Proposition 87
First a disclaimer. I work for Chevron. Nothing I say here has been endorsed by Chevron, it is simply my opinion. I believe that Proposition 87 on the California Ballot in November 2006 is overall a bad idea. Most oil production in the United States and the world carries a "royalty." That is not unusual. California was one of the few exceptions. However, California has some of the stiffest taxation in the nation, which I suspect more than makes up for it. So this is, in essence, California enacting a new "windfall profits" tax. Is this good or bad then? Well the structure of the tax is such that the highest payments happen when prices are high. That kind of graduation is good. there is also a limit on the total amount that will be brought in, so the tax goes away at some point. That's fine in theory. Once a tax is in place, it often gets extended or rates changed. The royalty might result in fewer barrels reduced ultimately. It depends on prices and timing. Ther