PROPOSITION 87

Make Big Oil pay? Or a recipe for waste?

Californians weigh a new tax on oil companies
Daniel B. Wood, August 29, 2006 (The Christian Science Monitor)
- How many other Californians are angry about gasoline prices - and ready for their state to take action - will be clear this November, when voters decide whether to levy a new tax on oil companies that drill in California and use the money for in-state development of alternative fuels…

- The fight over Proposition 87 is no small matter. Not only will the vote give Congress and other states a first reading of public disgruntlement over gasoline prices, but it might even affect the domestic oil market. California crude, after all, accounts for 12 percent of US production - supplying 37 percent of the state's oil demand…
- Prop. 87 aims to raise and spend $4 billion on alternative-fuel programs over time, with the goal of cutting Californians' use of gasoline and diesel 25 percent by 2017. It also would prohibit oil companies from simply raising prices at the pump to cover their costs of the new tax…
- Prop. 87 proponents say the initiative will eventually reduce oil use by supplying new technologies and alternative fuels for California motorists. It will also provide incentives to make clean energy more affordable, cutting polluting emissions, they say…

- Opponents say Prop. 87 would reduce revenue for local government, schools, public safety, and healthcare and drive up the price of gasoline, diesel, and jet fuel. Refineries in California would simply seek cheaper oil from out of state (not subject to the in-state tax), they argue, and demand for California crude would slacken…
- Each side has amassed a campaign war chest of more than $25 million. A California Field Poll conducted in July found Prop. 87 is favored 52 percent to 31 percent, with 17 percent undecided. But only 19 percent of respondents knew anything about the measure…
- But is it possible, really, to prevent oil companies from passing on to consumers the added tax, as the initiative proposes? Proponents of Prop. 87 say yes, citing the state attorney general's comments that it would be possible. Some economists, meanwhile, say the price at the pump is likely to rise for reasons beyond Prop. 87…
- Another hurdle for Prop. 87, say analysts, is voter confusion. Several state initiatives have failed during the past 10 years because voters did not understand their implications. In November, Californians will also decide whether to OK a $60 billion bond measure to improve infrastructure, and that measure could affect their decision on Prop. 87.
"This is a complicated measure with a lot of moving parts: creation of an independent board, severance tax on oil, money to provide incentives" for fuel alternatives, says John Matsusaka of the Initiative & Referendum Institute at the University of Southern California in Los Angeles. "I don't dismiss the possibility that the measure could have an effect, but the voters should not be asked to commit all that money on faith. Proponents have to come up with some reliable evidence."


Make comments, influence readers, have your say.

First thought: Take the 50 million they've got for the political fight and invest in wind turbines. Think it will bring in 4 mil by 2017?