In an effort to curb an estimated $11.2-billion state budget shortfall, California Gov. Arnold Schwarzenegger has proposed a severance tax on oil production in the state. Natural gas is not targeted for the tax.

“We have drastic problems that require drastic and immediate action—we must stop the bleeding right now,” Schwarzenegger says in a statement at the state’s website.

According to the IPPA, oil and gas production is from 28 of the state’s 58 counties. In 2005, the last year for which there are statistics, there were 2,083 oil and 117 gas wells in the state. In terms of oil wells drilled, California ranked No. 2 in the nation in 2005 and fourth in terms of production and reserves.

The average daily production was 625,000 barrels of oil and 224 million cubic feet of natural gas. The industry employed about 131,099 people then.

On Nov. 4, California voters rejected two ballot proposals that would have supported funding alternative energy. Two years ago, they rejected another tax proposal on oil producers that would have funded research and producing alternative energy and alternative-fuel vehicles.—JAS