Addressing Proposition 87 Criticisms


Voters in California will go to the polls in November to decide the fate of Proposition 87, also known as the Clean Energy Initiative. However, the ramifications of this proposition have the potential to be felt nationwide. I have previously written a pair of essays on Proposition 87 that you can find here and here. My position is not so much that I am against Prop 87, and I am certainly not against the intent of Prop 87. But I do have concerns about the proposition, which are explained in my previous essays.

In response to my essays, Dr. Ana Unruh Cohen, former Rhodes Scholar and the Director of Environmental Policy at the Center for American Progress, asked if I would mind posting a rebuttal from her. Ana is certainly no stranger to the Peak Oil debate; her father was the person who got me seriously interested in the subject. I think most of us share a desire that we pursue responsible energy policy, and I believe that through a civil airing of diverse ideas we can better determine just what constitutes responsible energy policy. One of the things I find most enjoyable about debating these issues is that it gives me an opportunity to learn from others, and my views can evolve as a result of the things I learn. With those things in mind, I am happy to offer up her rebuttal to my previously mentioned essays on Prop 87.

Disclaimer: To my knowledge, my company has donated no money to the Prop 87 opposition group (I don't believe we extract oil from California). I have nothing to gain financially by supporting or opposing this measure. So, consider me an unaffected party. I will offer my own take on Prop 87 in a few days, after which Ana will have the opportunity to have the final word with a concluding essay if she wishes.

Without further commentary, here are Ana Unruh Cohen's views on Proposition 87.


Thanks for the opportunity to respond to your post about California's Proposition 87. As way of introduction and full disclosure for your readers, I am Ana Unruh Cohen, the Director of Environmental Policy at the Center for American Progress in Washington, DC. My boss, John Podesta, is on the Leadership Council for Prop 87. I have been involved the initiative for over a year now when a group of concerned Californians, mostly with environmental or academic backgrounds and months before Vinod Khosla was involved, approached Podesta to participate. (More about the early history of Prop 87 is here [RR edit: Requires registration].) He agreed, appointed me his liaison, and it's been an interesting experience ever since.

(For really full disclosure, I met Robert through my father. They worked together for many years and are good friends. I have asked Robert many questions about energy issues over the past few years and try to read his blog regularly.)

But why should a DC-based policy analyst or anyone outside of California care about Prop 87? As the most populous state and the largest gasoline market in the nation, success in reducing oil consumption there could have national repercussions. The new technologies that get kick-started and the lessons learned from deploying them through Prop 87 will have benefits far outside the borders of California. This is also the first time voters are going to have the opportunity to vote for reducing oil consumption.

Robert outlines a number of concerns in his post that in my mind fall into two distinct areas policy - what the initiative would do and what the impacts would be in the future - and politics. For clarity, I will address the two types of concerns separately as best I can, although in some cases they are very closely intertwined.

I'll start with policy issues and their future impact. I will place references to the initiative language in parentheses (pg. x) at times. You can download a pdf of the initiative language here.

Support for Ethanol

One of Robert's primary concerns is that Prop 87 would funnel money to corn ethanol. Ethanol, of all kinds, would be one option that the California Energy Alternatives Program Authority could consider as a way of meeting the goal of saving 10 billion gallons of petroleum transportation fuels between 2007 and 2017, including 4 billion annually starting in 2017 (pg. 3). The initiative language does not designate any technologies to be used but leaves that to the Authority to determine. The Authority - a reinvigorated existing California entity - will consist of 9 members, 3 state officials and 6 citizen experts appointed by various senior elected officials. No member of the Authority will be eligible to apply for any of the initiative programs (pg. 5-6), and they will be bound by all of California's ethics laws. I expect the Authority to continue in the long tradition of excellence in public service seen in other Californian boards of this kind.

Furthermore, the initiative language instructs the Authority to assess fuels based on their full fuel-cycle and greenhouse gas emissions (pg. 22), which will lead to a rigorous evaluation of petroleum reduction and climate impact on which the Authority can base its decisions. The initiative programs must also compliment ongoing California environmental programs, like the greenhouse gas tailpipe standard and the governor's climate program (pg. 3, 18, 21, 223). Ethanol might get some support, but I expect many other technologies and programs that will help reduce oil consumption will also receive robust funding. Despite Robert's fear, I believe the funds raised will be deployed in an efficient way.

Impact of Oil Royalty

While you are about to read more than a few paragraph on prices, I would like to say at the beginning that the goal of Prop 87 is to reduce the use of oil, which I believe will ultimately benefit the people of California economically and environmentally no matter where the market takes the price of oil.

Another big concern of Robert's was the oil royalty the initiative would put in place and its impact on the industry and the price of gasoline. Robert argued that the royalty would ultimately raise the price of gasoline and also that California's current gasoline tax ensures the state is receiving adequate compensation for the oil companies' use of its natural resources. I will take each of these points in turn.

On the issue of passing on the assessment to consumers, there are legal precedents, right up to the U.S. Supreme Court in Exxon vs. The State of Alabama (1983), upholding the consumer protections that prevent the fee being passed on directly to consumers. The California Attorney General has confirmed that the initiative prohibits producers from passing taxes on to the consumers.

But what about the more indirect way that Robert suggests? In the near term, California will remain the largest gasoline market in the country and an important market for the oil companies. In a world where supply and demand for oil are so closely matched, it is hard to imagine any company reducing production because of the imposition of a small royalty. Robert quotes a 1990 Congressional Research Service report about a decline in domestic production from a windfall profits tax, but the landscape of oil supply and demand was very different in the 1980's than it is today. With almost no excess production capacity in the world now and rising global demand, oil producers will continue to pump what they can. In this instance, I don't think the past is necessarily prologue.

Robert also does a quick calculation of the royalty's cost per barrel. He uses a price of $75 per barrel, which I assume he is taking from the NYMEX future prices, but the royalty is based on the wellhead (gross value) price of oil (pg. 28). In California, wellhead prices typically run $10 to $20 below the futures prices. The royalty is also graduated so that when the price per barrel is low, the royalty is at its lowest. California imports 40% of its oil from foreign sources and 20% from Alaska with the remaining produced in California. With the current problems in Prudhoe Bay, the recent change in Alaska's oil tax law and the increasingly competitive nature of the global oil market, it appears oil from California - compared to imports from Alaska or abroad - will remain attractive to refineries looking to purchase the cheapest crude.

