Prop 23

Prop 23

By Kit Stolz 10/21/2010

Supporters of Proposition 23, which will be voted on by California voters on Nov. 2, call it the “California Jobs Initiative.” They want to suspend state Assembly Bill 32, California’s 2006 law mandating reduction of greenhouse gas emissions, until employment drops to 5.5 percent or less.

They argue that if AB 32 is phased in as planned, that the upshot will be a new “energy tax” that will lead to the loss of more than a million jobs, cost California families an average of $4,000 a year, and devastate state tax revenue.

Opponents of Prop. 23 call it the “Dirty Energy Act.” They point to the fact that nearly all the funding in support of the proposition has come from oil companies, most of them from out of state.

In fact, documents filed with the California Secretary of State show that oil companies Valero ($4 million) and Tesoro ($1.5 million), both from Texas, and Flint Hills Resources ($1 million), from Kansas, which is controlled by the far-right Koch Brothers, have bankrolled the initiative from the start.

Opponents say the passage of Prop. 23 would cost the state tens of thousands of “green jobs” that are being created to meet new standards for energy efficiency and conservation. And they complain that the supporters of Proposition 23 have taken advantage of hard economic times to mislead California voters. They say the proposition has nothing to do with saving jobs, and everything to do with saving oil refinery companies from having to pay new fees or change the way they emit gas into the atmosphere.

Which of these stories is true?

“Out-of-state oil companies” vs. “Regulatory efforts”
Both sides in the Prop. 23 debate stick unswervingly to their well-worn talking points, repeating the lines they want to get across to the public with a repetitiveness that sounds almost robotic.

Both sides are guilty of simplifying a complex debate and of glossing over facts inconvenient to their arguments.

Opponents of Proposition 23 sound almost as if they are speaking from the same script when they discuss the initiative.

“It’s an attempt by out-of-state oil companies to buy their way out of California’s most important clean energy law,” states Bill McGavern at the Sierra Club.

2“I think the first thing people who are coming to the initiative need to understand is that the big oil companies from out of state are the major funders and backers of Proposition 23,” said county Supervisor Steve Bennett. “We shouldn’t have oil companies from outside of the state writing an initiative to overturn a good-faith effort by the state of California to try and begin the process of dealing with climate change.”

Fran Pavley, who authored AB 32, California’s Global Warming Solutions Act, and who represents much of the southern coastal part of Ventura County in the state Senate, put it in almost the same terms.

“Voters want to know, as I do myself, who is funding initiatives,” she said. “Ninety-six percent of the money behind Proposition 23 is from oil companies, and 90 percent of it is from out of state. Primarily it’s two oil companies from Texas who don’t want to clean up their refineries or their fuels.”

On the other side of the coin, backers of Prop. 23 insist almost as repetitively that the proposition is a short-term fix for a bad economy.

“The main thing is the recession,” said Bill Day, a spokesperson for Valero, which is headquartered in San Antonio, Texas. “This is the worst economic downturn since the Great Depression. The unemployment rate has nearly tripled in California since AB 32 was passed in 2006. This is not the time to raise the cost of gas or electricity.”

Anita Mangels, a spokesperson for the Yes on 23 campaign, stressed that her organization supports many of the other clean energy bills pioneered by Pavley, but not AB 32.

“AB 32 was passed back in 2006, when unemployment was low, capital was easy to come by, and the rest of the world was contemplating similar [emissions control] measures,” she said. “Since then, we’ve lost 1.4 million jobs in California, and the economy has taken a real dive. Now is not the time for such an ambitious regulatory effort.”

At a recent Tea Party event open to the public in Ventura on Oct. 5, a room full of conservatives and Republicans unanimously raised their hands backing Proposition 23.

“We can’t talk about green until we get out of the red,” said one activist from the back of the room.

Beyond the television ads
Both sides in the Proposition 23 campaign have “gone negative” early and often in their television advertisements.

Prop. 23 supporters argue that AB 32 is a “job killer” that will cost California more than a million jobs. A “No New Taxes” group affiliated with the Howard Jarvis Taxpayers Association claims that implementation of AB 32 will mean an “energy tax” that will result in a “drastic drop” of economic output in California totaling $183 billion, as well as steep drops in tax revenues collected by the state for social services.

These numbers were based on a paper written by two professors of business administration, Sanjay Varshney and Dennis Tootelian, at California State University, Sacramento. Using a nonmathematical Forbes magazine ranking of business conditions that put California 40th among the states as a place to do business, they then estimated how much more AB 32 would cost California businesses, and extrapolated the results across the state economy, in return for payment from the Small Business Roundtable.

The results, which were reported this spring, were loudly rejected by fellow experts. The nonpartisan legislative analyst called the analysis “essentially useless.” A Stanford University energy consultant named James Sweeney said the study was “truly weird.” Two economists derided the paper as “shlock science.”

