When the eighth largest economy in the world establishes a landmark greenhouse gas emissions cap, you can bet oil companies are going to try to find a way to knock it down for one reason: money.
A new report shows the motivation behind one Texas oil giant's crusade against California's landmark greenhouse emissions law: big profits from price gouging of drivers.
The report by Consumer Watchdog's Oilwatchdog project shows Californians have endured higher gasoline prices than the rest of the nation while Texas-based Valero has averaged 37% higher margins on each barrel of oil it refined in California. The result -- $4.5 billion in profits.
That type of price gouging is apparently too profitable a gold rush to threaten with competition from a green-tech energy sector, which is why Valero is the principle funder behind California Proposition 23. The November ballot measure freezes the state's greenhouse gas cap until unemployment all but vanishes.
The irony is that green tech is the job creation engine of the state, making California tops for green collar jobs in the nation.
Environmentalists have been fighting Proposition 23 on the basis that dirty Texas oil companies want to keep polluting in the state. The bigger truth is that they want to keep price gouging the state's motorists, and Proposition 23 is a tool to allow the refiners to continue to charge too much for gasoline and make too much profit per gallon. It's all about dollars and cents per gallon.
According to Consumer Watchdog's report:
* Valero's net refining margins in California have been 37% higher per barrel than those from its refineries in other regions since 2002.
* Profits have been highest in California for the company during periods of steadily rising gasoline prices; Valero earned more than $1 billion in California refining profits in 2006 alone.
* Higher than average gasoline prices in the West, created by artificially low supplies during periods of high demand, have been Valero's recipe for big profits.
Valero's ability to exact outsized profits from California depends on high pump prices because, unlike integrated oil companies like Chevron, it doesn't extract crude oil, it only refines oil and sells its products at retail gas stations. This means that refining margins are central to its profits.
During the recession, Valero has been selling off refineries in the Northeast, but has held onto its California refineries with the expectation that it will resume getting outsized California profits by keeping refined gas supplies tight and charging high prices for gasoline in the state.
The ability to tighten gas supplies in California -- a key component of the price gouging -- will be limited by new environmental rules that support green alternatives to oil and less dependence on gasoline in California. Voters are not yet ready to scrap the greenhouse gas law, but Valero is making it's run at their hearts and minds -- arguing jobs will be lost if the environmental rules take effect.
Californians need to follow the money, all the way to Texas. That says everything about why Valero is backing Proposition 23.
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Jamie Court is the author of The Progressive's Guide to Raising Hell and the President of Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.
Follow Jamie Court on Twitter: www.twitter.com/RaisingHellNow
"The sound and the fury that has characterized the public discourse on global warming often obscures a basic economic fact: we are in the situation we are in because it requires fewer resources to generate electricity with coal or propel automobiles with petroleum than it does to accomplish those same goals with solar cells and biofuels. The “green economy” our politicians have placed on a pedestal is not an improvement over our existing one — there is no gain to be had in producing with the effort of three men what we previously accomplished with two. We should tolerate this inefficiency only insofar as it helps us avoid some other, greater harm."
AB32 forces the use of less efficient means of energy production. This translates into higher monthly utility bills for all energy users in California, individuals, private companies, and government agencies. Therefore, the public should vote "Yes" on Prop. 23, to halt the implimentation of AB32.
Here's the problem that I hope you guys will dig into now - THE SO-CALLED "CLEAN" POWER CABAL IS RUN BY THE OIL INDUSTRY TOO. Big Solar and Big Wind are dominated by the names Chevron, BP, Shell and those other nice guys, Goldman Sachs, Morgan Stanley, etc. They are bonna seriously, seriously JACK us on their (actually extremely destructive) "clean" power, too - it's so insane that people are supporting a new energy economy dominated by the same pigs!!!
What we need are democratically-owned, decentralized clean power installations like rooftop solar, supported by feed in tariffs - the fastest, CHEAPEST and cleanest way to transition to renewable energy. Big Solar and Big Wind are slaughtering mile after square mile of healthy (taxpayer-owned) functioning ecosystems so they can bottle OUR wind and sun on OUR land and send it down OUR powerlines (we have to pay for them at cost + 12% fixed profit!) and sell it to use at a 300% markup. what kind of lunacy is that?
PLEASE will you make sure the only clean tech you support is ACTUALLY clean and is not dominated by the supply-and-pricing monopolists from Big Energy? Thanks!
Gas prices tend to be higher in such a situation. Regular grade gas in Southern California is typically priced at around $3.19 per gallon as of the second week of October.
California grossly miscalculated pollution levels in a scientific analysis used to toughen the state's clean-air standards, and scientists have spent the past several months revising data and planning a significant weakening of the landmark regulation, The Chronicle has found.
The pollution estimate in question was too high - by 340 percent, according to the California Air Resources Board, the state agency charged with researching and adopting air quality standards. The estimate was a key part in the creation of a regulation adopted by the Air Resources Board in 2007, a rule that forces businesses to cut diesel emissions by replacing or making costly upgrades to heavy-duty, diesel-fueled off-road vehicles used in construction and other industries.
The staff of the powerful and widely respected Air Resources Board said the overestimate is largely due to the board calculating emissions before the economy slumped, which halted the use of many of the 150,000 diesel-exhaust-spewing vehicles in California. Independent researchers, however, found huge overestimates in the air board's work on diesel emissions and attributed the flawed work to a faulty method of calculation - not the economic downturn. .......
Read more: http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2010/10/08/MNOF1FDMRV.DTL#ixzz12BEWWYfX
The passing of AB 32 will cause an economic disaster for California that will keep other states from passing such legislation, and probably cause more harm for the cause than it will help.
° AB 32 is not a pollution law, it is a global warming law, but has no effect on global warming.
° Prop 23, in spite of fear-mongering by opponents, does not repeal any clean-air laws. It does not increase local pollution.
° CARB over-estimated emissions by 340%.
° Key CARB personnel caught lying about credentials and then failing to reveal this after it is discovered internally before AB 32 passed, until after AB 32 passed.
° Sacramento State University reports estimated cost of $3734 per year per family due strictly to AB 32.
° CARB has admitted that California alone cannot have an impact on reducing global warming and CO2 emissions.
° LAO (CA Legislative Analyst Office) stated: CA economy at large will be adversely affected by implementation of climate-related policies that are not in place elsewhere. (Letter to Dan Logue, 13 May 2010)
° Even CARB’s own economic experts have recognized the fact that jobs will be lost because of AB 32. In fact, they recommend establishing a “Worker Transition Program” to provide assistance to people who lose their jobs because of AB32.
Most people would consider a savings of $30 per month means that they would have an extra $360 in cash after a year, not that they would have to spend $756 more per year.
The study is full of this sort of nonsense. It is a gross distortion of reality and it was written solely to push a political agenda. It is not even an impartial academic study at all, it was commissioned and paid for by business interests.