And, yes, oil companies will have to pay $4 billion over 10 years to the new trust fund for clean energy. Because I believe oil prices and oil company profits will stay high over that time, I think they will be able to find the money. After all, the oil companies have to deal with royalties in all the other large oil producing states and on federal lands when they make their financial decisions. And at the moment, they seem to be favoring their shareholders, since the six majors spent more on share repurchases and dividends ($74 billion) than on capitol investment ($71 billion) in 2005 according to a BusinessWeek story. Moreover in 2005, ExxonMobil was able to compensate their retiring CEO, Lee Raymond, $400 million, roughly the same amount California would collect annually from all oil companies pumping crude from California's natural resources when Prop 87 passes.

Robert also argues that oil companies are paying their fair share in California because of the high gasoline tax, but a gasoline tax serves a fundamentally different purpose than an oil royalty. Drivers pay gasoline taxes. Gasoline retailers just collect them. Typically tax on a gallon of gas serves as a proxy for road usage and the revenue is used for transit funding. Oil royalties on the other hand are a way to return some of the value of natural resources to the government for allowing oil companies to extract material from the public commons. They are paid for by the producers who are profiting from the extraction of oil from the state. Because they serve two different purposes, almost all other states and the federal government impose both a gasoline tax on drivers and an oil royalty on producers. Why should California be any different?

Robert quotes California's gas taxes at $0.32/gallon. Here's the breakdown that the California tax board provides. You will see that California charges sales tax on motor fuels - another public policy decision and another tax borne by drivers, not oil companies.

Robert also argues that oil companies are paying a price by not selling as much gasoline as they might otherwise with lower gasoline taxes. But this logic suggests that every public policy decision that reduces the amount of product a corporation sells would somehow count towards their contributions to the state or federal treasury. Should we compensate oil companies when the government raises vehicle efficiency standards because they will sell less gasoline? Should we compensate coal companies when the government raises air quality standards because they will sell less coal? Should we compensate utilities when building codes are improved to make houses more efficient? I don't think so, and I don't think we should consider the gasoline oil companies didn't sell when considering whether or not they are adequately compensating the people of California for access to their oil resources.

Robert also makes many allusions to Hugo Chavez (perhaps straying into a little demagoguery himself) and is concerned that Prop 87 would open the door to other economic burdens on the oil companies. We can't predict the future, but the initiative is explicit that the royalty will sunset after $4 billion has been raised (pg. 30). The legislature would have to act or another ballot initiative would have to pass to extend the royalty. In drafting the initiative, we had many discussions about what would really be needed financially to meet Prop 87's goals and feel that $4 billion used judiciously will be enough to meet the challenge.

Will Prop 87 Work?

Robert quotes at length an article originally from the Wall Street Journal that argues that California's past attempts to reduce oil consumption have failed. I would argue that California's programs have been at least a moderate success. Every single program may not have succeeded, but on the whole California has maintained a smaller growth of gasoline consumption over the past decade than the overall increase in gasoline consumption in the United States. That has to count for something. Even with a growing population and economy, they have managed to keep their gasoline use somewhat in check. Don't take my word for it. Check out the EIA's data for yourself. Moreover, while California might be the largest gasoline market in the United States, only six states and the District of Columbia use less gasoline per capita than California. There has to be some reason that California is doing better than most states and the United States as a whole, and I bet part of the reason is those same allegedly failed programs.

There is no denying that the goals of Prop 87 are challenging. That's why we took a comprehensive approach when writing the language. We knew that areas not usually thought of as helping reduce oil consumption -- like public education, training new workers, and partnering with entrepreneurs to bring their products to the market -- would be necessary in addition to the traditional programs used to save oil. We also wanted to compliment and enhance the public policy decisions the people of California have already made, which in some instances have not received the necessary funding to implement.

The Campaign

Now let's turn to the politics of the campaign. Its impact goes beyond those who work for the oil industry or might benefit financially from Prop 87 to everyone who uses petroleum in some way. It is hard for anyone to be disinterested.

So are oil companies paying their fair share in California as the Yes on 87 campaign ads ask? I would argue no. Without some royalty on oil produced from the state, I think Californians are being shortchanged. Other natural resources in California, like timber and water, are assessed a fee for their extraction. Why should oil get special treatment?

Robert is also concerned that Vinod Khosla's investments in alternative energy create a conflict of interest. There are lots of interests involved in the campaign for and against Prop 87. The oil companies have produced oil royalty-free in California for a long time, and they aren't interested in starting now. On the other side, California scientists working on clean energy technology could get an increase in their research funding. Community colleges could get new money to prepare workers for new technologies. Public health advocates could get air quality improvements. Mayors could get help converting their bus fleets to hybrids or biodiesel. Drivers could get help buying more efficient vehicles. On Nov. 7 Californian voters will have to decide which interests they want to support.

As for the campaign vilifying oil companies, vilification, much like beauty, is in the eye of the beholder. I know oil companies are made up of more than their CEOs. I have friends and family who work for the oil or related industries. They are hard working individuals trying to do a good job. They are not villains. Sometimes they are even heroes, like the workers who blew the whistle on the Prudhoe Bay leaking pipelines. But have the oil companies help fund global warming deniers? Yes. Have the oil companies helped prevent progress on federal policies to improve efficiency, support renewable energy and reduce greenhouse gas emissions? Yes. Is it fair to ask the voters of California to support Prop 87, which would impose a small royalty on oil produced in California and direct the revenue to clean energy programs in their state? I think so. (Do I wish political discourse in this country were more sophisticated and less sensational? Absolutely.)

I hope this gives everyone some new insight into Prop 87. I would be happy to answer questions on the blog or directly at More information from the campaign for Prop 87 is available at Yes on 87.

I'd much prefer that California impose a large royalty on oil extraction and use the money to build electrified passenger rail. No way are we going to farm our way to a drive-thru motoring utopia.

As the most populous state and the largest gasoline market in the nation, success in reducing oil consumption there could have national repercussions.

I agree completely, but Prop 87 will not do this quickly enough or do enough.

A quote from Ed Tennyson on what HAS WORKED in California

I have just gone through motor fuel consumption for 2002 and find California at 509 gallons per year per capita. That is up only one percent from ten years prior. The nation is up 14 percent. to 575 gallons per capita per year. Saving 66 gallons per capita (apparently) California people are savng two billion gallons of motor fuel a year, worth $ 6 billion per year with national defense advantages as well,.
This is a very crude measure but it does suggest a payoff for more electric rail operations. Calllofornia has vastly improved its rail transit service over the past decade with expansions in all major areas.
Not only that but in every case except San Jose [my edit from Santa Clara] the new rail lines are moving people at less cost per passenger- mile than buses or automobiles saving still more money.


