THE BLOG
10/29/2006 08:48 pm ET Updated May 25, 2011

Part 3: Don't Let the Big Oil Money Confuse You on Prop 87

In my opinion Prop 87 is good for California and good for the country. We have an energy crisis, a climate crisis, and a terrorism crisis all of them tied to oil. We need to do something and do it now. If you agree with the discussion below (and a series of subsequent and previous posts) please email a link to this blog to ten California voters and ask them to email to ten others.

As Tom Freidman put it in the New York Times: "Here's the basic story: This Nov. 7, Californians will be asked to vote yes or no on Proposition 87, a ballot initiative that would impose a higher extraction fee on oil pumped in California. (Up to now, oil companies in California have paid a very low extraction fee compared with those in other states - a rip-off they want to keep.) The new funds raised by Prop 87, explained The San Francisco Chronicle, "would be used to finance research and development of alternative fuels in universities; education campaigns; and subsidies to consumers who buy vehicles that use alternative fuels and businesses that produce and distribute alternative fuels. ... Oil companies would be taxed between 1.5 percent and 6 percent on oil production depending on the price of oil per barrel. The tax would end by 2017 or when the tax generates $4 billion, whichever occurs first."

Part I talked about why gas prices won't go up. Part II talked about how and why prices for gasoline will decline. We have an energy crisis, Climate crisis, terrorism crisis all tied to oil. But do the oilies care?

I was hoping to discuss in this Part III the health and environmental costs of oil but Chevron announced financial results last week and in the opinion of people I respect was two faced and fraudulent about it. Fraudulent is a strong word, especially coming form somebody who is usually careful about word choice.

According to press release by the Yes on 87 campaign, Chevron confirmed Prop. 87 will not reduce California oil production, which is the cornerstone of the oil companies' misleading campaign ads. With this admission, Chevron CFO Steven Krowe declared that Chevron expects to continue at least current levels of oil production in California after Prop. 87 passes. In announcing its $5 billion third quarter profits, Chevron's CFO said "we could see at current prices and current production levels a penalty on Chevron in the order of $200 million." Chevron then issued a subsequent statement denying it said that Prop 87 would have no impact assuming current prices and production levels. Whatever they said, it is clear the oil industry has been on a massive mis-information campaign. During the summer with peak oil prices they kept insisting in full page ads in major national newspapers that world oil prices determine gasoline prices and they have no control over this. Today they are saying exactly the opposite in California, except when the truth inadvertently slips out. Saying they will cut production in California in public statements would be fraudulent if they did not intend to. You be the judge.

In one state they have raised almost $90 m (the last Presidential election each candidate spent about $125 million in all 50 states!) to spread their mis-information. Money can buy a lot and they are buying it. The Los Angles Times recently said "The oil industry, fighting the Proposition 87 oil tax, has paid $35,000 to Aaron Read. Read heads one of Sacramento's top lobbying firms, representing police and firefighters unions. Police officers and firefighters are featured prominently in the No-on-87 campaign" .It went on " Police and firefighters have received more than $220,000 for being featured prominently in both the No-on-86 and No-on-87 campaigns. One reason may be that lobbyist Read represents many public safety unions." My understanding is that the California Chamber of Commerce was paid $345,000 to endorse the No on 87 campaign.

Proposition 87 has been endorsed by former President Clinton and former Vice President Al Gore. Senator Feinstein and the American Lung Association have all endorsed it. None of them were paid. Nobel Prize winning Stanford economist, Prof Paul Romer, has blogged about the fact that there should be no noticeable impact on gasoline prices but that voice, unpaid, has been drowned out by the chorus of heavy spending on slick oil ads on economists stating otherwise. You can decide if it is likely that many of these economists were paid. Reasonable people can disagree on this tax but money should not be able to buy these opinions. Economist Greg Mankiw, former Chairman of President Bush's Council of Economic Advisors, does not like Prop 87 because it does not raise gas prices. Alan Greenspan also wants higher oil prices. Well known energy economist Severin Borenstein discusses it plusses and minuses. But paid opinions are something we should rebel against.

It is offensive and dis-heartening to see how the oil money is being used. Tom Friedman said in his op-ed piece in the New York Times recently "Up to now, oil companies in California have paid a very low extraction fee compared with those in other states a rip-off they want to keep." When the tragedy of Katrina happened the oil companies were able, with their vast campaign and lobbying contributions, to push to get $7 billion form the relief funds. An oil severance tax has been tried in the California assembly starting in the 1950's by then Governor Brown and more recently by the current Mayor of LA, Mayor Villaraigosa when he was in the assembly. But campaign contributions and lobbying backed by billions of dollars of clout wins out every time. The oil companies manage to get out of paying their fair share. One energy company (Peabody Energy) actually spends almost 5% of its revenue on lobbying almost nothing on research. What?

One of the most revered and old British scientific Societies, the Royal Society which counted Isaac Newton and Albert Einstein as members, accuses Exxon of "misleading and inaccurate" information about climate change by financing groups that misinform the public on this issue. Exxon had pledged to stop giving money to such groups that spread misinformation the society considers misleading. That is a clear admission that they are spreading mis-information. Recently Senators Rockefeller ( D) and Snowe ( R ) said that ExxonMobil's extensive funding of an "echo chamber" of non-peer reviewed pseudo-science had unfortunately succeeded in raising questions about the legitimate scientific community's virtually universal findings on the detrimental effects of global warming. Is it a surprise that they gave Stanford University over $50 million and the funded group is very kind to Exxon's views? Even a university can be bought. It just takes more money and the oilies have enough.

According to the Sept 21, 2006 NY Times front page, four government auditors in lawsuits claim they were blocked by their bosses in the interior department from pursuing fraudulent underpayments on oil and gas leases. Money can buy anything! Even government policy or immunity. And luckily oil prices have declined just before the election. Are you intrigued by the timing? Luckily for whom? Do you see a pattern of behavior here?

In my next blog, Part IV, I will discuss "extensive health and environmental costs of oil".
Do you believe Al Gore, Bill Clinton, Senator Feinstein and Los Angeles Mayor Villaraigosa, (all unpaid)? Or do you believe the oil companies and their "bought endorsers"?"

As Tom Freidman says: "Passage of Prop 87 would be huge". Vote Yes on 87!