Big Oil Misleads on California Renewable Energy Initiative
Big Oil Misleads on California Renewable Energy Initiative
In a few months, Californians will vote on Proposition 87, a ballot initiative that aims to reduce gasoline usage by 25 percent over 10 years. Specifically, the initiative creates an alternative energy fund by making oil companies pay extraction fees for drilling in California, much like they do in Louisiana, Alaska, and Texas.
Not surprisingly, the oil industry-funded opposition campaign is misleading the public about its impact:
Raising the cost of California oil will make companies more willing to import foreign oil into the state, which could raise pump prices, said Al Lundeen, a spokesman for the anti-Prop. 87 forces.
“We think it will very clearly impact consumers,” he said.
The initiative also would create a new state bureaucracy to administer the tax money, he said, and while California is one of few oil-producing states without an oil severance tax like this one, the other taxes it charges oil producers more than make up for that.
The facts show otherwise:
1. Prop 87 would not increase gas prices. “Since the tax would decline as the price of oil fell, it would not hurt production or affect gasoline prices, said Severin Borenstein, director of the University of California Energy Institute. ‘No one will shut down a well because of this,’ Borenstein said, adding that at most, it will discourage new oil-production projects. ‘I have seen no evidence this incremental loss in profit (for the oil companies) is significant.’â€
2) Prop 87 would not create a new level of bureaucracy. Section 6(b) of the initiative reorganizes and strengthens a current state board called the California Alternative and Advanced Transportation Financing Authority. The amendment will rename the board the California Energy Alternatives Program Authority, and expand the board from 4 to 9 members to include experts on energy markets, alternative energy, consumer advocacy, and public health.
3) Oil companies do not pay their fair share to the state of California. “Borenstein said the tax is not that high, noting that other states already have higher taxes on oil production, including Texas. California oil producers currently pay a severance fee, which is significantly lower than in other states, Borenstein added.â€
UPDATE: University of California Energy Institute director Severin Borenstein contacted Think Progress to tell us his quote in the first bullet point is inaccurate. (The Stockton Record did not quote him correctly.) According to Borenstein a better quote would be, “Oil is sold in a world market and the effect on production from Prop 87 would be negligible in that market. As a result, Prop 87 will not affect oil prices and will not affect gasoline prices.”
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34 Responses to “Big Oil Misleads on California Renewable Energy Initiative”
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You should see the ads against the proposition, there is a hug emphasis on word bureaucracy, almost like you are trying to tell the audience that the subject prefers sex with dogs, a hint of anger and disgust at the greedy politicians. I think the problem the oil companies are going to have, is well most people are not going to be too sympathetic
August 9th, 2006 at 6:50 pmBeing blue,the gab-fest people are going to think this is a open forum to prattle.
August 9th, 2006 at 6:58 pmIt is just another example of how the energy and fossil fuel companies want to keep California as their private exclusive market; how many times are Californians going to be thrown over the barrel for the benefit of a few oligarchs? What is really disgusting is that Schwarzenegger is claiming to be ‘all for’ renewable energy while he works overtime to stick a knife in the back of this proposal, aided by all the owned media outlets in California - who are doing everything they can to ignore a proposal that is by far in the best interests of all Californians.
August 9th, 2006 at 7:08 pmI would think that any voter, not working for the oil industry, that has vaguely heard of the criminal profits of the oil giants would be actively campaigning for the proposition. The best way to ascertain the validity of any proposition is to evaluate the proponents and opponents, not their arguments for or against, but their primary reasoning for taking sides (spending money) on the issue. Big oil does not, repeat does not, throw money around for humanitarian reasons. Big oil spends money because they have determined the pay-back ratio of their investment on any given issue. How much would the oil companies spend fighting or promoting a proposition that changed the State Flower from the California Poppy to the Kansas Sunflower? That number is exactly how much credibility and truth that can be found in their ads in opposition to Prop 87.
August 9th, 2006 at 7:14 pmComparing the tax rate in Texas to that in California is a mistake. While I support increased royalties across the board the analysis excludes a significant issue that could inhibit oil exploration/production: the environmental lobby and the NIMBY folks are certainly a ‘tax’ in Cali. Red tape is a significant risk and Cali has more than its fair share - you aren’t going to develop a marginal field if getting the permits is going to take several years as by then the price may have plummeted. Just because a company finds it attractive enough to pay at the current price doesn’t mean they will when a project comes online.
By the way, California is a marginal oil producer that has one large field that is more or less being ‘worked over’ and many smaller ones with the same ‘work over’ technology - it’s more expensive to extract.
So anyway comparing Texas and Lousiana to California is a mistake. The first two love oil, the latter one doesn’t.