Prop 87 monies could build these projects promptly with minimal (say 20% instead of 50% federal funding like Seattle) or no FTA funds.  Unlike ethanol, Urban Rail becomes more useful the worse things become with oil.  In most cases, all one has to do is buy more vehicles to expand capacity (LA Blue Line may be an exception and require some capital improvements to line).

More Urban Rail (quickly) is the proven method to reduce CA oil dependence !

Two of the three highest impact projects in the US are in Los Angeles

Light Rail Connector between Gold and Blue Lines
Red Line subway extension down to UCLA and then to Santa Monica

Also (not comphrensive list)
LA - Vermont subway, Green Line to LAX and then north to Santa Monica, capacity expansions for Blue lIne, Expo & Gold line extensions, streetcar feeders in downtown, "shelved" plans for hundreds of electric trolley buses

San Diego - North extension and then West Extension from UCSD

San Jose - BART to SJ, Light Rail extensions south

Bay Area - eBART, BART north to Marin County, third BART tunnel, electrify Caltran from San Jose to SF, more trolley lines in SF

Sacramento has more expansion plans on drawing board

Orange County may revisit Light Rail as Peak Oil approaches

That's interesting that California gasoline consumption has not gone up as much as the rest of the USA. However I think you are jumping to conclusions to say that this is because of rail. We would need to see more evidence to figure out what is the cause (probably more than one thing).

California has considerably higher gas prices than the rest of the country, for example. Yesterday's price report still has California above $3, while the US average has been lower than $3 for several weeks. Maybe these high prices have played a role.

Another possible difference is increasing urbanization of the state. As the demographics have shifted from republican to democrat we might have seen an increase in the percentage of people who live in or near cities, decreasing driving distances.

The point is that in a state as large, populous, and geographically and demographically diverse as California, you will probably not find one factor that drives gasoline usage. Whether railroad travel is playing a significant role is not possible to determine from the evidence given.

Also, you can get those good gas-consumption numbers by simply importing lots of poor people who only get around by bus or bicycle, and who have large familes thus raising the capita in per-capita. Also, Chinese and Indian etc immigrants here, while middle class, are typically single-car families with lots of kids, again the good numbers are the result of tons of poeple coming in.
I sometimes wonder if California's per capita gasoline consumption is limited by its gridlock.  I mean, Jevons advocates ... come here and try to rack up that greater consumption.

(I understand that a gridlocked car gets lousy mileage, but I think the congestion keeps a greater number of cars from even making the attempt.)

Thank you Ana and Robert. Since I know you both personally, let me first state that our energy future is going to be in much better hands if people on both sides of the debate are scientists (like you both are). We are all guilty of rhetoric and advocacy at times, but have ones thinking rooted in the scientific method, with a mind open to change based on new facts and discourse will be a key national asset for choosing the right long term paths.

Regarding Prop 87, you both bring up valid points - to me it seems many that understand the issues surrounding Peak Oil correctly advocate higher taxes on fossil fuels. Taxing consumers directly is not as politically expedient as taxing producers.  If there were a way to tax the producers and immediately give them this money back as a credit if they used the money for renewable energy development, I would be more for it.

Remember, the reason people are upset by XOM and others oil majors massive earnings is because oil is so non-discretionary in our economy. We dont gripe about Microsoft earnings, which have a much higher profit margin because we can choose to buy a computer or not - its not as easy whether to drive to work or fly to visit our parents.

I hope you two, and others like you, continue to have a civil, science based debate on these issues. Thanks.

Thanks to Dr. Cohen for this thoughtful and candid posting and to Robert Rapier for bring ing this question of prop 87 to focus on TOD.

Frankly, I now have further confidence that on balance the propostion is a forward step for California and I intend to vote in favor.

Santa Clara
The California Clean Energy Fund (CalCEF), a $30-million public benefit investment fund created via the PG&E bankruptcy settlement to spur investment and innovation in California's clean energy economy, announced a summary of its Fund 1 Portfolio.

Among the investments in the portfolio are Tesla Motors, makers of an all-electric high-performance sports car, and Imperium Renewables, a biodiesel producer.

The CalCEF Fund l portfolio is co-managed by three investment managers who, together, bring more than $5 billion in market power: Nth Power, DFJ Element, and VantagePoint Venture Partners.

Here's what I commented there:

"So this CalCEF fund is managed, apparently on my behalf as a taxpayer and ratepayer, by these investment managers, one of whom is VantagePoint Venture Partners. And one of their major investments is in Tesla Motors. At we read that Tesla board member Jim Marver is co-founder and managing partner of VantagePoint Venture Partners! So this VC firm is taking California ratepayer dollars and funneling them into a private company that it is investing in and helping to manage. They are increasing the value of their own holdings and enriching themselves at taxpayer/ratepayer expense.

"This is just the beginning. If California Proposition 87 passes this fall ( ) there won't be just millions, but billions of dollars being managed in just this way. According to the Sacramento Bee ( ) the funding for Yes on 87 comes from VC firms and managers who are already invested in the same companies and technologies that will see a windfall if this proposition passes. You can bet those are the same people who will be on the board to disburse up to 4 billion dollars, and they'll send it directly to the companies they are involved in, just as we are seeing here with this PG&E fund."

As for the claims that the Prop 87 disbursement board can't give money to their own companies, there are a million ways to maintain arms-length relationships and get around these restrictions. I'm sure the CalCEF board in the article above operates under similar limitations, yet we see that a board member is associated with the same VC firm that is a major investor in Tesla Motors, and sure enough the board gives a lot of money to that company.

We'll see exactly the same thing with Prop 87. All those Yes on 87 investors (Khosla's just one of them) are doing this to make money, pure and simple. If Prop 87 did not pass, probably most of those investors would give up on their alt-energy investments. Their whole play is to put money in advance into companies that are going to receive a windfall when this proposition passes.

As long as it's my choice, I prefer that the robber barons enrich themselves while they hire and pay industrial geeks inside California, instead of robber barons enriching themselves in Russia, Iraq and Angola.

Since wealthy people will find a way to game the system to their advantage, I want the better class of wealthy people, those who might carry the rest of us along with the ride, to win.

Their whole play is to put money in advance into companies that are going to receive a windfall when this proposition passes.

Sure, but along the way those companies will actually have to try to make products.

I doubt that those startup companies are going to just declare a big dividend and return taxpayer cash to investors.  If that happened then certainly it would be considered fraud on the State of California.  

The reality is that this is effectively government funding of basic to applied industrial research, along with taxing oil companies.   I don't have the moral objection to this that others do.

