Valley Firms Push California Oil Tax 543
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.
shocking, I tell you! (Score:5, Insightful)
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?
Re:This oughta be interesting (Score:5, Insightful)
Ugh (Score:2, Insightful)
One of these days, I'm gonna finally move myself out of the Socialist Republic of California...
The road is paved with good intentions (Score:5, Insightful)
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:This oughta be interesting (Score:4, Insightful)
Re:No on Prop 87? (Score:5, Insightful)
Re:No on Prop 87? (Score:5, Insightful)
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? (Score:5, Insightful)
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.
Ethics (Score:5, Insightful)
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.
Misplaced priorities (Score:5, Insightful)
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.
Money flowing (Score:3, Insightful)
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:Ugh (Score:5, Insightful)
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:No on Prop 87? (Score:2, Insightful)
Re:The road is paved with good intentions (Score:5, Insightful)
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.
Taxes on oil companies end up being paid by people (Score:5, Insightful)
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....
Re:Fat Cats (Score:2, Insightful)
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.
You bet they are, but what of it? (Score:5, Insightful)
There is no such thing as a free lunch (Score:3, Insightful)
Re:Ugh (Score:3, Insightful)
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:Screw them. (Score:3, Insightful)
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.
Re:Misplaced priorities (Score:5, Insightful)
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.
You commies have it all backwards (Score:3, Insightful)
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 (Score:2, Insightful)
Re:No on Prop 87? (Score:2, Insightful)
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:Ethics (Score:5, Insightful)
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.
Backers (Score:3, Insightful)
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:Money flowing (Score:4, Insightful)
Re:This oughta be interesting (Score:3, Insightful)
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.
Government vs. free market (Score:5, Insightful)
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 (Score:3, Insightful)
Which is why I am completely in favor of California raising its gas prices to pay for research into alternatives.
Re:Misplaced priorities (Score:3, Insightful)
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
Re:No on Prop 87? (Score:4, Insightful)
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.
The Free Market Works, But It Can Kill. (Score:1, Insightful)
This observation is a basic fact of the free market.
What this fact does not tell you is what the manifestations of adaption are. The manifestations depend largely on the rate at which scarcity develops. Consider two extreme scenarios: gradual scarcity and sudden, massive scarcity.
In the first scenario, oil dries up slowly. There is plenty of time for everyone to adapt. One possibility is finding an alternative to oil. Another possibility is that if no alternative to oil is found, then life becomes too expensive to live, and the population will very gradually decline to a level that existing supplies of oil can support. (Note that fertilizer is derived from oil.) Everyone is happy.
In the second scenario, oil dries up suddenly. It disappears after 1 week, counting from today. One week after the disappearance of oil, starvation will be widespread in the West as the transportation and the farming system stop working. Bacteria and fungal infections will run rampant as the technology powered by energy derived from oil grinds to a halt. The population declines by 50% after 6 months.
The question is which scenario best matches the scarcity rate of oil. Many geologists suggest the first, optimistic scenario. However, these geologists are basing their guess on a world where only the West is consuming oil.
In the future, half of the planet will be consuming oil at a high rate. We are moving quickly to the second scenario. The free market does indeed work in both scenarios, but the second scenario is excruciatingly painful.
NOT raise gas prices????? (Score:3, Insightful)
Re:Trendy (Score:5, Insightful)
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:No on Prop 87? (Score:5, Insightful)
Only those who were smart enough to take an economics class.
Re:This oughta be interesting (Score:3, Insightful)
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. (Score:5, Insightful)
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. (Score:2, Insightful)
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:There's also another minor detail. (Score:2, Insightful)
Re:Ugh (Score:3, Insightful)
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.
Re:Money flowing (Score:3, Insightful)
The state of CA can't retract federal subsudies.
Free Money! (Score:2, Insightful)
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:No on Prop 87? (Score:1, Insightful)
Re:Taxes on oil companies end up being paid by peo (Score:3, Insightful)
Re:Taxes on oil companies end up being paid by peo (Score:3, Insightful)