And yes I support higher extraction royalties but I might be more supportive of California’s initiative if a section dealt with nixing oil taxes if a project is delayed by a state regulatory agency for x years.
August 9th, 2006 at 7:37 pmThis initiative creates a $4 billion dollar socialist bureaucracy with the revenues from this tax only providing $200 million/year of funding (depending on how this poorly written initiative is interpreted, it may be $380 million/year). The damage to the California economy outweighs the benefits.
Producers are defined by this initiative as anyone who produces oil, operates a well head or has a royalty interest in the well. This is also a tax on small well service companies and land owners who have mineral rights with producing wells. Why is this tax being portrayed as a way to penalize big oil when it really penalizes small business and land owners? This is just a money grabbing scheme by socialists.
Now some may argue that California will eventually see benefits from the emergence of the alternative fuel industry. But alternative fuels are not economically competitive with fossil fuel at this time. This initiative does not provide solutions, it only damages the economy while we wait years for alternative fuel to be a realistic energy source.
According to California Legislative Analyst:
Reduction in Local Property Tax Revenues.
Local property taxes paid on oil reserves would decline under the measure, to the extent that the imposition of the severance tax reduces the value of oil reserves in the ground and therefore their assessed property value for tax purposes. The size of this impact is unknown and would depend on the price of oil, which determines both the severance tax rate and the value of oil reserves. Under certain circumstances,
existing law requires the state to offset reductions in property tax revenues
experienced by K-14 school and community college districts. To the extent that this measure reduces property tax revenues to these districts, the measure could
increase, by an unknown amount, state funding obligations for education.
Reduction in Income Tax Revenues.
Oil producers would be able to deduct the
severance tax from earned income, thus reducing their income tax liability under
the personal income tax or corporation tax. The extent to which the measure would reduce income taxes paid by oil producers is unknown, as it would depend on various factors, including whether or not an oil producer has taxable income in any given year, the amount of such income that is apportioned to California, and the tax rate applied to such income.
Potential Reduction in Gasoline and Diesel Excise and Sales Tax Revenues.
August 9th, 2006 at 7:37 pmTo the extent that the programs funded by the measure are successful in reducing the
use of oil for transportation fuels, it would reduce the amount of gasoline and
diesel excise taxes paid to the state. Similarly, it would reduce sales and use
taxes paid to the state and local governments, under certain conditions. These
impacts would be offset, to an unknown degree, by increased sales and excise
taxes paid on alternative fuels, to the extent that the measure results in an
increased use of alternative fuels that are subject to these taxes.
Potential Indirect Impacts on the Economy. In addition to the direct impacts of the measure, there are potential indirect effects of the measure that could
change the level of economic activity in the state, thereby affecting state and
local revenues. For example, by increasing the cost of oil production, the
imposition of the severance tax could result in reduced production and/or
reduced investment in new technologies to expand production. The impact on oil
production and investment would vary depending on each oil producer’s rate of
return and the measure’s impact on it. To the extent that the measure reduces
investment in oil production, the measure could result in a reduction in
economic activity, reflected, for example, in a reduction in jobs and/or capital
purchases related to the oil industry. Additionally, if the measure results in
reduced oil production, over the long term it could increase the price of oil,
which could also reduce economic activity. Any negative impact on the economy
will potentially reduce state and local revenues through reduced personal
income, corporation, and sales taxes.
Nice copy/paste!
August 9th, 2006 at 7:45 pmIf all else fails, call your opponents socialists. Conservatives are not interested in moving on to the next energy source. They would rather run this one into the ground until it is too late to develop alternatives, or have some blind faith that “market forces” will magically bring alternatives about, with no investment required.
August 9th, 2006 at 7:49 pmOur military is a socialist institution, hippie. Very bureaucratic, too.
August 9th, 2006 at 8:32 pmI hope the oil execs own houses in Miami, which will be underwater due to their greed and lies.
August 9th, 2006 at 8:35 pmIt would be sad if Californians were deceived again by energy moguls.
August 9th, 2006 at 8:38 pm#6
It would do much for my earlier comment (#4) if you would identify your self, your interest in, or against, the proposition, your sponsors, and what you stand to gain or lose depending on the outcome of the election. Don’t be bashful, my friend, we may laugh and scoff at you a lot but we don’t bite–anybody but trolls.
August 9th, 2006 at 8:39 pmChant with me group…
ANWR, ANWR, ANWR!
August 9th, 2006 at 8:48 pmAfter much soul searching I have come to the conclusion that the price of oil, the price of gas at the pump, and oil company profits are unrelated. This way, when anyone tells me that anything (aside from raising a liquid fuel tax) will cause the price of gas to go up, I can believe they are full of it.
