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Wednesday, July 23, 2014
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Published: Friday, 9/1/2006

California dreaming?

CALIFORNIA frequently comes up with ideas that have a way of seducing the rest of the country. It s possible that could happen with Proposition 87, which would levy a new tax on oil companies that drill in California. And the nationwide implications on several fronts, from curtailing domestic oil production to advancing alternative fuels, might be significant.

Other states as well as members of Congress are keenly interested in the outcome of Prop. 87 if only to get a good, first reading of public outrage over gasoline prices.

Rising prices at the gas pumps in California, where motorists paid an average of $3.16 a gallon for regular last week, created the impetus for the Prop. 87 campaign. Politicians across the country will be watching this to see if the voters want to get back at the oil companies through higher taxes, said Robert Stern, president of the nonpartisan Center for Governmental Studies in Los Angeles.

Proponents of taxing the oil companies say their plan would raise $4 billion for in-state development of alternative-fuel programs.

The goal is to cut Californians use of gasoline and diesel 25 percent by 2017. Ostensibly, oil companies would also be prohibited from passing along the cost of the new tax with higher pump prices.

But opponents of Prop. 87 argue it will do more harm than good by reducing needed revenue for local government, schools, and public safety, and still drive up the cost of fuel.

California refineries would drill less and import more with the adherent expenses of foreign oil, say challengers. Besides, some add, citing previous government efforts where taxing oil companies to supply clean fuels failed: been there, done that, didn t work.

Predictably, the American Petroleum Institute weighed in with Prop. 87 critics, saying, We have seen this movie before, so one has to question if it didn t work before why would it work now?

True enough, but, as one analyst suggested, unlike the 1970s, when gasoline prices went back to reasonable levels, the prospect of even higher oil prices in the foreseeable future may change the equation.

Both sides in the Prop. 87 campaign have amassed huge war chests to reach voters. One poll done in July showed the issue favored 52 percent to 31 percent, with 17 percent undecided.

Yet voter confusion over the complicated measure, which involves creation of an independent board to dispense money from a severance tax on oil to pursue alternative energy, could also affect the outcome in November.

Either way, the state initiative to punish oil companies for steep prices at the pumps has made its mark as another California idea gaining serious attention across the country.



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