Valley Firms Push California Oil Tax

isabotage3 writes, "Still smarting from California's recent enactment of emissions caps, the oil industry is confronting another assault in the Golden State — this one bankrolled in part by Silicon Valley tycoons pushing to fund conservation and alternative-energy initiatives with a tax on oil output. Slightly more than half the money raised by the Prop 87 tax would be earmarked to help cut gasoline and diesel use. Another 27 percent would be put toward alternative-energy research at California universities. The remainder would be used to help start-ups, retrain energy workers in new fields, and for administration." Oil companies claim the backers of Prop 87, some of them venture capitalists, would profit from state money flowing into the alternative-energy projects they are funding.

Comments

Trendy

[celardore]

It's cool to be green. Being 'enviromentally friendly' is currently some of the best marketing you can have. Take for instance, Richard Bransons latest pledge.

I'm not opposed to this sort of corporate behaviour myself.

Re:Trendy

[Jason Earl]

Which is why I am completely in favor of California raising its gas prices to pay for research into alternatives.

Re:Trendy

[IAmTheDave]

as long as someone else can be made to pay for it.

We should all pay for it. Somehow, this world has become so short-sighted, in-the-moment, materialistic, and irresponsible, that we have this aversion to making some sacrifices that benefit humankind as a whole.

Yeah yeah, communism blah blah, capitalism blah blah. What the hell is wrong with getting rid of oil? BEGONE! What's wrong with investing - heavily, I might add - in cleaner fuels?

Even if - and this "if" is pretty weak - there is no global warming, there is certainly high mercury levels in our oceans, polution in our oceans, rivers and wells, toxic chemicals in our computers, drinking water, meat, vegetables, etc. Being "green" seems to have taken on the conotation of only being about global warming - but it's so very much more.

We know that a lot of what we do as a people pollutes the earth. Even if it doesn't cause global warming, the dense brown layer of air the airplane flies into coming into LA or NY or even Philadelphia airports are disgusting.

We can have almost everything we have now, and in a greener, cleaner fashion. But gross consumerism and selfishness has us so completely stuck in neutral that without shit like rising gas prices and crazy-ass California passing laws like this, we might never move forward of our own accord.

Now, admittedly, my condo doesn't have solar panels to drive the central AC I enjoy. While about 50% of the bulbs I have in my house are the low-energy florescents (sorry about my spelling - lets GO Firefox 2.0!) the other 50% are not - and some are halogens. I do take somewhat lengthy showers, and yes, I wash my truck. That's "truck", not "car".

So I'm not perfect. But small changes mean something. I pay an extra $15/month for PECO to deliver only wind-generated energy to my condo. I replace all dead bulbs with low-energy (and long lasting) florescents. I use public transportation to commute (because it's available to me). I'm a consumer, but I don't understand why I shouldn't be a somewhat responsible one too.

Having the technology to be nicer to this planet and not using it because of sheer complacency is unacceptable. IMHO.

Re:Trendy

[Quadraginta]

Yes, I think the Black Death does offer food for thought. As I recall (it's been a while since medieval history class), the period just before the Black Death was one of economic stagnation, low wages, land scarcity and population pressure. The aftermath of the plague was a steep rise in the cost of labor, with consequent spread of prosperity at the bottom of the economic pyramid, a loosening of feudal constraints on trade and migration (since it was harder to hold a serf when he could make very good wages by skipping off to town), and an economic renaissance (called the 'High Middle Ages') that arguably helped bring about the Renaissance itself that shortly followed.

But the problem with this comparison is that death by plague is essentially a Malthusian crisis; it's a giant act of natural selection. It's bound to improve the species, by selectively taking those who are less healthy, less clever and capable, or who are making poor use of their resources. There's nothing wrong (as far as the species, not individuals, are concerned) with a Malthusian crisis.

What we've got in the present, however, is a different thing. As you said yourself, it looks like it's the most capable of us who are no longer breeding. It's almost an inversion of natural selection, something that would not make the species more healthy and successful, but which could lead to quite the opposite. Not good.

Of course, in the ineluctable calculus of Mother Nature, "capable" is as capable does. We may consider highly educated, morally-refined, sensitive individuals as the most capable members of our species, but if they fail to breed, then by Mother Nature's standards they are not -- they are simply an evolutionary dead-end which will be replaced by other branches of our species. The giant brontosaurs probably considered the biggest of them to be the most "capable" dinosaurs around, too. But they were wrong. It was the little guys with wings that made it.

That's why I myself (only partly in jest) favor stabilizing population by introducing a predator. Something large and agile, with fearsome claws and teeth, almost as bright as human beings, with good eyesight, smell and hearing. Let it roam the Earth, catching and eating people who fail to blend in discreetfully with their natural surroundings, who argue noisily with their neighbors or fail to dispose neatly of their garbage, or who, because of being on the cell phone, fail to pay enough attention while driving to spot the primitive deadfall traps (with crude but sharp stakes at the bottom) that the animals dig in the highways. Since the animals would be clever enough to stake out restaraunts or malls, we can imagine that the average level of human fitness would dramatically improve. No obesity pandemic when people must routinely sprint across open spaces, one eye cocked worriedly for that tell-tale rustling in the trees that presages fulfilling your destiny by becoming a tasty meal...

shocking, I tell you!

[nojomofo]

Oil companies claim the backers of Prop 87, some of them venture capitalists, would profit from state money flowing into the alternative-energy projects they are funding.

Shocking! Because I'm sure that the oil industry never profits from any legislation that they push, right? Why is it surprising (or wrong) that people are pushing bills that help them?

No on Prop 87?

[Rupan]

I live in Silicon Valley. I often hear anti-prop 87 ads on the radio and TV. One day as I was driving to work I decided to listen to the ad carefully. At the end, as required by law, they state their sponsors. They (quickly) list a number of individuals, the last 2 or 3 of which are actually oil companies. It is for this reason that I decided to look into the issue. This tax will be levied on the oil companies. They will be forbidden by the law to pass the cost on to consumers, so this will NOT raise gas prices. So, to recap: 1) oil companies have to pay their fair share to improve the environment; 2) the tax cannot be passed on to cunsumers; 3) This will benefit researchers and universities Do not be fooled by the anti-prop 87 propoganda.