August 9th, 2006 at 8:58 pmdear world,
we have come to the conclusion that we have no future, therefore, we have no reason to care for the future. furthermore, our children (and especially your children, since it is too late for you moonbats) need to learn the difficult truths about natural selection and, more importantly, that financial gain is far more important than everything else.
so, to put it bluntly, there will be no world without oil. that, we can assure you.
and really, can you blame us? things might suck for you but it’s been going quite well for us, actually. and it has been since, well… we probably shouldn’t get into that, should we? it would just be rubbing salt in the wound.
one final thought: revelations is such a beautiful description of the end of life as we know it, and hey, we’re not going to waste it! we have to fulfil the prophecy. otherwise, the bible wouldn’t be true, and we can’t have that, can we?
praise the lord and his godly gift of oil and, lest we forget, george w bush.
oh, and jesus. heh.
‘THE HANGMAN EQUALS DEATH!
THE DEVIL EQUALS DEATH!
DEATH EQUALS DEATH!’
love and smooches,
August 9th, 2006 at 9:19 pmthe oil industry
“Why is this tax being portrayed as a way to penalize big oil when it really penalizes small business and land owners?”
This one is always my favorite. Like the poor farmer that will lose the farm cus the inheritance tax will cripple him (BTW, show me that farmer), it will be the little guy that gets burnt. Gimmie a break!
August 9th, 2006 at 9:42 pmThere are no conservatives in the Republican party. Just an template that Sammual and Prescott Bush provided for Adolph Hitler in the creation of Nazi Germany, down to the support for eugenics. The Republican party is a pathetic piece of authoritarin clones with a mind incapable of thinking in any direction but rule through military imperial pltocracy. The Democrats have given up on the working person and is hardly liberal, but works for K-Street connections, just as the Republicans do. The term conservative and liberal should be retired.
August 9th, 2006 at 10:53 pmOver here in Michigan we have a snake called a puff adder. They are perfectly harmless, but if they get scared they puff up and flatten thier head like a cobra. One day, I had a buddy by, that is less inclined to leave things be than I am. He kept poking at a puff adder (not hurting him), and the snake went through a whole repetoire of stunts. I can’t remember tham all, but of course the cobra thing was first, then I think about 5th or so was playing dead. Anyway, this thing went through about 8 different stunts, and then it went back to the first one, the cobra one, and did all the rest again.
What has this got to do with anything? The bush crowd seem to rely on a limited number of stunts, and use them over and over again. Much like the scaredy cat puff adder. During the 2001 Cali energy crisis, when enron was illegaly manipulating the market for profit, and Grey Davis was begging the feds (bush cheney et. al.) to intervene, bush gave several excuses not to intervene. Like : these are normal market forces, Cali has too many environmental laws, etc. But really what they were doing was covering for kenny boy (since smitten) lay. Does any of this remind anyone of the current situation. Oil co.s making record profits, gas at record prices, the excuse that these are just normal market forces.
Much like the puff adder these jerks have a limited number of stunts. They are apearant.
August 9th, 2006 at 11:02 pmOnce again Cali takes it in the backside for big energy. Could these bastards do anything that wasn’t shady or illegal? Buy electric cars Cali, put the fat asses out of business!
August 9th, 2006 at 11:13 pmBeing really stupid here.
August 9th, 2006 at 11:13 pmI went to Europe several years ago where they have strict pollution laws.
I rented a Renault station wagon with a 2.2 litre engine.
With 3 adults and 2 teenagers and all their luggage I got twice the milage out of this car with little polution.
Why? Laws covering pollution was dependant on motor tune up rather than crap added to motors.
Everything in NA is totally dependant on the computer.
No-one knows how to repair. Everyone knows how to look at computer read-outs.
Over here we are under the control of corporations telling us what is right for them, (not what is right for us).
Not only did I get great milage, I got great horsepower.
What is our problem?
What is our problem?
Comment by kimmy — August 9, 2006 @ 11:13 pm
You like the roar of big motors. Must be a low self-esteem issue.
August 9th, 2006 at 11:27 pmThe Oil Cartels lie about everything, so nothing surprises me anymore > greedy oil bastards!
August 10th, 2006 at 2:31 amLil dick cheney keeps telling us that its no mistake we havent been attacked since 9/11. No shit dick,the attacks have been in the planning stages. This proves how much of a failure this whole Iraq war has been,and this should be the talking point on every thread from here on out. Failure.
