When I first heard about oil tax Prop 87, I found it eerily reminiscent of the stem cell initiative, Prop 71, from a few years back.
Both involved big time Silicon Valley backers, both involved an emotional issue, and both involved the creation of a new state run agency that featured political appointees responsible for a lot of taxpayer money.
The other thing that Prop 87 and the stem cell initiative have in common is that it’s hard for me to be against the issue emotionally, while at the same time opposed to it ideologically.
When moderate swing voters are confronted by an emotional issue that is attractive and promises results far enough in the future that we think of it as long-term investment for our children, it becomes a “Hope Vote.” The hope ignores what the measures is actually likely to do, or not do as is the case here. The fact is that clean energy (alternative, cleantech, whatever you want to call it) doesn’t suffer from a lack of funding, just like stem cells did not, but rather an inconsistent public policy. As much as we would like to believe that Prop 87 will change that, it won’t because it doesn’t deal with the real public policy of energy, consumption, and genuine efficiency proposals.
If you want to debate the merits of E85 versus gasoline or what Brazil is really doing for energy (actual consumption is 50% diesel, 25% gasoline according to the Brazilian government, by the way) then that’s cool, because I’m really interested in fuel cells, hydrogen, cellulosic ethanol, and natural gas. But this debate really isn’t about the issue of the research itself so much as it is about the emotions that the words “oil companies” bring rise to.
The “Big Bad Oil Company” part of the Prop 87 pitch is sinister in the way it’s being sold to voters — if not through outright misleading information then certainly from a lack of information. For example, the Proposition backers say that oil companies – which are bad by the way, didn’t you get the memo? – aren’t paying any taxes on oil extracted from California, but what they don’t tell you is that California drivers are paying some of the highest gas taxes in the country, up to .42 cents a gallon in addition to the .185 cents a gallon in federal tax. Contrast that to other oil producing states and it’s about twice as much.
We are also being told that oil companies won’t be able to pass along the tax increase in the form of higher prices to consumers, but I’ve been sold that bill of goods before. I’m just not buying it this time. Companies can hike their prices, and blame it on something else.
Even if they didn’t pass along the cost, this would be essentially a windfall profits tax. A quick history lesson in windfall profits tax reveals they are disastrous at every turn, because of the nature of commodity markets. In this case, oil produced out of state would be cheaper to extract and ship,and be substituted for California oil in the refineries.
The other fact — that these taxes are deductible against corporate income taxes — means California could very well end up collecting less with Prop. 87 than from current income taxes.
According to the Congressional Research Service, the windfall profits taxes of the late 1970’s and 80’s had the effect of decreasing domestic production by 3 percent to 6 percent, thereby increasing American dependence on foreign oil sources by 8 percent to 16 percent with a side effect of declining, not increasing, tax collections.
That said, I’m not all that swayed by this, because quite honestly I wouldn’t mind paying a little more at the pump to support big ticket initiatives aimed at alternative energy (I really want a nuclear car). My deal-breaker issue on this measure is the fact that yet another state run agency will be created featuring more political appointees and less than transparent oversight, just like the Stem Cell Research Institute.
Tell me, honestly, do you know what they are up to? I don’t and you would have a difficult time finding out even if you did look into it, yet it’s $6 billion of our dollars in play.
In looking at the “state of the State” I find it hard to support the notion that Sacramento can be trusted with yet another agency when they struggle with education, roads (and bridges… Bay Bridge in particular), prisons and law enforcement, and mass transit, and the state has additional real challenges today with border enforcement, drug enforcement, and homeland security.
Maybe my emotional response isn’t about clean energy at all, but rather my lack of confidence in the state to do this more effectively and efficiently than the private sector. While the proponents will say this is about funding the private sector, you really can’t expect me or anyone else to believe that public officials, elected and appointed alike, aren’t go to be all over that money like, well, politicians and pork.
California has real needs involving state infrastructure and education that we are going further into debt on to pay for, these are real needs we have now that are not be adequately addressed.
Lastly, I resent former President Clinton and former Vice President Al Gore flying in and campaigning for these issues by making promises that can’t possibly be kept because they are so ambitious, despite the great sound-bites they offer. By the way, I would bet that the private jets that carry these VIPs into the state burn about 3,000 gallons of jet fuel from the east coast, that’s about 45,000 miles in a Prius and the only intervention from the state on that alternative energy vehicle was some tax incentives and a look the other way on the HOV lane usage.
Like Prop. 71, Prop. 87 is the kind of issue that I wish voters would take the time to understand, instead of voting on the “tax the bastard oil companies” or “it’ll make us more reliant on foreign oil” arguments that either side throws out.