Re:No on Prop 87?

[0racle]

this will NOT raise gas prices

Of course it will. They'll just raise prices for 'another' reason. Just like it's illegel to fire someone for being gay. If you want to get rid of them for being gay, you just give them another reason and let them go.

Re:No on Prop 87?

[thrillseeker]

This tax will be levied on the oil companies. They will be forbidden by the law to pass the cost on to consumers, so this will NOT raise gas prices.

Announcement: The Laws of Economics have been suspended in California. Yes, Viriginia, there is such a thing as a Free Lunch!

Re:No on Prop 87?

[BadAnalogyGuy]

The prop, if you've summarized it adequately, does not go far enough if its goal is to reduce emissions and promote a cleaner environment. It fails to reduce the actual fuel consumption at the pump by omitting the two things that would actually make a difference. First, it does not allow the tax to be transferred to consumers. Second, it does not levy a tax against gasoline consumers. The cost of gas must increase if you expect to see an impact in fuel consumption. It must be a bottom-up plan that forces consumers to consider alternative forms of transportation. A simple top-down plan that attempts to replace current transportation with cleaner forms will not succeed because there is no incentive for people to make the switch away from their current mode of transportation.

It's a bad law. Not because it goes too far, but because it does not go far enough to achieve its stated goals. Additionally, it attempts to manage the marketplace in an unnatural way which is bound to lead to some strangeness later on.

Re:No on Prop 87?

[stuartrobinson]

I live in the Bay Area, and Prop 87 sounds great in theory, but I'm pretty skeptical about the part of the costs not being passed on to consumers by law. How specifically is that supposed to be prevented? I find it hard to believe that it's really possible but I don't know much about the specifics.

Re:No on Prop 87?

[BadAnalogyGuy]

Which is why I suggested the tax at the pump where the consumer is most directly exposed to the tax. In California, the gas tax is already sky high. Raising it further will have an effect, even if it is only in that people take less long drives or drive more gas-consciously. You can't expect everyone to drop everything and buy a new Prius just because the gas prices went up. But you can expect them to use the gas more carefully than if they were paying 99 cents a gallon for it.

It is from the decrease in gas usage that you will see the biggest pollution delta. Since the goal is to reduce emissions and promote Earth-friendly technologies, they have already made the decision that they value the environment over their economy (or at least moved the environment up the ladder of priorities).

If they want to reach their goal, they need to change people's behaviors. There are millions of individuals whose cumulative effect is greater than that of the all the oil companies combined. If you could get them to reduce their driving by a couple percent, you'd gain a much greater benefit than if you got only a tiny fraction of them into eco-friendly cars.

Re:No on Prop 87?

[Quadraginta]

It can't be prevented, any more than water can be made to flow uphill.

Here's one guess as to how it will shake out: Prop 87 passes, because Californians are generically such fools as to routinely believe they can get something for nothing, if a majority votes in favor of it. This makes extracting and selling oil in California less profitable than doing so in Texas or the Gulf of Mexico. Therefore, oil companies with multi-state operations -- which is to say all of the big ones -- will reduce their business in California and increase it in other states. The reduced supply of gasoline will, quite naturally, drive up the price. Zap, the tax has now been paid for by the consumer, as it always is.

Can this be prevented by even more legislation? Of course not. So long as California cannot change the rules of doing business in other states, the most it can ever do, while pursuing the fool's gold of squeezing money out of those damn "rich" corporations, is impoverish itself by driving successful business to other states.

Re:No on Prop 87?

[thrillseeker]

Do you know of any consumers who would object to a price cap on gasoline?

Only those who were smart enough to take an economics class.

Re:No on Prop 87?

[14CharUsername]

Ah, so its just like slashdot then?

Generally speaking, you're right costs usually get passed on to the consumer. Unless there are regulations prohibiting it. Of course you could say that they'll find a way. But if the oil companies charge californians more than what they charge elsewhere in the US, well its pretty obvious whats going on. And if they jerk around people too much then california can simply regulate gas prices. Which they really should do regardless, since this has been done where I live gas prices are much lower than the price the oil companies set elsewhere and yet gas stations are still making a profit. Funny how that is.

It all really depends on how much competition there is in the oil industry. You see back in the days of Rockefeller and Standard Oil they had a monopoloy on the oil industry so they could charge whatever price they wanted. But even then they found an optimal price point that maximised their profits. If they charged more than that people would drive less, use alternate forms of transportation, etc. In a free market the price is decided by the costs of production vs. demand. In a monopoly price is determined by scarcity of the product vs. demand, with the monopoly deciding the scarcity. Although in this case it may be OPEC (or the fact that we're just running out) deciding the scarcity as well.

So a tax effectively increases the cost of production. In a free market this shifts the supply curve and the price increases. But in a monopoly the price is determined by the demand and the artiificial scarcity that the monopolist creates to gain profit. Niether of these are affected by the cost of production (unless the tax is so high that it takes away all the oil companies profits, of course).

To summarise, a tax on a competitive company will be paid by the consumer while a tax on a monopolist (or oligopolist) will be paid out of the monopolist's profits.

And regulating the oil industry is relatively simple. We know the cost of crude oil, we know the cost of refining it. It's very simple to calculate what the cost of gasoline should be.

Re:No on Prop 87?

[evilviper]

First, it does not allow the tax to be transferred to consumers. Second, it does not levy a tax against gasoline consumers. The cost of gas must increase if you expect to see an impact in fuel consumption.

You can raise the price on bottles of oxygen all you want, but if there's no alternative at any price, I'm just going to be screwed by the high price, and HAVE TO pay it.

When Ethanol, Biodiesel, etc., are available in volume, THEN you can raise prices, and see some change. Right now, people will just have to pay it.

If you think everyone will just take public transportation instead, you're so wrong it's not funny...

Re:No on Prop 87?

[tsotha]

But if the oil companies charge californians more than what they charge elsewhere in the US, well its pretty obvious whats going on.

Uh, yeah, it is obvious when you realize oil companies have to produce special formulations for California because of clean-air restrictions. I still think those restrictions are a good idea, but of course we're gonna end up paying more at the pump. That and the state won't allow any new refineries, so there's an artificial bottleneck. You realize all California's imported oil comes by way of tankers and is refined in California, right?