Lots of other people have advocated a combination of two things:

  • higher gasoline/petroleum/carbon taxes
  • greater investment in energy R&D

OK, now we have it.   The principal problem is that it's only California and not nationally but that's a new matter.
I doubt extremely that the failure of Prop 87 would kill VC investment in CleanTech. The VC sees what all of us here see -- that there is a major transformation coming with regard to how society uses energy. They see major business opportunities  to supply the next generation of energy technology.  They are going to be investing whether or not Prop 87 passes.

The question is whether conflicts of interest in the managemet board will fund dollars into investments that would otherwise be questionable. This is a governance topic that needs to be getting news coverage, whether or not Prop 87 passes.

I think probably a lot of people here would be in favor of some sort of government investment into alternative energy R&D, the question is how to handle the governance of it.

(Before a market-libertarian chimes in to say that the government shouldn't be subsidizing technology development, they also need to make sure we get rid of all subsidies for oil and roads).

Hi, and thanks for the article. I'm a California resident trying to make up my mind about this initiative.  I am generally in favor of taxes on fossil energy that are used to help with alternative energy, efficience and public transit.

I have one main concern about this initiative, which is that it charges a tax that oil companies are prohibited from passing on to customers.  That seems very difficult to police,  and has some logical problems. If a company finds that its costs go up, the company will find some way to increase prices to customers.

One contributing factor in the 90s energy deregulation debacle was that retail prices were capped, while wholesale prices were deregulated. This logical violation of the law of supply and demand broke the energy system.  Enron manipulated the system to drive the wholesale prices up, but the underlying problem was the flaw in design.

I made another point on Robert's blog with regard to this initiative, and that is about the growth in companies that come along and re-open "dead" oil fields. These fields were closed years ago because their production was so low that they were no longer profitable.

However, that was when oil was $10 or $20 per barrel. These new companies buy the rights and are able to make money off old fields. They use advanced recovery techniques and manage to get enough oil out that it is profitable at today's high prices. This is an important potential resource going forward. The total amount of oil left in these abandoned fields is substantial, and could make a difference if we hit a major oil production crisis in the next few years.

So what's going to happen to these small companies when they are hit by this new production tax? It's going to change the economics, which is already just barely profitable. Chances are that many fields which make economic sense to produce today will become uneconomic once this new tax is added. The result is just what economists would predict: taxing production means you will get less production.

Is this really what the voters of California are going to want, if and when we hit a Peak Oil crisis? Are they going to be happy with a measure which is driving oil recovery companies out of business and reducing California oil production? I'd suggest that this is the opposite of what we want to do.

If voters want to subsidize alt-energy companies, fine. Do it out of their own pockets. Lay a tax on themselves to fund the program. But don't con yourself into thinking you can tax the other guy and it won't cost you a penny. It's a discredit to the intelligence of the California voter that advocates of this proposition are trying to sell it on the basis of that old "it won't cost you a thing" con.

If Peak Oil really is real, the small percentage of royalty will be insignificant next to the value of the oil.

With P.O., oil is going to $500 sooner or later.

If a few percent of royalty makes the oil uneconomic, then it is probably because it has negative EREOI.

If it dissuades marginal production now, then that's a good thing.  California will have more oil for the time when it's $150+ a barrel and up.

Ms Cohen's phrase

"I would like to say at the beginning that the goal of Prop 87 is to reduce the use of oil"

seems to me like the Bush admin saying that the goal of the invasion of Iraq was to find and eliminate WMD.  Sure, that would be nice, but not the main goal.  

The main goal of this legislation seems to be to find a way through technology and subsidy to continue the drive-everywhere-for-everything lifestyle that exists.   How else would you explain the fact that there is no mention of supporting smart land-use and effective mass public transportation ?   The part about the tax on oil extraction will probably slightly benefit California by making it slightly less attractive to deplete its reserves as quickly, but the odd phrase about not allowing this cost to be passed to consumers, shows that continued consumption growth is at the very least not looked at as a problem.  

Most of this debate is over the question of whether or not ethanol/biofuels will ever be an economically (without subsidy) viable liquid fuel, but a lot more of it should be over the effect of large-scale "crops for fuel" on ecological systems and food production, and the often very good technical debates on these subject overlook the more fundamental question of whether any of it is sustainable for any significant time period without significant changes to how we inhabit the landscape and operate our civilization.

First, apologies I should have said Dr. Cohen.  

Also, people should check out the info on 87 here

In the arguments for and against (particularly against), there is a lot of mention about how 87 would make California oil less desireable.  I thought this would be one of the better things it would do for California.  The oil will still be there for use at some later time, why the rush to deplete your own resource?  What's wrong with using up all the Middle Eastern oil first ?  

The main goal of this legislation seems to be to find a way through technology and subsidy to continue the drive-everywhere-for-everything lifestyle that exists.

And if it results in people doing this more efficiently, sustainably and polluting less?

People have needed and wanted personal transportation since the beginning of civilization: the horse.  

This is not a new desire, nor one that you can beat out of people.

How else would you explain the fact that there is no mention of supporting smart land-use and effective mass public transportation ?  

Great ideas, but those are more regulatory than technical problems and it's not clear that research money helps a large amount.

Research money will help create electric and hybrid busses as well as autos.

I agree. While I have big issues with humongous vehicles driving wastefully everywhere and the fragmentation of families as they drive to soccer, cheerleading, etc all over kingdom come and never have a meal together, I think the desire for mobility, flexibility and exploration is very human and not in itself evil or wrong. A case in point is private aviation, a passion for my father and several friends. He built his own airplane and loves the experience of flight, as people have dreamed of since imagination was created. I think it's tragic that such activities (in my judgement) will be relegated to history as a result of peak oil. It will be the end of a real dream and passion for uncounted numbers of people. I don't see general aviation surviving peak oil except in an extremely limited form.

Same could be said for NASCAR, etc for other people. We shouldn't delight in their loss. This is a sobering time and we do need to learn not to waste, but there is a difference between a moral value and a social need. I also believe that once it is clearly established as a social necessity, the moral value will adjust accordingly, like sprinkling lawns during a drought - what had been fine and routine becomes socially unacceptable not because it's inherently wrong, but because it is wrong and maladaptive under the new circumstances.

And if it results in people doing this more efficiently, sustainably and polluting less?

That would be better, but even that won't be the result.  Fossil fuels are too valuable and convienent.  They will be burned, even if some Californians run their cars on Sorgum and corn.  

People have needed and wanted personal transportation since the beginning of civilization: the horse.

And before that: the feet.  Nobody is questioning the need to get around.  Or, even if we should have artificial (man-made) conveyances.  It is a question of whether you want your life to depend on it though.

