Bill would impose $1.50 per barrel fee on oil

Published on Wed, Dec 30, 2009 by Tara Nelson

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A new bill introduced by the Washington state legislature would help offset the true costs of petroleum use in the state by introducing a tax on oil refineries.

The bill, House Bill 1614, would charge oil companies $1.50 per barrel of oil and raise nearly $120 million in revenue to help local governments pay for capital improvements and retrofits to address stormwater pollution.
State rep. Timm Ormsby, D-Spokane, the main sponsor of the bill, said the legislation is a necessary step to help preserve environmental quality currently enjoyed by Washington residents and to make sure the costs of clean-up aren’t unduly borne by taxpayers.

“We’re trying to create the revenue from where the problem is created,” Ormsby said. “There is also a clear connection between petroleum use and storm water contamination. I also think it makes common sense, because it causes us to make a connection between our habits and the consequences of those habits.”

The fee wouldn’t apply to petroleum products exported from the state. Home heating oil, farm diesel and aviation fuel would also be exempt.

Bill Kidd, director of external affairs for BP Cherry Point disagreed. Kidd said the fee would double the tax liability for BP and unfairly singles out petroleum refineries in the state.

“Stormwater pollution is clearly a concern for the state and the Puget Sound but to have my industry pay for all of
that doesn’t strike me as fair,” he said.

Kidd did not say whether such a fee would cause BP to relocate outside the state but that it could put Washington refineries at a competitive disadvantage.

Citing a study by the Washington Research Council, Kidd said the fee would create a tax liability nearly four times of similar-sized refineries in California.

It would also create an equivalent of a 4-cent tax per gallon on gasoline for consumers, he said.

“If this state wants to be competitive, having something two or four times the tax rate as our competitor, that’s not a good strategy,” he said.

“That, and it’s such a widespread societal problem, it seems to me it ought to be spread out to the greatest number of people who affects that.”

BP Cherry Point produces 230,000 barrels of oil per day. More than 60 percent of that stays in Washington state, he said.

The remaining product is transported to Oregon, California, Nevada and Arizona.

Kidd is joined by Rep. Doug Ericksen, R-Ferndale, and Rep. Kelli Linville, D-Bellingham, in opposition to the bill.

Both legislators said they were concerned about the possibility of losing jobs to states with a lower tax burden and voted against the bill in the 2009 legislative session, when it was first introduced.