By the way, the profit in the retail gas business all comes from the mini-mart, while the gas is break-even or a loss. I've known two gas station owners. They both made a lot of money, and both of them lost money on gas. So the retail gas price in CA is really quite a bit lower than it should be, except people are willing to drive around to pay one cent/gallon less on gas and fifty cents more on everything else they buy. Go figure.

Re:No on Prop 87?

[Shag]

I'm a consumer in Hawaii, which had a cap on (wholesale) gas prices. The cap was determined each week based on some spot prices on the mainland. When the cap was in effect, our gas was consistently a certain amount above the average of those spot prices.

So the oil companies said, "you know, if your gas price cap weren't there, your prices wouldn't be linked to the mainland prices and you'd probably pay less.

And enough fools believed them that the cap was done away with.

Shortly thereafter, mainland prices dropped something like 40 cents a gallon.

Ours didn't budge.

The moral? Don't believe an oil company that claims to be showing you a way to give it less money.

I think our prices have now, after several weeks or months, dropped about 20 cents. Some places on the mainland, gas is under $2 a gallon again; here, the cheap stuff is $3.40.

Re:No on Prop 87?

[albanac]

$2 per gallon. It's practically $2 per litre in most of the rest of the world...

Re:This oughta be interesting

[bahwi]

Yeah, except california is a big state. They wouldn't stop selling gas there if it meant the gas was being used to burn babies alive, they'd still sell because it's such a big market.

Ugh

[Anonymous Coward]

While I definitely like the idea of strongly encouraging less oil consumption and less driving, the Libertarian in me says the government should stay out of it. If there's a profit to be made in alternative energy, someone will do it. More importantly, private business can do it a hell of a lot better than the government could hope to, and the free market will select a better winner than the government can.

One of these days, I'm gonna finally move myself out of the Socialist Republic of California...

Re:Ugh

[bunions]

> the free market will select a better winner than the government can.

Just like it did with HDTV standards and the US cell phone market, eh?

While I agree that the law in question is bad, blind faith in the free market, while fashionable, is misplaced.

Re:Ugh

[99BottlesOfBeerInMyF]

While I definitely like the idea of strongly encouraging less oil consumption and less driving, the Libertarian in me says the government should stay out of it. If there's a profit to be made in alternative energy, someone will do it.

What does the libertarian in you say about people randomly shooting firearms in the air in populous areas, resulting in random deaths amidst all of society? Who should bear this cost, the people shooting or all of society?

Using gasoline is like shooting in the air. It pollutes the environment causing health and likely climate problems for all of society, not just those using it. It is not practical to ban it. It is not practical to tax everyone who uses gasoline, except by taxing gasoline itself. Right now if a person rides a bike every day, they are still forced to deal with the problems to their health and environment people using gasoline have caused. In effect, they are subsiding those who use it.

By earmarking this money for alternatives, you're paying back the users of alternatives for the detrimental effects of gasoline use that they are not contributing to and at the same time, passing that cost on to those who do use it. It is not ideal, because the level of subsidy is never going to be the exact same as the cost (which is already subjective). Still, it is a step in the right direction, IMHO.

Re:Ugh

[99BottlesOfBeerInMyF]

Wow, what a bullshit analogy. Exactly what purpose does shooting in the air in populous areas serve? How does it fuel our economy?

The analogy is apt for the aspect we were discussing, differing only by the degree of benefit and harm, not the principal. As for fueling our economy, it fuels bullet and firearm sales as well as the health care industry.

It's a criminal activity, and anyone doing it should be locked up in prison to rot.

So in principal if we passed a law banning burning fossil fuels, then it would be the same? Whether or not something is criminal is just a matter of how much society as a whole is against it and the legislature responds.

I ride my bike to work whenever I can. I'd love it if gas prices were $10 a gallon so that people were forced to change their lives and seek alternatives. But not if it's done at gunpoint by the government.

Capitalism cannot redress costs that are not charged to those who use the product. How much does the use of gasoline, that you do not use cost you in quality of living and risk? You don't think you should be compensated for that? What if you develop lung cancer and it is 100% proven it is due to smog from cars? Should you have to pay your healthcare costs or should those who poisoned you?

This proposition earmarks money for alternatives. So who gets to decide what projects get money, and how much they get? The government?

Yup, that half of this type of redress will be very inefficient, just like socialist programs. That does not mean that inefficiency should be an excuse to do nothing.

Do you want that sort of agency deciding where your dollars go?

If the alternative is my dollars stay in the pockets of those who burn fossil fuels, providing them incentive to keep doing so at my expense, yes.

I don't. I want to choose where my money goes. I feel that I can be a much better judge of what projects may be worthwhile.

That is not an option. This money either will be taken from those doing damage and inefficiently given to those trying to stop it, or it will remain in the hands of those doing the damage. Unless you can come up with a better solution or you honestly believe everyone who buys gas will contribute additional money to paying to clean it up, while those who don't use gas won't.

I want the freedom to give to the organizations I that I trust will do the best job.

Most of the benefit of this is simply taking money from those that use gas, and counting on them to act in their own best interest and try to use less. Your solution does not do that at all, and thus fails to achieve the same goals.

The road is paved with good intentions

[paranode]

It hardly seems logical to put the burden of this on the oil companies. While it is in their interests to eventually carry over into alternative fuel markets, taxing the crap out of them to force it defeats the free market and ultimately ends up punishing the consumer. As with many of these types of programs, it will drive California even higher into 'expensive to live in' status. That is, if the oil companies don't just jump ship altogether for a more friendly state.

This is just an attempt at the 'blame game' to punish oil companies and help California seem more 'progressive'. While they're at it why don't they tax Coca Cola so that we can find soda-alternative drinks! Or maybe tax Silicon Valley itself a little higher to fund research into alternative computing?

Re:The road is paved with good intentions

[99BottlesOfBeerInMyF]

It hardly seems logical to put the burden of this on the oil companies. While it is in their interests to eventually carry over into alternative fuel markets, taxing the crap out of them to force it defeats the free market and ultimately ends up punishing the consumer.

