $0.388 a barrel), and $0.36 for each additional barrel.[4]
  • The current tax rate for Wells located partly within the City and partly outside the City is a flat rate of $1,933.20 for the first 10,000 barrels (at $0.193 per barrel) and $0.14 for each additional barrel.[4]
  • "Current City ordinances allow for directional drilling beneath the City from locations outside the City, as well as drilling within, at controlled drill sites."[4]

Opponents

  • There was a "No on Measure O" campaign and Ted Green was its campaign director. He said, "Measure O is a 500 percent energy tax that would increase costs for thousands of Beverly Hills residents, including churches, temples and schools. It would lead to higher gasoline and natural gas prices and increased energy costs."[2] Green also said, "Measure O is a 500% tax increase...what happens when you increase the cost of tax on natural gas, which is passed to the natural gas company, which in turn is passed on to its customers in Beverly Hills. The City simply has its facts wrong on the royalty payments."[3]
  • Greg Brown is the executive vice-president of BreitBurn Energy Partners L.P. This company is one of a few oil companies that operate within the city of Beverly Hills. Brown was opposed to Measure O. He said, "We think it's bad in a number of respects, starting with the justification that's given by the proponents. They refer to it as a tax on big oil. There is no big oil in Beverly Hills, there are four companies that are small to medium sized, including ours. Number two, it’s also repeatedly referred to as not being a tax on the residents and business and institutions in Beverly Hills and that's just flat wrong. The taxes are passed directly to to the mineral rights owners, so there are thousands of Beverly Hills residents that will be directly taxed by this proposal."[4]
  • Leaders in the Beverly Hills School District came out against Measure O. One well, known as the "Tower of Hope," generates a million a year in royalties for the school district. This income would have declined if Measure O had passed.[5]

External links

References