Great ideas, but those are more regulatory than technical problems and it's not clear that research money helps a large amount.

I agree, we know what to do, research not required.  It does take a long time to change out transportation infrastructure, relocalize schools etc. so the more time wasted, the harder it will be for those who continue on the wrong path.  

That would be better, but even that won't be the result.  Fossil fuels are too valuable and convienent.  They will be burned, even if some Californians run their cars on Sorgum and corn.

Yes, of course.  I want that amount of fossil fuel to be as low as reasonably possible.

I think that realistically, given the actual constitutency of people's desires, rather than what we may want them to act like, promoting technology for low-fossil-consumption vehicles will be far more effective in overall impact than trains.

This isn't a judgement call on what people ought to do but what realistically might happen.   The problem is that changing living and mass transportation means changing housing patterns; and that has a much longer turnover rate than even vehicles.  There is huge investment and costs there; people cannot afford to move into (non-existent) dense housing now so that future rail system will be feasible.

You can't change the facts that with any kind of realistically feasible trains (which I support where realistic) most people in California will be out of range to use them.  (Most of the state doesn't live in SF, where transit can work, and they do have trains and trolleys.)  One end of their stop may be close enough to walk or bike, but often the other one isn't.    It is hard to create massive new rights of way for rails which will involve condemning swathes of neighborhoods which will upset people greatly.  

This is my position.  I understand and agree that much of the problem is a result of poor land-use policies which induces excessive automobile dependency.   But the turds of climate and peak oil are already hitting the fan today. And we need to quickly move to whatever technology and system is realistically likely to work as deeply and quickly as possible, including the realities of society, government, and people's needs.

Punishing them for living where they are (as if they really have a choice in zoning) by having the oil price skyrocket and tell them to hike 2.5 miles to a train which doesn't yet go anywhere they need to, is not a winning strategy.  They will drive and complain about government wasting their tax money on pointless crap.

Imagine you gave people a choice.  Suppose you could get, for free, one of two things:

(a) a modification to your car which doubled the fuel effiency per dollar and was good for the environment

(b) a better subway and rail system

which would they choose?  I'd estimate it would go 85:15 for the first.  Given delays it would be (b) "in 15 years" and (a) "in 5 years" and almost everybody would choose a.

By the way, I fully support reintegration of electrified trains as replacements for petroleum-dependent long-distnace cargo hauling.  The needs work better that way.

And before that: the feet.  Nobody is questioning the need to get around.  Or, even if we should have artificial (man-made) conveyances.  It is a question of whether you want your life to depend on it though.

Your life always depended on it.  If you were lame, and had no horse, you would starve without kindness of others.   Horses or other domesticated transportation animals were critical to human survival for most civilizations more complex and densely populated than hunter-gatherers.

How else would you explain the fact that there is no mention of supporting smart land-use and effective mass public transportation ?

"Smart" land-use is in the eye of the beholder, a concoction devised by urban architects who want to be dictator. Most people do not want to be crammed into dense cities, with their crime and incessant racket. After all, any style whatever of music (etc.) coming 24/7/365 from one or another of one's far-too-numerous city neigbors is thumping rubbish at 3AM when all one desperately needs is some damned sleep. If you can't imagine what the problem is, get a DVD of the classic old TV show, The Honeymooners.

Public transportation is still a delusion, pie in the sky, a hopeless basket-case, partly because it is mired in impossibly expensive Federal regulations. In my town, the "operating cost" of a bus ride was about $3.30 several years ago, probably approaching $4 now. That includes no road tax on the fuel and no payment for the bus itself. Driving a car costs - on the same basis - maybe 25-35 cents a mile. Driving is as cheap as, or cheaper than, the bus, and despite traffic, it's a hell of a lot more timely and dependable. And the car runs on Sunday nights. And the car can take you on a weekend trip to a nice park out in the country, where the bus doesn't even go.

The apparent cheapness of public transit is owed solely to massive subsidies from those eternal chumps, the taxpayers. After all, we'd all see driving a Hummer as quite cheap if "somebody else" paid for 3/4 of our "operating cost" and the vehicle itself cost us nothing. Such lavish subsidies would be utterly unsustainable, except that hardly anyone outside Manhattan and Brooklyn travels much by transit.

And never mind rail transit, which is even more expensive. The heavy cost I just cited, well in excess of the cost of driving a car, is just for the miserable, stinky, infrequent, unreliable, perenially-late, slow-as-molasses, stop at every corner, diesel bus.

Now, what people might be forced to settle for if things eventually head towards the doom end of the possible range could be quite a story. But - and get over it - people are not going to go there voluntarily, because it's quite obviously not worth going there until and unless there's obviously no conceivable alternative here and now.

If you agree to stop taking my earnings to subsidize any and all of your car infrastructure, like roads, bridges, tunnels, middle east garrisons etc, I will gladly give up any amount you think you are paying to subsidize transit.  We can remove the existing dictatorial land-use restrictions and let the free market go.  I'm all for that.  
there is an empirical example of little or no land-use regulations in a major city:   Houston.

And it a titanically sprawlacious car-dependent POS.

Ah yes, but with heavily subsidized auto infrastructure.  

You've missed a significant externality.  The users of public transport don't clutter up the roads for other users.

Go to London, or New York, or Washington DC, on a transit strike day.  The cities grind to a halt.

Even in a city like Los Angeles, where the public transport system was removed by GM in the 40s, if you shut down the buses, a very significant proportion of the population can't get to work.  Yes we are talking clerks, janitors, maids (this is LA after all) but those people also make the city run.

Public transport never 'pays off' in terms of its own fares, because it can't capture this externality (plus lower pollution and other societal benefits).

In addition, most of the costs of owning a car are fixed (depreciation and insurance).  So the marginal cost of an additional drive, once you have a car, is very small.

By contrast, a bus fare has to recoup some of the fixed costs of the bus system.  So the user is taking on a fuller piece of the total cost (and a personal cost is also a societal cost).

A better comparison would be to compare a bus ride with the cost of renting a car for that purpose.

Public transport works well, especially in cities with populations above 10,000 people per square mile.  In the US, the centre of many older cities (especially on the east coast), in Canada and Europe, most cities.  Once cities get to a certain level of traffic congestion (Denver) they start to provide public transport.

Medium distance rail (100 miles to 500 miles) the case is more complex.  But if you include a fair charge for the carbon cost of flying, plus the noise you inflict on the people below you when you fly, then rail looks a lot more competitive.