Actually, it does make sense in a way. Oil based fuels contribute to detrimental factors in our society that are not reflected in the cost of the product. For example, those selling and those burning fossil fuels do not pay for cleaning up the smog or for all the related health problems likely contributed to by oil. So while some person may ride a bike every day, or buy an expensive alternative vehicle, they are still also dealing with smog they did not create. Thus, they are actually subsidizing the oil companies and users. By taxing products that are detrimental to everyone, not just those that use them, some of those costs are brought back to the oil companies and oil users. The problem is finding the right balance.

As with many of these types of programs, it will drive California even higher into 'expensive to live in' status.

Nope. The law forbids them from raising the prices in California to make up for said cost, so in reality the cost will be borne by oil users in all the US, not just CA. This actually subsidizes the cost for CA residents at the expense of everyone else, a smart move on their part.

That is, if the oil companies don't just jump ship altogether for a more friendly state.

BT says to Shell, "Yeah we're going to stop selling into the multibillion dollar CA market, we'll pull out right after you do." Not going to happen.

This is just an attempt at the 'blame game' to punish oil companies and help California seem more 'progressive'. While they're at it why don't they tax Coca Cola so that we can find soda-alternative drinks!

So here's where this differs from a traditional "sin" tax. Usually, harmful products like alcohol primarily harm the user. Coca-Cola, for example, does not harm anyone who does not buy it. Oil harms everyone regardless of whether or not they buy it.

Re:This oughta be interesting

[Elwood P Dowd]

Wait until the Oil companies refuse to sell oil to anyone in California.

Oil is a commodity good.

Ah I see

[finkployd]

Oil companies claim the backers of Prop 87, some of them venture capitalists, would profit from state money flowing into the alternative-energy projects they are funding.

Ah, business patent violation I'm sure. No wonder the oil companies are mad.

Finkployd

same old song and dance

[avi33]

It reminds of that manuscript recently dug up from the 14th century.

If there's one thing we don't need, it's the King and his "men of science" dictating their values to the marketplace. It's businesses like mine that are leading this nation to prosperity. If I have to refrain from tossing my pissbucket out the front steps, and deliver it all the way to the cesspool, it will cost me money, and I may have to lay off some peasants as a result. Besides, it hasn't been proven that these so-called bacteria even exist, and if they do, maybe they don't cause the black death. Maybe they will make our teeth straight and white forever. I say we should wait and see.

Sometimes government-mandated values work for the greater good.

Ethics

[Archangel Michael]

So, you think it is ethical to tax people (take money by force) to hand it over to private entities, for political purposes, while not actually having to provide anything useful, while knowing that the results of the research will not be free (as in beer)?

Or is it just that you think Oil Companies are evil and anyone opposing them is good? Last time I checked, the Government made more on Oil Taxes than the Oil Companies made in profits.

Re:Ethics

[Waffle Iron]

Last time I checked, the Government made more on Oil Taxes than the Oil Companies made in profits.

And those oil taxes come nowhere near military expenditures that the government pays to ensure worldwide security for the oil market. So the government takes additional money by "force" from the rest of us to subsidize the oil industry by providing them with free security services.

Taking some tax money and allocating it towards finding energy sources that don't require major projection of military force to secure could very likely end up reducing the overall amount of money that's "forcefully" collected from you in the long term.

Misplaced priorities

[j. andrew rogers]

A far more productive activity with respect to reducing fuel usage that would not involve California creating yet another destructive tax would be to allow high density development in places like Silicon Valley. It is the height of stupidity that the same political class that wants everyone off the roads and/or to take public transportation adamantly refuses to allow the high density construction that would make it feasible. Far more fuel use reduction could be obtained by simply letting developers turn the vast suburban sprawl of places like Silicon Valley into an urban environment, but apparently this offends their sense of aesthetics.

If they were serious, they would start with the absurdly contradictory positions of city planners rather than inventing a new tax that will invariably get pissed away with no obvious benefit.

Re:Misplaced priorities

[j. andrew rogers]

"Except that I don't want to live in HIGH DENSITY URBAN area. I want a yard where my kids can play, unmolested by child preditors, gangs, drug addicts. You know, that thing called "outside"? Take your high density living and force it upon yourself."

Your argument is entirely misplaced. Right now, they are forcing developers to NOT build high density urban construction and so the suburban sprawl is the default. I am not suggesting everyone should live in an urban environment, I am suggesting that people should have the choice. I do not care if you choose to live in the suburbs, my point was that the city planners are FORCING everyone to live in the suburbs whether they want to or not. The point is nominally to reduce average fuel consumption, not to force people to live in some particular type of neighborhood. Allowing people that want to live in an urbanized environment to live there will reduce average emissions for the whole area.

Re:Misplaced priorities

[LWATCDR]

It really isn't about forcing people to live in an urban environment.
It is allowing them to.
Right now it isn't possible to build a high density project in much of Silicon Valley. So what is happening is people are being FORCED to live in a sprawling suburban landscape. The homes that are nearest the jobs are the most expensive so the poorest people are forced to drive longer distances to work. The tax on fuel would tend to place the greatest burden on the people that make the least. Also a high density doesn't have to mean a lack of open spaces. By creating a higher density of living space you can increase the public green space. You could actually free up more land for parks, bike paths, and sports fields. Just don't let them build golf courses!

Suburban living does take more resources than urban living. So yes your choices are not the best for society as a whole. But then paying for cable tv, going out to eat, spending money on movies and dvds, and owning an iPod all take up resources that could be used for feeding the poor. The National endowment for the arts is also money that could be used to cure AIDs in africa.
Many of the choices we make that add value and pleasure to our lives are in theory less than optimal for the world as a whole. The key is the trade off between making live worth living and the resources that we use. That is a personal choice. I don't live in an urban environment my job isn't in a large city and I live as close as I can to it. I also like my big yard :)

Money flowing

[Mateo_LeFou]

My memory is fuzzy, but I think one of the initiatives meant to encourage alternative-fuel R&D was a big subsidy for that industry. This gets added to our tax bill alongside the giant subsidies to the oil industry.

I don't get it. If you want to level the playing field, why not retract the fossil fuel subsidies?

On a sidenote: do conservatives really think the US has a "free market" when all this govt. money is being pumped into damn near every industry?

