TITLE
Recommendation to, by motion of the City Council, request City Attorney to draft a ballot measure that includes alternative 1 or alternative 2 in the discussion.
DISCUSSION
The City currently has two separate oil production fees. The oil production fee was originally enacted by the City Council in 1990. A 0.15 cents per barrel rate was set based upon a $24.49 a barrel price. This amounts to $.006 cents for every dollar of oil on the WTI.
There was no inflation factor included in the oil production fee so that it remains to this day as 0.15 cents per barrel despite the posted price of oil being $86.00 a barrel. The 0.15 cents per barrel on the current posted price of oil at $86.00 = $.001 cents for every dollar of oil on the WTI.
The revenues from the 0.15 cents per barrel rate go into the City General Fund.
In 2007, voters approved a second oil production fee. Proposition H placed a .25 cents per barrel fee and added an inflation factor based upon the Consumer Price Index.
The revenues from the .25 cents per barrel fee may only be used for: police officers and firefighters, and related costs including, but not limited to, equipment, facilities and training, all intended to ensure responses to public safety needs, natural and man-made disasters and possible acts of terrorism.
The City Auditor has noted in recent audits that oil production (amount of barrels) has and continues to be reduced, thereby bringing less and less revenue to the City with a per barrel fee.
Price of Crude Oil:
The price of crude oil is set by commodities trading based upon a number of factors: demand, supply and type of crude. The price has been historically volatile - particularly as the international oil companies manipulate production supplies.
Crude is refined into a number of products depending upon its “API Gravity” - which compares it weight in relation to water. The lower the number the heavier the oil. The value of crude is determined by two major commodity markets: ...
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