August 10th, 2006 at 7:18 amnytimes: bomb plot thwarted in britain
August 10th, 2006 at 7:50 am123nytimes: bomb plot thwarted in britain
August 10th, 2006 at 7:51 amguardian
chemicals
Reports suggested the plot revolved around liquid-based explosives, and all passengers from the UK and the US were being told they could not carry liquid or lotions onto flights. Heathrow officials said all milk for babies would have to be tasted by an “accompanying passenger”.
August 10th, 2006 at 8:22 amBig Oil = Bush Co
August 10th, 2006 at 9:10 amThese capitalistic fearmongers wreck havoc on anyone’s
common sense. Ultra clean Coal technology has emerged.
Montana alone had enough coal to provide the U.S. with all
of it’s energy needs for several hundred years.
No CO2, no mercury & no sulphur emissions.
What are we waiting for? The oil companies to provide a solution?
I wouldn’t bet on it.
‘Who Killed the Electric Car’? See the movie. Think about it.
The solution is staring us in the face.
Don’t let profit motive keep us off track.
Let’s outsource the oil companies for a change. Take control of
our energy market back & out of the hands of extremists and big
fat scumbages that think the American people owe them a fortune.
Bush gives AMERICA a bad name.
Well, duh! Of course the Big Oil isn’t going to give up its obscene profits without a fight!
August 10th, 2006 at 10:55 amNot to mention the fact that the oil companies (and many other corporations) have been pulling this same bull**** for years. They complain that if they have to pay taxes or see some sort of regulation it will hurt consumers and the price at the pump will go up. SO, in the past, nothing was done, the price at the pump went up anyway and oil companies see record profits which they use to further push their political or corporate agenda.
Now, obviously that is their business and they can do that. However, for politicians or the brainwashed consumerist public to believe this trip is complete stupidity and ignorance of anything that has happened in the last 20 years.
The price seems to be going up practically every day lately and EVERYBODY is saying that we shouldn’t expect prices to drop anytime soon. Meanwhile, oil companies are seeing record profits every single quarter.
Anyone with even the slightest amount of brain power should be able to realize that even IF oil companies are right, it is a million times better for those higher gas prices to go towards alternative fuel research (or anything that benefits the public) than into the massive vaults of the oil execs. We will never get off the oil habbit so long as people keep running scared like morons when gas/oil companies say “oh, but that will hurt the consumer when the price goes up at the pump.” Funny how only taxes or regulations causing prices to go up at the pump hurts consumers (according to oil companies) but prices going up to fuel their massive profit margins doesn’t hurt or impact the customers at all.
August 10th, 2006 at 11:58 am[…] Think Progress has posted responses to the claims of the “No on 87″ spot. […]
August 10th, 2006 at 6:15 pm[…] The “No on 87″ campaign is mostly funded by oil companies, with about $30 million in its reserves. The “Yes on 87″ campaign is relying primarily on donations from progressive billionaires and currently has about a $5 million budget. (Think Progress posted responses to claims made by “No on 87″ spots) […]
September 21st, 2006 at 2:33 pmMaybe oil companies in California pay their fair share. Maybe they don’t. But the key isn’t to simply compare the severance taxes between California and the other states - you need to compare all of the AGGREGATE production taxes between California and othes. After all, it really doesn’t matter by what MECHANISM a company is taxed - the only thing that matters in the end is how much money they pay as a percentage of revenues.
For instance, California does not have a Prop. 87-style “severance” tax on oil production. Let’s say State X has a severance tax on oil production at 10% of the oil’s value. But let’s also say that state X has no coporate income tax or property tax, while California’s coporate income tax is 10% and the property tax against the oil company is another 15% (That’s not what it is in CA - but I’m just using hypothetical figures here to illustate the point). California would then likely be taxing oil companies more than State X - even though CA has no Prop. 87-style “severance” tax and State X does have one.
California probably taxes oil companies more than many states, but less than others. But until you compare all of the AGGREGATE state taxes on oil production, this is just an academic discussion.
October 9th, 2006 at 8:26 pmThe $0.51 per gal. corporate welfare to the oil refiners for adding 5.6% ethanol to California gas is about $500,000,000.00 per year.
The ethanol may add over $1.00 per gal. to the gas profit in California.
That may be about $100 billion in oil profit from California motorists.
The science is interesting but so is the money.
A $4 billion Prop. 87 oil tax may add $40 billion in oil profit.
Charlie Peters
November 4th, 2006 at 2:21 pm(510) 537-1796
Clean Air Performance Professionals
[…] are paid for by Chevron. I was going to do a post about this Prop. in the next couple of days, but Think Progress has a great one up today that makes sense out of it all. Take a […]
March 23rd, 2007 at 2:10 am