In practice in Europe the train is an excellent substitute for planes on up to 5 hour journeys.  In the US, where there has been both bad management and bad investment, this is probably not the case.

The US probably has room for 4 or 5 economic train routes: Boston-NYC-Phil-Washington, San Francisco-San Diego, Houston-Dallas Ft Worth, LA to Las Vegas.  Anyone think of any others?


I'd be curious what the total costs are for rail per passenger mile.  Alan?

thanks for the info Robert.  87 gets my vote.

San Francisco

I think one of the biggest flaws of this prop is the restriction on passing costs to consumers. Passing on costs would actually help alternatives and would make the consumer share responsibility for greenhouse emissions.  This feature was put in by people who like to pretend that we as individuals have no responsibility for our impact on the planet. I am no fan of the oil companies or the auto companies but I also believe that we, as individuals need to be part of the loop in addressing oil shortages and greenhouse gases. Prices are determined by the global market. I don't understand how we can pretend that California is some sort of disconnected island.  Maybe the good news is that this provision is probably incomphrehensible and, therefore, unenforceable.

California would be better off jacking up the gasoline tax and using the proceeds for alternative energy, with the emphasis on cutting consumption of all fuels, whether alternative or not. They may eventually have to do this anyway to meet the emissions goals set by their recent greenhouse gas legislation.

Along with one or two others here, I don't really understand the practicalities of prohibiting a royalty (i.e. tax) cost passthrough either.

Politicians perenially purchase votes by promising money and good times from thin air. But the money comes from the buyer of the product - or else it comes from investors, such as individuals, or agencies like the California pension fund acting on behalf of individuals. Investors and consumers are the only parties throwing major money into this pot, there are no others.

Now between those two parties, who pays? Well, it's just about impossible to tax investors in a narrow sector for very long. They can simply go elsewhere. This is why so many states worry about their "business climates" to an extent that constantly annoys and angers the Left. As already noted, pharma and Microsoft offer huge and unquestioned returns. (And Microsoft is getting to be almost as non-optional as a car - it's getting to be nearly impossible to find and take a job without using a computer, and Linux is not for the faint of heart.)

Furthermore, as many have noted on this site, the USA is in hock up far beyond its eyeballs. It has discouraged investment for decades now, by tax policies, by inflation, and by the anti-success social attitudes sometimes expressed around here. And investors, penalized in these broad ways, can simply switch to being consumers, as they have done on a massive scale. Why should anybody invest in oil, or wind, or anything like that, when they can get better - and tax free - returns on a house, and, to boot, they can live in the house?

With domestic investment, such little, net, as there is, diverted into real-estate, that leaves overseas investment. But even the Federal government, much less an individual state, can't hold overseas investors captive for very long. They can just leave. Though, I suppose, you could word the legislation to hold the California pension fund captive by ordering it to breach its fiduciary duty.

So, in general, pass as many laws as you like, and investors still don't pay, consumers pay. You can only alter how consumers pay. You can certainly fix things so that, rather than pay an honest price reflecting costs, they pay by spending endless hours waiting in line because of disinvestment-induced shortages. We did that repeatedly in the 1970s, and perhaps that sort of artificial crisis atmosphere is what some supporters are really after. However, I don't think Californians, who were certainly wedded to their cars even back then, but are far more wedded to them now, would be very happy with an abundance of "no gas" signs.

There is no such thing as a free lunch. So I think that if I lived in California, I would be inclined to vote against the proposition simply because of the fraud that seems to inhere  in its promotion and, I gather from your piece, in its very language. This subject doesn't seem to lend itself to honest discussion of costs and outcomes.

Well, it's just about impossible to tax investors in a narrow sector for very long. They can simply go elsewhere.

This time, not so.  The oil doesn't move.

Bingo. Without massive investment, the oil doesn't move. Without continuing massive investment, already-moving oil eventually stops moving, as we have been seeing in Alaska.

Of course, these things aren't all-or-nothing, they work on a curve. With investment being punished, disinvestment will occur. More oil will stay in the ground instead of moving elsewhere. Consumers will either pay more, or spend their family time in gas lines, in whatever combination they choose politically. After all, to the everlasting chagrin of the Left, supply-and-demand works, willy-nilly.

Eventually, circumstances will change. Since we can't run alternate time-lines simultaneously, change will make it quite impossible to say what the price "would have been" without the passthrough clause, i.e. on the time-line that never happened. Consumers will again be paying full price, plus extra to make up for the disinvestment  that occurred during whatever time the price was capped at an artificially low level.

Put it all together, and consumers will pay more now and pay more again later.

Whether that's good or bad in some larger sense is of course another question. It can certainly be argued - and in effect it is argued by Hirsch - that artificially raising prices now is an excellent idea. (Though paying for grain ethanol when harvests are both below consumption and declining seems like typical California folly even if it's also being done in supposedly sensible Iowa.) But none of this makes Prop 87 a free lunch of the sort perennially promised by chronically crooked politicians.

With investment being punished, disinvestment will occur. More oil will stay in the ground instead of moving elsewhere.

Whether that's good or bad in some larger sense is of course another question. It can certainly be argued - and in effect it is argued by Hirsch - that artificially raising prices now is an excellent idea.

That is a reason I just decided to vote for 87. Of course it will result in less oil pumping now, and more in the future when the price is really high (given the global nature of Peak Oil, the small tax and royalty problem in CA is insignificant).   We will have saved a little bit of oil and smoothed out the peak a little and CA will get higher royalty payments later.

Besides, why are people complaining about CA doing this, and not insisting that Alaska abandon its royalty and Permanent Fund?   Might it have something to do with an improper political insinuations about "liberal Californians"?

(Though paying for grain ethanol when harvests are both below consumption and declining seems like typical California folly even if it's also being done in supposedly sensible Iowa.)

The realities are entirely opposite.  California refiners didn't want to use ethanol to replace MTBE (phased out for water pollution reasons) for many reasons, arguing (correctly) that the latest technology of refineries can make gasoline with the proper pollution control without MTBE .  They were refused by the Feds who insisted they use ethanol regardless of the cost, despite complaints by various CA politicians.   This is a pickpocketing of Californians to go to Republican-voting wealthy midwest agribusiness.    But when CA wants to tax themselves for R&D on electric cars (which will benefit the nation and the world, in fact), that's a bad liberal idea?

The oil companies never expected oil prices to go this high, and they still assume maximum $40 oil for investment decisions.  The profit on $70 oil is being returned to investors.  Quite clearly THEY think it's a windfall, so why not tax it??
If I lived in California I would probably vote yes on 87. It doesn't sound perfect. In particular, I agree with Robert's criticisms of ethanol funding. Nor do I like the idea that some of the proponents clearly have their personal interests in mind -- but that's politics. Some of the investments will fail, but maybe some will work out too. That's venture capital.