Re:Money flowing

[Erectile Dysfunction]

Because the Myth of American Capitalism was useful in making a stark contrasts with the evil Communist Russians during the Cold War, and has since been useful for dismissing everything from environmental regulation to deciding which businesses are to receive subsidies (by calling subsidies for the other businesses "socialist"). They aren't really conservatives, they're just using words with their base that get them elected. It is customary to ignore all of the intervention in the economy except the ones that you don't want. In the end they funnel their pork to their states, and despite electing them based upon their capitalist rhetoric, their constituents are pleased to receive the handouts and vote the same in the future.

Re:Money flowing

[evilviper]

I don't get it. If you want to level the playing field, why not retract the fossil fuel subsidies?

The state of CA can't retract federal subsudies.

Re:Money flowing

[phantomlord]

how come whenever anyone proposes stuff like net neutrality or alternative fuels the conservatives say "the free market will take care of it"?

I'm a conservative in the strict Constitutionalist sense of the word. I think limited regulation is good but too much regulation or no regulation is harmful.

I see net neutrality as a solution in search of a problem. Some ISPs are out there threatening to charge the Googles of the world extra fees for carrying their data, throttling VOIP so it can't compete with their service as well, etc so people here at Slashdot are in a tizzy that something needs to be done to regulate it. That's the wrong attitude because it instantly assumes that the customers are completely powerless and can exert no force on the markets themselves. The minute popular sites like google get throttled, customers will be all over their ISPs complaining about how things don't work right and that if it doesn't get fixed, they're leaving for a competitor who won't engage in such practices. If every provider in the area engages in such things, someone will step in and change that if the customers rattle their cages loud enough. They could build a co-op, threaten to terminate utilities monopoly rights to the roadsides unless they comply, etc.

Legislation is the last step to try, not the first. Government is rarely the solution to problems because it is the largest tool you have and it WILL affect things in unforseen ways. Net neutrality gets implemented and suddenly, ISPs can't setup a low latency path to popular game servers to improve their customer's gameplay, they can't cache large popular files with a proxy, etc. Depending on the language of the bill, they might not even be able to peer with a larger network with faster pipes than a smaller network. There are tons of unforseen consequences in such broad legislation and you take a huge risk that you're going to make things worse... and good luck on fixing it after one bill has already been passed, it might take decades.

All that said, just up the thread here, people asked why conservatives think we have a free market economy. We don't think we have a free market economy. LOTS of us regular joe fiscal conservatives believe that the amount of regulation and taxation is EXTREMELY out of control though. Personally, I want to see the federal government reduced to what it's legally allowed to do under the Constitution (ie, handle interstate commerce and foreign relations (including military) and that's about it) and a lot of conservatives would agree, even many who are trying to get into office for the first time. However, once you're actually in office, your idealism all fades away as you realize you have no hope of changing anything because if you refuse to take pork for your district to set an example, the money will just get spent somewhere else and your opponent will accuse you of not bringing home the bacon. Try to reduce the federal entitlement programs (which are ALL ENTIRELY Unconstitutional IMO) and you get demogogued about wanting to starve children and old people, throw people out into the streets, etc. The longer you stay a part of that system, you will eventually lose faith that you can push your ideals into action.

In fact, that is one of the reasons why it was a HORRIBLE idea to make Senators popularly elected instead of chosen by state governments. It's the United STATES of America and the Senators were there to push for the interest of the states instead of being beholden to the immediate interests of the people. The Senate was once the chamber of esteem and statesmenship but today, it's more raucous than the house because usually a Senator has to pander to a significantly larger group of people and often, will only play up to the major population centers while ignoring the rest of the state. Here in NY, most of the state is actually fairly conservative - you'd think we were a midwest state but New York City dominates the state's politics on every level and instead of having a balance

Re:Follow the money

[BluedemonX]

There was no "less" on the end of his statement.

Bush has been spending freely like there's no tomorrow. No war, corporate perk or handout to the rich that can't be put on the credit card for others to pay later. While cutting taxes for the top 1%.

I think I speak for everyone when I say...

[Garse Janacek]

Still smarting from California's recent enactment of emissions caps, the oil industry is confronting another assault...

Poor, poor oil executives :'(

Damn it people, when will you finally stand up and say "enough is enough?" These people already have to suffer through the uncertainty of how to spend billions in federal subsidies, and what to do with their record-breaking profits, higher than that of any other industry at any other time in human history... that's a lot of pressure! And now this?!

These people are true unsung heroes.

Re:This oughta be interesting

[rubycodez]

anyone could buy it and then resell it in california, just raises the price a tad

Taxes on oil companies end up being paid by people

[johnlcallaway]

Tax a business, their costs increase, they pass that charge onto their customers. If you are going to tax it, tax it at the pump so everyone knows about it. Provide tax relief for people who will be impacted, and get on with it.

Know why gas went to $3/gal in the US?? Because PEOPLE WERE WILLING TO PAY IT. They griped, they whined, they complained, but everyone still went down to the gas station once or twice a week and filled up. Don't believe me?? Why do people pay 5 cents more a gallon for gas when they could go across the street and get it for less?? Or 20 cents when they could drive 5 miles and get it for less?? Because they can. Oh, they'll whine about the cost, and then they'll eat Kraft Macaroni and Cheese one night a week instead of spending $25 for pizza for the family to make up for it.

My heart goes out for the minority that can't afford it, but businesses are in business to make money, not provide charity work. The funniest thing I heard was someone whining about Exxon's record profits. I didn't hear anyone offering to give them money several years ago when their profits were in the crapper.

My daughter, bless her heart, wanted a new car. She went out and bought a Yaris and now gets 40MPG. Toyota can't keep them on the lot. I bought a motorcycle a year ago and get 50MPG, so there are already means to reduce consumption.

As for those 'cheaper alternatives', where are they. Ethonal?? I've read mixed reviews, some claiming it's the answer to everything, some claiming that the resulting agribusiness pollution might be worse than what comes out of our tailpipes now. Hybrid cars?? First, they cost more. Maybe their effective MPG makes up for some of it, but the anlysis I've seen says they are still more expensive in the long run once you start swapping out batteries. Biodiesel?? There is only so much french fry oil in the country.

My fellow citizens of the USA have it easy -- just look at the price of gas around the world. This is one of the cheapest places to by it.

And we still whine....

