VentureBeat

The buzz around the growth of virtual world site, Second Life, is drawing more scrutiny from real-world regulators who fear they’re losing grip with the growing economy.

The site appears to have hit a sort of critical mass — and the attention is fueling even more activity.

A U.S. congressional committee has launched an investigation of the site, to see that people pay taxes properly on income they make at the site. Outsiders are scratching their heads at reports that several thousand people are pulling in $20,000 annual incomes by selling virtual goods and services, and saying “How can I get a piece of this?” Silicon Valley venture capitalist Bill Tai has been pitching Second Life founder, Philip Rosedale, on the idea of creating a central bank, which Tai would — benevolently, of course — run himself. Rosedale has held him off.

And now there’s a marketing start-up, Crayon, which says its launch Thursday will be the first real business to launch inside of the site.

Up to $500,000 in transactions take place daily at Second Life, and the economy is growing by 10 to 15 percent a month.

Vinod 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.