Having said that, 87 seems to have a couple of sound ideas behind it. One of them is, the idea that since California's oil can be extracted only once, it should be used to fund modes of renewable energy that will have to serve when the oil is gone. The second sound idea is, that royalties are a common practice. They might discourage some marginal production but in the end the oil companies who campaign against royalties, are every bit as interested as the VCs who want 87. Oil companies pay royalties to, or buy oil outright from, noxious regimes around the world -- does anyone really think Big Oil will find California less hospitable than, say, Nigeria? I also like the idea, as explained by Dr. Cohen, that the voters will have some say as to where the trust fund monies will go. Finally, one can only hope that California will set a trend. No one else has used oil revenue to fund the transition to renewables. Hopefully other states and countries will build on the idea of 87 and improve it.

Of course it would be great if the private market would fund alternative energy quickly enough to support a seamless transition to a renewables based economy. On the other hand if the world oil production curve ends up looking like that of post-peak Great Britain, we will be grateful if accelerated public investments -- or public/private partnerships -- help to cushion the fall.

Sunlight, that is a great and cogent post. Thanks!

On response to Robert's concern about investments in ethanol.  California VCs aren't just funding ethanol by a long shot. VC have been funding a much larger variety of technologies, including solar, storage, and and grid modernization technologies.

This is a good blog to follow, if y'all aren't reading it already:

This blog covers mostly later stage companies but some vc

So, it's likely that 87 would fund a much larger portfolio than just ethanol.

ASLevin, thank you for the compliment... and for the VC blog links! I have bookmarked them.
thank you for your blog links.  Very helpful.
 I do live in California and your post expresses my views as well as I could put them myself (perhaps better).
Question for Dr. Cohen. You mention that:
The Authority - a reinvigorated existing California entity - will consist of 9 members, 3 state officials and 6 citizen experts appointed by various senior elected officials.
Since your organization was involved in developing the initiative, are you familiar with the types of "open government" process that apply to groups like the California Energy Alternatives Program Authority. Would the public be able to see what investments that authority was considering a head of time, and would citizens have the ability to raise concerns if there were issues with conflict of interest or investments in programs that have significant downsides?
Wow, this blog post on the yeson87 site is really disingenuous.

It quotes the oil companies as saying that the price of oil is driven by market conditions. Then, it says the oil companies are being hypocritical for saying that oil prices will rise if their costs go up.

That just does not compute. Market forces include both trading  and costs. I'm sympathetic to the goals of prop87 but that blog post is specious.

Yeah, that one is very similar to the one I addressed in my second essay (referenced in the header). It seems like the author of that one figures "the single most important factor" is synonymous with "the only factor."
I am a Californian blogger who has been approached, indirectly, to support Prop 87 so as to influence other bloggers to follow suit. Too bad - I hate these publicly formulated politically correct $Billion initiatives (stem-cells, anyone?) even though I agree that the government should do more to free up regulations and secure R&D and deployment funding.

My problem with this initiative is its creation of a bureaucracy to manage development of alternative fuels in the state. Who's in charge here? Manage means state-controlled - not free-market - development of the industry.

I think free enterprise - including, VCs, lobbyists, marketing partnerships, privately financed R&D, business investors, ... - offers a much more creative and sure-footed way of evolving this paradigm shift than anything a bureaucracy could come up with.

I sincerely believe that: 1) the money will sit and do very little while the politically correct, the state government, and educational institutions figure out ways to create fiefdoms to extend R&D contracts rather than work to solve problems; 2) privately financed R&D efforts to secure patents will suffer while competing with well-financed schools, and government efforts to provide their own solutions, 3) innovators who have invested heavily at the bleeding edge will get the shaft during this power play; 4) much of the collected tax will end up funding everything but alternative energy investment - including the Luddite ambitions of the Industry's opposition.

$4 Billion can be used to propel development or obstruct development. I'd rather Vinod Khosla reap the rewards for early investment in nascent albeit "high-risk" start-ups than watch the government throw wrenches in private enterprise. This is, after, California - the land where mis-begotten good intentions NEVER go unpunished.

Not sure I buy that either. The internet was built with government money. Wind technology was subsidized by European governments in previous decades and now European companies have world-leading competitive products.   It's not clear to me that government R&D money is necesarily going to be that much dumber than other money.  And capitol is helpful in cleantech, you can't do a startup on pocket change and a day job the same way you can with say, software.
I don't think this is the same thing.

The federal government has been spurring development through subsidies and secured financing efforts. I think they need to do more of that because the big hurdle now is deploying commercial scale versions of successful privately-financed pilot operations.

However, this proposition is setting up a bureaucracy about which precious little has been publicized. No doubt with good intentions but the devil is in the details. Who will control the direction of these investments? Will these ventures become "welfare dependent" on the continuence and largesse of the bureaucracy? What are its mandate, goals, and measurements? Who will judge whether the goals have been attained? How can we be sure that the bureaucracy won't change course and start advocating solutions that are counter-productive to needs of society because of political meddling?

It shouldn't take billions to solve our energy dependence. In California, much can be accomplished by changing the definition of terms, permitting regulations, and incentives controlled by the legislature. These changes will spur private investment into clean technologies without a top heavy, politically vulnerable bureaucracy calling the shots.

However, this proposition is setting up a bureaucracy about which precious little has been publicized. No doubt with good intentions but the devil is in the details. Who will control the direction of these investments? Will these ventures become "welfare dependent" on the continuence and largesse of the bureaucracy? What are its mandate, goals, and measurements? Who will judge whether the goals have been attained? How can we be sure that the bureaucracy won't change course and start advocating solutions that are counter-productive to needs of society because of political meddling?

The California electronics industry was heavily subsidized by military projects with funded goals enormously different from commercial success, and yet it worked.

Scientific bureaucracies are usually less corrupt and more honest than most others, but of course it's a problem to watch out for.  

One metric may be if CA state taking equity positions in some startups; money from future commercial success will flow back to taxpayers.

CA still has some excellent universities with people who know what they're doing scientifically.

It shouldn't take billions to solve our energy dependence.

You're right: the number is trillions to quads.