Go slow, but steady.

[WindBourne]

It would be good if they implemented these taxes over a period of time. Say raising ten cents every 6 months. If you do that, you give the sellers and buyers time to adjust. The real issue is that we politics coming in and skewing things all the time. JC pushed America hard core towards Alternative. Reagan pushed us back towards oil. Poppa Bush/Clinton left it up to the free market. And W. has pushed us hard core towards oil. If a state is going to have a success, they need a long-term view on change and one that is voted in and can not be repealed. If the tax is applied over a period of time AND they know that it will increase (as opposed to hoping that it will decrease), then companies such as EEStore and Tesla will do what GM/Ford/Toyota/etc are unwilling to do.

Re:Fat Cats

[ackthpt]

The Fat Cats want the consumer to have as much excess money as possible to buy more of his product. The Nanny State wants the consumer to have the minimal amount of money possible to not revolt.

Ideally, you want to maximise your return on as little product as possible, that way you don't run out of your money making stock. Doubled the price, gasoline still sold in large quantities. I work in California and am shocked how many people won't pay $180 for annual school bus fare, but will happily join the morning grid-lock to transport their kids and burn through a few $ of fuel per day.

Bring it on!

[Travoltus]

We're the world's 6th largest economy. If we tank, they tank. Demand plummets because California's out of the equation. Oil prices fall, and their stock falls.

Plus, we get to pursue alternative energy a lot faster. California will be bruised but we'll come out of it even better off than Brazil.

Then the rest of the world will follow our example, and the oil companies will get bent over like a cocktail waitress wandering into the NFL post game locker room.

Reduce fuel costs

[cubicledrone]

How about a tax credit for telecommuting? Ding! Traffic goes away.

But see, that would take control away from asscrack middle managers who insist on being able to penalize people for failing to leave for work two and a half hours early (and therefore miss breakfast and time with family) to overcome miles of 5 MPH traffic and unreasonable traffic signals. All we have to do to solve 21st century traffic problems is to get the fuck OUT of the 19th century workplace.

You bet they are, but what of it?

[WindBourne]

This is like having Cheney meet with the top oil guys for a national strategy back in 2001, except;

1. These guys are looking out for America's long-term interest as opposed to looking only for your own interest.
2. It is in the open.

There is no such thing as a free lunch

[joe_n_bloe]

Increased costs are always passed on to consumers. If oil production becomes less profitable, supply is reduced, and, guess what, the price goes up. You can't legislate pricing without inducing shortages (or, alternatively, in the case of price supports, creating surpluses). Anyone here remember gasoline rationing? Was your license plate even or odd?

Is this the best we could do?

[Random Utinni]

When the issue is a California proposition, the best article we could find to link to was from the "Northwest Florida Daily News"??? Huh?

Here are some more local sources that might be useful in the debate... and yes, the critical sites do raise the same point... from within California.

(Neutral)
Secretary of State's Analysis

(Critical)
Local Blogger
Official "No" Site

(Favorable)
Official "Yes" Site

Re:Screw them.

[Archangel Michael]

You do realize that more people have died in California Car Accidents than US soldiers in Iraq War, during the same time frame, right?

And while you're on the subject, how much money is not being a Muslim or dead worth to you? Or perhaps we should be like Chamberlain and bring back a piece of paper stating Hitler will not invade.

While I have my problems with Bush, I don't see the democrats offering anything worth considering except "we're not Bush". They could be worse than Bush, it is possible, you know.

You commies have it all backwards

[Travoltus]

Forcible transfer of wealth from the citizens to the wealthy and the corporate elite = the American way

Transfer of wealth, forcible or market-aggravated, from the wealthy and corporate elite to the citizens = godless communism = bad, bad thing.

[neo con parody off]

Re:Follow the money

[operagost]

Why shouldn't we cut taxes for the top 1%, as long as we are cutting them for everyone? In fact, everyone who actually pays taxes got a tax cut-- and the people on the bottom got the biggest percentage, so it was still good ol' socialism at work. But you probably couldn't know that because all the media ever reports is "tax breaks for the rich."

Backers

[Pfhorrest]

Oil companies claim the backers of Prop 87, some of them venture capitalists, would profit from state money flowing into the alternative-energy projects they are funding.

This just in: people who support proposed law think they somehow stand to benefit from said law. Film at 11.

Saying "yeah, of course YOU like that, it does good things for YOU!" is no argument against anything. You need to show that it also does bad things for someone else (or in the case of something tax-funded, where there's the automatic bad thing of costing us money, you need to show that it provides insufficient public benefit).

This is no more interesting than saying "Rich folk claim that welfare supporters, many of them poor, stand to benefit from such laws". Of COURSE they do. The question to the rest of us is, do WE benefit from THEIR benefit? If these VCs make money off of projects they fund which also benefit the rest of us, where's the loss?

Re:This oughta be interesting

[Elwood P Dowd]

It is still a product that can be withheld from consumers in particular areas if the business or businesses decide to not sell in that area.

The point is that it cannot be withheld. There's no cartel of oil companies that can shut out a specific purchaser. If they try, then any of their customers can just resell to California for a profit. All the cartel would be doing is robbing themselves of profits. So they wouldn't do it.

Although I guess it would be hilarious for Unocal (Chevron, whatever) to stop selling oil in California.

Yes, this legislation would reduce the profitability of selling oil in California, but it would still be profitable. Prices might go up (even though they say they will not go up), but it wouldn't mean there'd be no oil imported to California. If the legislation actually has some way to fix prices, and there are shortages nationally, then maybe this could make the shortages focus in CA. I guess. We'd need someone who understood both this bill + world oil economics to tell us, though.

Re:This oughta be interesting

[nelsonal]

The tax is on extraction of oil not sales of oil, California remains one of the larger oil extraction states in the Union. The fungible nature of oil means it's terribly difficult to actually harm someone by boycotting in either direction (it's pretty cheap to ship oil even a long distance so if for example California producers stop selling to California consumers the roughly 1 million barrels of oil extracted in California would just go from California to say Oregon, Washington, Nevada and Arizona while oil would be imported from Venezuela. Extra shipping costs would probably be about $2 per barrel (or about $0.05/gallon of gas/heating oil). Good for the shippers of oil (pipelines and boats), small losses for producers and consumers of oil.

