Somerset Perry, Georgetown University
Monday November 13, 2006
While the rest of the nation voted for progress on Nov. 7, voters in California failed to take a progressive step towards energy independence by voting against Prop. 87. Called by all the Clean Alternative Energy Act and by many the most expensive proposition campaign in California history, the proposition would have taxed oil producers and invested the money in alternative energy research and production. The tax, called a “severance tax,” is similar to laws that are already in place in Alaska, Louisiana, and even Texas, and would have made oil companies pay a tax on every barrel they take out of the ground. In rejecting the measure, Californians allowed themselves to be fooled by Big Oil, even though a host of famous politicians and celebrities, including Bill Clinton, vocally supported the proposal.
The proposition was an opportunity for California to continue its trail-blazing in the alternative energy field and the fight against global warming, as well as bolster its long history of leadership on environmentalism. From the recent bipartisan passage of state law AB32, which calls for a cap on greenhouse-gas emissions statewide, and a 25 percent reduction by 2020, and San Francisco Mayor Gavin Newsom’s support of tidal energy research, to John Muir and the establishment of Yellowstone National Park, the people of California have a history of conservationism that is unparalleled. Unfortunately, they voted for conservatism over conservationism when they rejected Proposition 87.
Global warming will be the defining issue of our generation and alternative energy, along with energy consumption reduction, is our main weapon against it. Prop. 87 would have allocated $4 billion dollars for the research and development of alternative energy, a welcome contribution in a field that is underfunded by the current administration, according to the New York Times. The alternative energy business has begun to grow and may soon boom, especially in California where a combination of progressive energy proponents, clean tech whiz kids, and willing venture capitalists hope to make it the next Dotcom Boom. In California and other places such as Cape Cod, the private sector is already taking the important steps that Prop. 87 would have encouraged.
But because of its unique necessity in reversing the cataclysmic effects of global warming, alternative energy cannot be left to develop at its own pace. Businesses’ ultimate motive is profit, but the world needs clean sources of energy now. By providing subsidies that align this need with the profit motive, Prop. 87 would have allowed the business sector, universities, and non-profit research institutions to pursue that goal. If we do not enact such policies now, we will pay dearly in the future.
One of the main arguments against the tax is economic: It would raise oil prices for the average Californian, who, according to a multi-million dollar ad campaign sponsored by Chevron and other oil companies, already pays some of the highest oil taxes in the nation. This is simply false. Prop. 87 would make it illegal for oil companies to pass the cost of the tax onto consumers. In addition, even if it weren’t illegal, the laws of economics would keep Californians from experiencing anything aside from a negligible increase in prices. Every expert agrees with this interpretation, from Stanford economics professor Paul Romer to San Diego oilman Chris Hall, who said plainly, “I can’t pass [the tax] on. I’m a price taker and not a price maker. I don’t determine the market.” Seeing the resulting damage to their profits, the oil companies poured money into opposing Prop 87.
Opponents of the law said it would increase California’s importation of foreign oil. Although market forces would make California import more out-of-state or foreign oil as a consequence of the rise of instate prices in the short term, this temporary increase would be offset when the $4 billion dollars invested in alternative energy resources yield returns through the development of efficient and affordable petroleum-free energy sources.
As California leads the way toward sustainable living, the defeat of Prop. 87 should be only a bump in the road. Californians can and should continue to take steps every-day to reduce their carbon footprint, and, if the chance comes again, pass the next incarnation of Prop. 87.