California and National Elections

Voters Appear to Be Rejecting New Oil Tax

BERKELEY -- Voters appear to be rejecting the idea of levying an extra tax on oil production, according to early voting results. With 29.3 percent of precincts reporting, the No on Proposition votes are leading 57.4 percent to 46.2 percent, according to the California Secretary of State’s office.

The results reflect the reluctance of voters to approve taxes, said Ethan Rarick, director of the Center on Politics at the Berkeley Institute of Governmental Studies. The no vote also reflects the oil companies’ success at painting the proposition as a measure that would increase the cost of gas.

“Gas prices are the ultimate pocketbook issue,” said Rarick.

“I don’t think that the economics of Prop 87 were ever made all that clear,” said Dan Kammen, a professor at UC Berkeley’s Energy and Resources Group and a co-author of the measure. He echoed Rarick’s comments that the opposition succeeded in framing the proposition in voter’s eyes.

The Yes on 87 campaign fell short in explaining the positive economic benefits of the proposition, he said. And with the No campaign spending almost $100 million, the proposition didn’t stand a chance, he added.

“$100 million will buy a lot of votes,” Kammen noted.

During the day, many Bay Area voters seemed to supporting Proposition 87. This was in keeping with a Field poll that noted support for the measure was strongest in coastal regions, while inland areas tended to be against the measure.

In the poll, the No side held a slight lead of 44 percent over the Yes side’s 40 percent. The poll signaled a continued decline in support for the proposition since July. The poll had a margin of error of +/- 3.5 percent.

Support for Prop 87 was strongest in San Francisco County, with 73 percent voting for it. Most supporting counties were clustered in the Bay Area. The No side won in most other counties with percentages of 65 percent or higher against the proposition.

Supporters had hoped that the success of the measure would focus attention on global warming and encourage the United States to work more fervently toward increasing its use of alternative energy.

“87 will hopefully result in making sure that California—and by extension, hopefully, the United States—can move toward new energy sources that are more sustainable and have a less harmful impact on the environment,” said Ali Saidi, 32, of Richmond.

Proposition 87 would have established a tax on oil pumped in California. The revenues from this tax were to be used to fund companies and programs developing alternative fuels and efficient technologies. The goal of its authors was to reduce California fuel consumption by 25 percent by 2017.

The tax would have remained in effect until it raised $4 billion.

Opponents claimed that the tax would have reduced state oil production, leading to increased foreign imports and higher gas prices. Supporters disputed this contention and pointed out that the initiative was specifically designed to prevent oil companies from passing the tax on to consumers. In addition, oil prices are determined by the world market, not by California production, said Severin Borenstein, the director of the University of California Energy Institute, who is not affiliated with either side of the proposition.

Opponents were also worried that the proposition would also reduce funding for schools and public safety.

The current taxes on oil now go into the state’s General Fund, where they can be used for a variety of purposes. Proposition 87 would mandate that all oil taxes go into a special fund that can only be used to promote alternative energy. The California Legislative Analyst’s Office says any losses would probably not exceed a few million dollars for local property taxes, $10 million in state income taxes, and $15 million in state oil revenues. Supporters contend that this money is necessary to put muscle behind California’s global warming laws.

The Yes on 87 campaign’s supporters included environmentalists, venture capitalists, the American Lung Association of California, well-known Hollywood figures, and prominent Democrats like Bill Clinton and Al Gore.

The coalition opposed to Prop 87 included oil companies, the California Chamber of Commerce, several education administrators, and firefighter and police groups.

More than $155 million has been raised by both sides of Prop 87, making it the most expensive proposition race in California history. Chevron and Aera Energy have provided most of the No on 87 campaign’s funding, with $71 million of $95 million total, while the Hollywood producer Stephen Bing has provided the bulk of Yes on 87 campaign’s $61 million by donating $50 million of his own money.

As a result, he found the tax on oil producers to be particularly appealing. “I am far less about alternative fuels than I am about the fair regulation of petroleum prices.”