Monday, July 24, 2006

California Proposition 87

California voters will be have another chance to reaffirm how much they enjoy the deep and hard screwing of their energy economy in the hands of petroleum companies by failing to approve Proposition 87 in November.

Proposition 87 is also known as the California Clean Energy Initiative, and you can download the PDF file from the Secretary of State here. As a public service for California voters, I will review the text of the actual initiative here in this very blog posting and summarize to the best of my ability. (I should disclose at the start that I am registered to vote as a Green, so you might expect that I am favorably pre-disposed toward initiatives of this sort. I will try to be as cynical and as jaundiced as possible.)

Skipping past the first three sections to the normative text of the initiative (and reordering the sections for clarity), let me summarize what Proposition 87 will do:

  • Establish the Clean Alternative Energy Program within an existing bureacracy I've never heard of before called the California Energy Alternatives Program Authority, which will be empowered in a bunch of new ways to spend money on behalf of the program. Also establishes a special purpose fund, separated from the general fund, called the California Energy Independence Fund and authorizes the Authority to spend four billion dollars from it on a variety of projects described below.

  • Imposes the California Energy Independence Fund Assessment "upon the privilege of severing oil from the earth or water in [California] for sale, transport, consumption, storage, profit or use" applied to the gross value of each barrel of oil. The rate is 6%, but it could go lower if the price of oil magically drops (due to price manipulation, for example).

  • Allocates the four billion dollars raised by the assessment to a Gasoline and Diesel Use Reduction Account, a Research and Innovation Acceleration Account, a Vocational Training Account and a Public Education Account and Administration Account. Or, in English, the money will go toward providing incentives to reduce gasoline and diesel consumption, produce alternative clean energy systems, research and development activity, some public service announcements, and the big deal that will get all the press chattering: grants to promote the rollout of E85 refueling stations, i.e. 85% ethanol fuels for existing "flexible fuel vehicles" in California.

  • Reorganizes the California Energy Alternatives Program Authority. Adds four new members, appointed by various high-level positions in the state government, e.g. the governor, the speaker of the assembly, etc. Replaces the President of the PUC with the Secretary of California EPA. Replaces the Director of Finance with the State Treasurer. Requires the Authority to appoint a CEO.

  • Authorizes the California Energy Alternatives Program Authority to incur its own debts. It may only service those debts from its own revenues, i.e. not from the State general revenues.

  • Forbids the producer, first purchaser or anybody else from passing the costs of paying the assessment onto retail fuel customers. Authorizes the State Board of Equalization to investigate such attempts to hide the salami.

  • A whole bunch of stuff that looks like boiler plate to my untrained eye.

I like this ballot initiative.

The Yes on 87 campaign is pushing the message that this initiative will "make oil companies pay their fair share" for cleaner energy. I don't know about that, but what it does do is pretty straightforward. It charges the oil companies a royalty for extracting the natural resources of the State of California. That sounds to me like a no-fscking-brainer. I'm trying to figure out why this wasn't done fifty years ago. This initiative could call for dumping that money into the California general revenue fund, and I would still support it. Maybe, you're the type who wants to know who else is endorsing before you're willing to sign up. (I know I usually do.)

I predict some people will feel sorry for the oil companies having to pay this special tax on every barrel of oil they pump out of California wells, and to them I would say this: Dudes, what have you been smoking? And, is there any left in the bowl, or are you just sucking spent butane?

Look at it this way. Oil companies have been reporting record profits. Persian Gulf oil producers are charging a royalty on extraction. Venezuelan oil producers are charging a royalty. You better believe the Nigerians are charging a royalty. For crying out loud, Texas and Alaska are charging royalties! The oil companies have to eat the cost of those taxes today, and they still haul in healthy profits.

Don't feel sorry for Exxon shareholders, California. They will survive.

In the meantime, four billion dollars will go a long way toward kick-starting a transition to flexible fuel hybrid vehicles, which will get us going toward a reduction in greenhouse gas emissions to address the global climate crisis. It will even help the oil companies in the long run, because the Hubbert Peak is real, they all know it, and they've got to find a way to make the transition from petroleum to alternative energy. This initiative will help do that.

Nevertheless, the oil companies are guaranteed to pitch a fit. They and their supporters will spend massive amounts of money to oppose this initiative. Expect to be overwhelmed with bullshit from the professional newspeak industry.

If you want to see a clean energy economy in California— in America, for that matter— then now is the time to get hooked up with the Yes On 87 campaign. Flow them some love. Post articles on your blog. Talk it up with your friends. This one is important, folks. Let's get to work.

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