Government vs. free market

[Tony]

More importantly, private business can do it a hell of a lot better than the government could hope to, and the free market will select a better winner than the government can.

You have proof? Or is this just a statement of fact where no proof exists?

There is no such thing as a free market. It's like Santa Claus, or the tooth fairy, or WMDs in Iraq. There are always people who control the landscape of the market, whether it is the big boys (AT&T, Microsoft, oil cartels, etc) or the government (often the proxy for the big boys). Whether market dominance is long term or transient, the affect on the market is detrimental and permanent, and never in favor of the individual citizen.

I'm not defending the government, because it is usually filled with people who are unfit to govern. I'm just saying, putting your trust in the free market is like walking into a seedy Mexican bar where known organ harvesters hang out saying, "Yessiree, I just got the results of my medical exam, and I have perfect kidneys, and a beautiful purple-grey healthy liver. Yep. I have great body parts."

As far as stuff like alternative energy sources go, there's no money to be made until those sources have been found, developed, and made economical vis-a-vis petroleum. And believe it or not, many modern advances have come because of government investment in research. I'd go so far to suggest that government research has resulted in more economic health than private research.

Consider the internet as a prime example.

What was the "free market" doing? The participants were fighting amongst themselves, and not advancing anything at all like the internet. We had IPX/SPX, NetBEUI/NetBIOS, yadda-yadda-yadda. It took substantial (though not massive) government funding to provide us with a simple, resilient, adaptable protocol suite, and the infrastructure to make it useful. If we were stuck with the "free market," we'd all be using MSN dialup right now, except the oldtimers, who'd be using AOL (who would've purchased everyone else).

The free market has shown itself to be a fiction. When you pull the curtain back, you won't find a kindly, slightly-bewildered gentleman. You'll find the hideous faces of the corporate monsters who will offer you no alternative but their alternative. When they are mighty, they will eat the smaller competition who might possibly challenge them someday. They will purchase protection from the government where they can, as if it is the government's duty to protect them from their customers.

I don't believe the government should meddle in everything. But I don't think we should leave something as important as our future in the hands of corporations, either.

Have we learned nothing?

[TheWoozle]

Come on people, this is America we're talking about here.

If you want to reduce dependence on foreign oil, make sure that advertisements, TV shows, and movies only associate automobiles with fat, ugly people. As it is right now, all the stars drive big cars - the less fuel efficient the better. Can you name me one automobile over $100,000 that gets at least 25 mpg?

Even better, someone whip up an astroturf campaign complete with "scientific studies" that show that fossil fuels cause impotence.

Another crap law

[Eccles]

Want to reduce emissions? "Tax" all CO2 producing fuel based on its carbon content. Let the tax be passed on to the consumers. Then, at the end of the year, distribute the money evenly, with checks to every man, woman, and child. Thus anyone who reduces emissions gets a bonus, while long-range Hummer drivers pay more. The incentive to produce alternative energy will come from its lower cost, the disincentive to produce more greenhouse gas will be represented in higher costs.

Simple, few bases for anyone to object (cabbies and long-distance truckers would have to raise their fares), promotes alternative energy.

NOT raise gas prices?????

[Pinky3]

As I understand it, the proposition will tax oil taken out of the ground from within California. Oil from within California will now be more expensive. The oil companies will then buy more oil from Alaska or Venezuela and pay the cost of shipping the oil to California. The oil companies may not be allowed to pass on the cost of the tax directly to the consumer, but they will pass on the cost of transporting oil from greater distances. The price of gas will go up, make no mistake about it.

Re:Government pork is for everyone

[thrillseeker]

That is exactly the short-sightedness I'm talking about. There's plenty of room at this sow's tit.

This sow's tit is the pocketbook of the taxpayer - and apparantly the departure of so many of those paying taxes from the state is read as an incentive to 'squeeze 'em more".

Save it for later!

[Kadin2048]

In the long run this might actually be a good thing for California. If it encourages oil to be consumed from the Middle East or Venezuela first, then it just means that oil is still in the ground to be pumped out and sold later, when the price will probably be higher. Given the rate at which oil prices have risen and will probably rise in the future (well ahead of the rest of the market), keeping the oil in the ground for later probably isn't a bad investment. However, it's not one that most companies would make, because they're too focused on short-term profitability.

By making it economically unfeasible to use the oil now, Californians might be unwittingly doing themselves a favor: they'll suffer now, but once the oil elsewhere is gone and they're all that's left (of easily extractable reserves), it's fat city.

The only exception to this would be if there was some plan to take the money that would be gained from pumping and selling that oil now, and doing something with it that would be more profitable than just leaving it in the ground until the price goes up. Given the way that both industry and government squander cash, I suspect this is unlikely. Whatever they're going to make by selling it now will probably just be blown on stuff that has little or no lasting impact.

Re:This oughta be interesting

[a whoabot]

Shell reported 22.49 billion in profit for 2005. I think they could afford to have even a lot of tax increase.

Hey, wait, I thought capitalism was supposed to bring profits down, because everyone would compete and so there would be no room for large profits, and so someone would just undersell you? I've only seen profits increasing...

Oh yes gas prices will go up.

[rhombic]

Incorrect. The prop doesn't tax the oil companies per se. It taxes oil pumped out of the ground in California. The law does say they can't pass the cost on to their customers, the refineries. Let's assume that the producers follow this, rather than justifying price hikes by being just a little bit creative. Costs for in-state pumping will go up, but the cost to run a well is constant, thus low-yielding wells will be shut down sooner. And companies doing exploration are going to look elsewhere rather than explore in Cali. Thus in-state production will go down-- estimates I've read go from 10-20% reduction in in-state production over 5-10 years. Consumers will still drive, demand will remain fairly constant, which means more oil will be shipped in from Alaska and overseas. Shipped in oil is more expensive. Refineries will have to pay the higher price for out-of-state sourced crude, and they most certainly can and will pass those higher costs on to their consumers. Net result-- if 87 passes, Cali gas prices will go up. Economics of commodities is a byatch.

