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

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?

[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.

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: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: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.

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.

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.