Khosla responds to conflicts-of-interest charge on oil tax

September 27, 2006 | Matt Marshall | Comments | |

khosla31.jpgVinod Khosla, the successful Silicon Valley venture capitalist who is leading the effort to raise a tax on oil extracted in the California, has responded to the oil industry’s charges that he has conflicts.

In an interview the WSJ (sub req), Khosla says his investments in alternative energies aren’t really a conflict with his $1 million support of Prop. 87, which would levy a tax on oil – even though some of the tax proceeds would support alternative energy research.

Mr. Khosla, in an interview, says he wouldn’t accept the seat on the proposed California Energy Alternatives Program Authority if it were offered to him. He also says that if any energy companies he backs receive money through the initiative, he will donate his profit on those investments to charity.

Here’s a guy who has leaned Republican in his political views, who now says he doesn’t want to profit from his energy investments, and that he’s doing this for meaning only — to combat what he says are the misleading claims by the oil industry about economic hardships the measure might cause. We’ll se how the oil industry responds, now that the “conflict” wind is out of their sails.

See our earlier piece here, where we pitted Khosla against a leading oil guy in a set of Q&As.

The WSJ story is worth reading. It says Google co-founder Larry Page, Wendy Schmidt (wife of Google chief executive, Eric Schmidt) and Kleiner Perkins venture capitalist John Doerr have all given about $1 million each to support the tax.

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  • Lee C.
    "...that he’s doing this for meaning only..." Could it also be that he's doing it because it's the Right Thing to do?

    A couple of related thoughts. First the investing momentum and interest in 'Green' technology and 'alternate' energy sources is one of the reasons I have stayed here in the Valley. Still in the old economy (software), but it's pretty apparent the same dynamics (talent, capital, ideas) that inspired, nurtured, and drove the semiconductor, computer, software, and networking industries are at work again. This time with the potential for improving life on a planet-wide scale, and maybe even saving that Planet. I'd assert this is the Valley's new 'Mission.'

    Second, it will be interesting to see how green/alternative energy investments mature and unfold vis-à-vis existing entrenched players. The playing field in this domain has numerous incumbents with substantial economic, political, and mindshare stakes. I suspect the tit-for-tat written about here will be repeated in much more bruising fashion as new technology/enterprises/business models/solutions developed or financed by the Valley gain traction. A new venture that's raised funding will not only have to worry about developing a "product" and bringing it to market, but how to deal with additional political and extra-market forces. This is going to be LOTS of fun! Where do I buy a ticket, no, where do I sign up for team?
  • BurningMan
    He doesn't want the profit?! That was his only legitimate reason! Now all that's left is Vinod Khosla shoving his value system down the throats of every American.

    The Right Thing to Do? The creationists in Kansas /sincerely/ believe what they're doing is the Right Thing. Save us from Hell and all that. It still doesn't give them a right to force their political values on the rest of us.

    But Kansas is isolated to Kansas. As California is a significant oil producer for the US, Khosla is attempting to bend every one of us to his particular political view point. It is a shameful, shameful thing.

    Look, I hope Khosla's investments yield HUGE profits. I hope he changes the world. I hope those companies solve our oil-dependence problems, our global warming problems. When they create real value, a product I want, I am yours!

    I WANT a hyperefficient car which I can stuff banana peels into to create the 1.21gigawatts.

    But that's not what Khosla et al are doing here. This tax says, "you, John Q. Public, consume too much oil. I want you to stop. I have lots of political power and therefore I will force you."

    It is wrong when the creationists do it and it's wrong when the environmentalists do it. No matter how good your intentions. The road to hell is paved etc.

    Beyond the amoral approach, it's just a plain wrongheaded technical approach. The tax gives advantage to an arbitrary technology, in this case ethanol, and ALL OTHERS suffer as a result. Of all the infinite possibilities to solve oil and global warming problems, picking one like this is essentially guaranteed to fail.

    Meanwhile the whole country suffers in the shadow of Khosla.

    Maybe we can implore Russ Roberts to give us an elegant argument on the just-plain-silly economics of Khosla's Plan for our lives.

    http://cafehayek.typepad.com/hayek/
  • Ann Onimus
    I'm a big fan of getting off fossil fuel, but the way to do it is to make alternatives more efficient, not by making fossil fuels more expensive through taxes.

    Mr. Khosla wants his alternative fuel sources to be more competitive, so he wants you and me to pay a tax on gas. While were at it, the Mac is better than Windows and Windows is from WA anyway. So let's tax Windows, that way more people will buy Macs.
  • Lee C.
    Wow, this got strident fast... Like I said regarding his funding of alternatives is that entrepreneurial effort will encounter a lot of dynamics not present in traditional technology ventures. Glad subsequent comment(s) supported that view.

    Do agree that alternatives need to stand on their own, in the long run. Would be nice if there was a truly level playing field for all so the 'market' could make efficient decisions based on transparency, facts, and intellectual rigor.
  • BurningMan
    Strident indeed.

    It's important to be vocal here because so many of us California voters share the underlying values - Khosla's asphalt-to-everlasting-damnation good intentions.

    The tax is wrong. It is wrong economically, wrong technically, wrong morally. It will make people worse off. It will not solve the problems of oil dependence or global warming. It is not even a step in the right direction, because it discourages all the other Alt-energy options.

    It will only make Khosla's ego happy because he "did something."

    So, yes, I'm strident.
  • george
    The tax, as i understand it, goes to research. The dynamics of our oil addition have gone against predictable funding for alternative energy and predictable funding is exactly what is required. Instead of just complaining about this approach, offer a better alternative. Raising the tax on oil in a way that truely compensates for the incredible burden that it places on our society (much defense department spending, a very good percentage of infrastructure spending, some healthcare spending) would be a good start.
  • rdr
    BurningMan clearly needs to do more homework in finding out more about what is involved than making such cursory calls.
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