The other thing I anticipate happening is that the oil companies are going to redouble their efforts to get permission to drill in Federal controlled waters. That means anything more then 3 miles off the coast. There is absolutely nothing Californians can do about it if Congress lets them do this, it's Federal "land" (at least treated as land) covered by federal law. And guess what, oil pumped out of Federal lands isn't subject to prop 87's severance tax. Problem solved!

Re:Screw them.

[imthesponge]

"how much money is not being a Muslim or dead worth to you?"

A lot. But what did Iraq have to do with that? Why don't we bomb every other country just to be safe? You never know, Luiz Inácio Lula da Silva of Brazil could be having dreams of imperialism! We must invade before the smoking gun becomes a mushroom cloud!

Re:Follow the money

[Howserx]

That's a great idea! I'll find 30 or so of my friends, give us a year and 30 Million dollars and I'll give you a commission report that says "Spend less"

Re:There's also another minor detail.

[mwlewis]

Of course not, because oil companies don't pay the tax. Customers of the oil companies pay the tax.

Re:Taxes on oil companies end up being paid by peo

[RandomLetters]

Know why gas went to $3/gal in the US?? Because PEOPLE WERE WILLING TO PAY IT. They griped, they whined, they complained, but everyone still went down to the gas station once or twice a week and filled up.

Can you believe they were whining about the price? I mean it's like them whining about how much the air companies charge for air. $3/cubic foot. I mean if people are willing to pay it then that justifies the price. I myself have refused to buy air and am perfectly fine with not breathing.

My heart goes out for the minority that can't afford it, but businesses are in business to make money, not provide charity work.

I know! My heart goes out tho those minorities who are suffering too. It's not like everyone needs to drive to work. I mean doesn't everyone have easy access to public transportation?

The funniest thing I heard was someone whining about Exxon's record profits. I didn't hear anyone offering to give them money several years ago when their profits were in the crapper.

I did my civic duty back then. I bought as much gas as I could to help them out with their massive suffering and complete lack of money which led to such a tremendous hardship for them.

My daughter, bless her heart, wanted a new car. She went out and bought a Yaris and now gets 40MPG. Toyota can't keep them on the lot. I bought a motorcycle a year ago and get 50MPG, so there are already means to reduce consumption.

See alternatives. Just like I was saying. Instead of buying gas you can buy less gas... and die in a motercycle related mishap.

As for those 'cheaper alternatives', where are they. Ethonal?? I've read mixed reviews, some claiming it's the answer to everything, some claiming that the resulting agribusiness pollution might be worse than what comes out of our tailpipes now. Hybrid cars?? First, they cost more. Maybe their effective MPG makes up for some of it, but the anlysis I've seen says they are still more expensive in the long run once you start swapping out batteries. Biodiesel?? There is only so much french fry oil in the country.

Yeah there's no solution right now so we definitely shouldn't try to find one!

Renewable Bureaucracy

[JonBuck]

California has a history of creating programs with the best of intentions that do not actually produce any results. Take, for instance, the 2002 law that mandated that electrical utilities must get 20% of their energy from renewable sources by 2010. The result has been over $300 million taken fron consumers in order to subsidize it, and not a penny spent? Why?

Here's why:

"It is an extraordinarily complicated process compared to any other state in the country," said Ryan Wiser, a scientist at Lawrence Berkeley National Laboratory who has studied efforts by 21 states to mandate increases in the use of renewable power. Wiser wrote a paper on California's process titled "Does it Have to be this Hard? Implementing the Nation's Most Complex Renewables Portfolio Standard."

        Wiser said that here, unlike anywhere else, two state agencies -- the California Energy Commission and the Public Utilities Commission -- have regulatory oversight of renewable projects, forcing developers and utilities to work with two distinct bureaucracies.

        And each project faces multiple, and sometimes redundant, monthslong proceedings in front of regulators before getting approval, while most other states only require one.

The state of Texas is surpassing us in renewable energy development. Since they enacted their ten paragraph legislation in 1999, they've gotten 2,200 MW of wind power. How much have we gotten since 2002? 242MW. How long was our legislation? 13 pages.

What's more, renewables enjoy very broad bipartisan support in California. But since we do not have state government that is actually friendly to business, we get zip or very little actual action.

And all the while the politicians get to pat themselves on the back that they're Doing Something for the Greater Good!

It's crap like this why I've become more libertarian in my political outlook.

Free Money!

[phlamingo]

The problem with this kind of legislation is that it is not a tax on the oil companies. In the end, it is a tax on their customers.

The wacko-enviro-lefties seem to always forget that a tax always has a negative economic impact. It sometimes has a positive benefit somewhere else in society, and that benefit may even outweigh its negative consequences.

So, what's so bad about a negative economic impact? Economics is not just about rich corporate CEOs, lawyers, politicians, venture capitalists, bankers, inside traders, hedge fund bandits, leveraged buyout raiders. It's about your job, and the corner drug store, and the bicycle shop, and the Internet, the church down the block, and your grandmother's pension, and your local PBS station. Economics is about everything in life. It's about how we survive, and thrive, and interact, and plan for the future, and pay for the mistakes of the past.

So, what's the big deal about this kind of tax? It's one group of economic units using the political process to raid the resources of another group of economic units for ideological, or economic, or political reasons. They funnel that money from one group, through the government, and to another group. And this is the ugly part: all governments are notoriously bad about handling your money.

Make no mistake. That is your money they are talking about. Not the oil companies' money.

Re:Taxes on oil companies end up being paid by peo

[kindbud]

Tax a business, their costs increase, they pass that charge onto their customers.

The authors of this bill know that, and have included language in it that attempts to prohibit passing on the costs to the customers. Whether it will work or not, I have no idea, but your objection misses an important feature of the bill.

Re:I call BS

[rahvin112]

BP, formarly british petroluem is one of the largest if not the largest suppliers of Solar Panels on the planet. Most of the oil companies have their little branch of alternative energy that they explore.

Re:Taxes on oil companies end up being paid by peo

[RexRhino]

You CAN NOT keep the costs from being passed on to consumers!!! Thinking that the government can change economic laws is like thinking the government can change pi, or change gravity. All the language on all the peices of paper in the world cannot change fundamental properties of economics.

Re:Taxes on oil companies end up being paid by peo

[Brandybuck]

The authors of that bill are idiots. I heard one of them on an interview last week, and his economic ignorance was disgusting.