Summary: Surprise! add a tax on CA oil and you’ll wind up importing more oil from abroad.

California crude oil production, like that of the United States as a whole, is on a long-term downward trend owing to the failure of new discoveries to keep up with depletion from older fields. The state produces a little over a third of the oil we consume and must import the rest from elsewhere. This proposal taxes the oil produced in California but not any of the oil that we import, giving imported oil a tax advantage relative to that produced here. If you look just at the tax incidence of the proposal, it is inconceivable that the tax change could have any effect other than to reduce the amount of oil California produces and increase the amount we import from other states or countries. And yet, proponents of Proposition 87 advance as one of their arguments the claim that the Act would reduce our dependence on imported oil!

How can it make sense to tax imported oil at a lower rate than that which is produced domestically? One argument might be that oil production has environmental externalities, and Californians prefer to see this environmental degradation occur outside our state boundaries. However, it seems clear to me that the use of oil (both in refining and combustion) entails more significant environmental externalities than production of the kind that currently takes place in California, so if that is the aim, it makes far more sense to tax the users of oil rather than its producers. Furthermore, if the effect is to replace some of the seemingly benign production around Bakersfield with Alberta tar sands or Colorado oil shale, it seems absurd to try to justify that on the basis of environmental considerations.

full article here
http://www.econbrowser.com/archives/2006/10/proposition_87.html

My issue with ethanol is its 20% decrease in BTU’s and mileage. Then look at the cars that are now being made into flexfuel, the biggest cars in the carmakers fleet. So if the vehicle gets 18mpg on gas they are going to get 12-14mpg on E85. You are not going to get American people behind if they are going to be paying even more for monthly fuel costs. E85 vehicles should only be made in small vehicles getting over 30mpg already or be moved into ethanol hybrids and then just go all the way and do plug-in ethanol hybrid, that gets 80-100mpg

My Goal is that americans start demanding the highest mileage possible, like ethanol, biodiesel hybrids that are plug in. People could have the size vehicles they need but using the appropriate fuel for the weight and technology. Biodiesel hybrids can be used in all mid-size to large vehicles. Diesels get excellent MPG already, are very durable and can tow anything. Just increasing our MPG to 40 gallon average on 1/4 of the cars driven in the US would be equal to the amount we import from OPEC. And we havent even starting talking about emmission reductions, or how much biofuels can stimulate local and national economies if the money we spent on importing fuel was kept here and spent here.

Even If you never drive a diesel you are affected every day buy the effects of diesel costs and emmissions. Every product you buy has been hauled in a truck at some point.

Kari Lemons