In California, much can be accomplished by changing the definition of terms, permitting regulations, and incentives controlled by the legislature. These changes will spur private investment into clean technologies without a top heavy, politically vulnerable bureaucracy calling the shots

Unfortunately, it doens't work enough in science and engineering.  There is about a 20 year gap between fundamental development and commercial application.  Academic, government financed research (e.g. NSF) funds years 0 to 3 or so. Fully capitalist private investment typically funds the last 18 months worth---at most.   There is the well-known "Valley Of Death" in technology development, which in the past was fulfilled, quite suboptimally, by military-oriented development.  Since that's stopped in many areas, we've really lost plenty of industrial capacity and progress in "heavy metal" type of industries, the kind which will be necessary to solve energy problems.

That's a good point - look what happened to the stem cell initiative. Passed with good intentions and great fanfare, it's been tied up in court ever since. The program's never gotten off the ground and almost no money has been disbursed.

These big government programs are a fat target for lawsuits by interest groups of all stripes. It could be years before all that money collected goes anywhere. Meanwhile everyone is paying the costs for no benefits.

Since you hate government initiatives I hope that helps you to avoid driving (so you won't use those hateful roads). Don't user imported items which come from those pesky government run harbors and ports. By all means avoid electricity from dams which are built by governments and managed by bureaucracy. The horror the horror.

Frankly if the money is not used I'm ok with that. If oil burning is reduced the whole earth can benefit.

So called "Free enterprise" sure has done a good job of helping put the whole planet in danger. But, of course next to the horror of a bureaucracy, which must be avoided at all costs who gives sh*t about earth.

TAX TAX TAX TAX, Then double the TAX (on oil)


Rather than addressing directly PaulS, comments on Public transport.

Portland Oregon is the US poster child for Public Transport.

"Sarah Gilbert and Jonathan Hanson, two car-dependent Portlanders who have agreed to give up their beloved Mercedes SUV for a month and survive on public transport alone.

They're taking part in a challenge set by the Department of Transportation and Flexcar, a car-sharing business, to show just how easy and economical it is to use public transport.

Sarah, Jonathan and their two children have found using a mixture of Portland's integrated light rail, bus, streetcar, cycle lanes and free city centre transport far easier than they thought.

In fact they're now going to sell their SUV."

I think this is Alan's (from the Big Easy) coverage
Operating Cost per Boarding Rider
Bus     $2.43
LRT     $1.54
Source: FTA data, Oct. 2005

"The MAX light rail in Portland carries 26% of all rush-hour commuters travelling in the Sunset Highway and Banfield Freeway corridors. Federal estimates are that this amounts to approximately 67,000 auto trips per day. Ridership has increased steadily for the last 17 years, and the new Interstate Ave. (Yellow) line carries 95% more passengers than the bus line on the same street that it replaced."

From the BBC article:
And, incredibly for a city in the world's most car dependent nation, they're eradicating over 62 million car trips a year, which means car use is growing at the slowest rate anywhere in the United States.

At the slowest rate - but car use ist still growing!?

Portland is so far ahead in so many areas it makes me ill to read about it.
As a Los Angeles resident, I am most definately voting NO on Prop 87.

No Oil Tax

Not surprisingly, Prop 87 is opposed by a coalition of hundreds of organizations, including the California Taxpayers' Association, California Small Business Alliance, California Chamber of Commerce, California State Firefighters' Association, labor, senior groups, public safety officials, local governments, and educators.

The absolute last thing I want is more government and higher taxes. The free-market will eventually force us Californians to reduce our oil consumption, nothing else. The only thing government can do is interfere with our lives and make situations worse.

I, for one, own many gas & oil stocks both as an investment and as a hedge against higher oil prices. That means I love higher gas prices and will never change my driving habits since I can afford premium gas, nor give up my gas-chugging sports car, until we have shortages and I can no longer get the amount of gas I want. Others, with lower incomes, will give up their driving habits much sooner. There is absolutely no need at all whatsoever for this oil tax. Supply & Demand will take care of this issue for us.

On a larger issue, the human race will survive Peak Oil, albeit in greatly reduced numbers. We will get through this much better with the minimum amount of government involvement. Look at the Great Depression. Big Government prolonged the conditions of the '30's instead of letting the free-market run its course and rebuild. All of you in favor of looking to the governments of the world to see us through Peak Oil are sadly misguided.
As I re-read this, it seemed a bit harsh. It's just that I'm upset at all of the newer and higher taxes we're paying here in CA. 10.3% state income tax. 8.25% Los Angeles city tax. Numerous other fees. It's ridiculous. Then there are always more bond measures on the ballots. Who's going to pay for all of this. The truly wealthy people who pay the highest taxes are leaving the state which means us middle-class folk are getting stuck with the tax bill.

Big Government prolonged the conditions of the '30's instead of letting the free-market run its course and rebuild.

Indeed, surely we ought to have butchered and sold the flesh of those starving surplus workers.   More jobs and more food!

Thank you for this article.  I'm pleased to hear that the California Energy Alternatives Program Authority will play this role, and that it has a more open charter than the initial press reports led me to believe. (Is that a long way of saying I got it wrong?)

As far as it affecting my gas prices here in California .. gotta tell you I don't really mind.  We need gas taxes and backdoor ones are fine ... not that this is one (wink, wink).

Thank you for addressing Prop 87 issues -- I am a CA resident and have been struggling whether to vote yes or no in November. there are some questions I still have --

  1. I have read the Consumer Reports ( that gasoline usage has went up 1% because of the credits automakers can buy in creating E85 vehicles: "This allows automakers to build more large, gas-guzzling vehicles than they otherwise could under Corporate Average Fuel Economy rules. As a result, these credits have increased annual U.S. gasoline consumption by about 1 percent, or 1.2 billion gallons." Is this not contradictory to the campaign promise that we will lessen our dependence on oil?

  2. Is it a possibility that the oil companies will not be able to make the $4 billion in ten years, given the tax is only on CA oil and that they will have less incentive to drill in CA? Since the prop allows new programs to use state bonds, would it be possible that Californians will have to help bailout the state when the funds are not met by taxes?

  3. How much greenhouse gas emissions does using Ethanol reduce versus gasoline? I'm hearing 20-30%, is this true?

Thanks for any input.
Anytime a political discussion uses two special words together, I automatically discount the proposal.  Those words are "trust fund."

I know of two government trust funds and both are deceptive and are in no ways secure - the Social Security trust fund and the nuclear waste trust fund.

Government uses these to collect taxes today and pass the problem and costs off on future generations, meanwhile spending today's surplus to buy votes.

It continues to amaze me how any advocate of an energy policy can think that people will buy the proposition that the solution to $3 a gallon gasoline is increasing the tax to make it cost $3.50.  Adding tax to oil and gas production in California will either raise the price or restrict the supply or both.

People are just not that stupid.

No on 87.