On the other side of the coin, opponents of Proposition 23 repeatedly stress that if Prop. 23 is passed, it will devastate the burgeoning green economy, but they downplay the cost of weatherization and energy efficiency.

“If Prop. 23 passes, that will create uncertainty, which is what businesses don’t want,” said Pavley. “Business wants to know what the rules are, and they want a level playing field, and they are good to go.”

Democratic Assemblyman Pedro Nava, who represents the 35th District in California, including Ventura and Oxnard, and who chairs a committee on green technology, agreed.

“There are thousands of businesses across California who have embraced the idea of green practices and green energy because it is profitable,” he said. “They’re not doing it because they’re wearing Birkenstocks and burning incense. They do it because, from a business perspective, saving energy saves money.”

Nava cites several examples of businesses in Ventura County that are doing well, and would thrive with the planned implementation of AB 32, including SolarWorld, which he said is “the largest manufacturer of solar panels in North America, and is unique because they use component parts also manufactured in North America,” and Power-One, which he said is “the second largest manufacturer of power inverters in North America.”

Pavley mentions these two examples, as well as Gil’s Onions, which uses waste from onion peeling to generate methane to power its Oxnard business, and a lithium-Ion battery business start-up in Fillmore.

Pavley adds, in a mild tone of voice, that some of the same arguments were heard against a bill she authored earlier this decade encouraging clean, energy-efficient cars in California. Although the new fuel efficiency standard was at first rejected by the Bush administration, it was eventually adopted by the Obama administration, after negotiation with car manufacturers.

2“I get the politics of this,” she said, “but implementation of AB 32 doesn’t begin until 2012, so the oil companies can’t blame their problems on my bill. When I talk to people who aren’t environmentalists, and they hear about the bill reducing our dependence on foreign oil, on increasing fuel efficiency, and on using more renewable energy instead of polluting, they’re all for it.”

What the polling says
Both sides can take some comfort from the poll numbers.

The largest poll in the last two months, taken by the Public Policy Institute of California in September, found the electorate split almost evenly, 43 percent for passage of the proposition, and 42 percent against, with a plurality of young voters, Republicans and Latinos in support of the measure, but a majority of Democrats and older voters opposed.

The most recent poll, by Ipsos/Reuters in the first week of October, found 49 percent of likely voters opposed to Proposition 23, and 37 percent in support, but with two-thirds of Democrats opposed and a bare minimum of 51 percent Republicans in support.

Both polls found a large number of voters remain undecided, with 16 percent of voters undecided in the PPIC poll, and 14 percent in the Ipsos/Reuters poll. Among pollsters, it’s conventional wisdom that if a proposition on the ballot is garnering less than 50 percent shortly before the election, chances are that it won’t pass, but pollster Sonja Petek of PPIC points out that this rule hasn’t always held true. Proposition 8, which outlawed gay marriage, was trending at about 44 percent in the polls before the election in 2008, but passed by a substantial margin.

“It’s complicated because, although the Californians we have surveyed in the past generally believe in the idea of global warming and strongly support AB 32, in this election they are most concerned with jobs and the economy,” Petek said. “It’s a question of how much the proponents’ arguments resonate with the voters in the time before the election.”

Both sides have plenty of money to spend in the remaining weeks. Opponents include hedge fund manager Tom Steyer and venture capitalists Ann and Tom Doerr, along with other Silicon Valley billionaires, for a total of nearly $9 million. Marathon Oil of Houston recently donated an additional $500,000 to the Yes on 23 campaign, giving it a total of about $8 million.

Carl Cole, a Ventura County businessman who volunteered to speak on green issues for the Stop Dirty Oil campaign, objected strongly to the tactics of the Prop. 23 campaign, even though he jokingly described himself as “an evil little Republican in a business suit.”

“The problem is the amount of money that is being spent by these companies, in the millions of dollars, to force something down the throats of Californians,” Cole said. “I really hate being manipulated.”

To a major oil company such as Valero, a $4 million investment in a proposition that might lower the cost of doing business in California and the nation could be seen as small change.

“For a big oil company, a million dollars is something you can lose track of without any difficulty,” said Neal Davis, who oversees financial reporting on oil companies for the U.S. Energy Information Administration. “You have to look at their overall revenue and bottom line.”

In the second quarter of this year, Valero reported a return to profitability, with $921 million in operating income, its second-best quarter in history, despite losing money on refinery operations in California. The company plans to spend $2.3 billion on its business in 2010, meaning that Valero’s $4 million investment in Prop. 23 adds up to less than one-fifth of 1 percent of its capital expenditures for this year, .17 percent to be exact.

The stakes
While the battle has been taking shape in California, outside the state two opposing trends in public opinion have combined to focus attention on the vote.

In the Republican Party, buffeted by the anger of the right-wing Tea Party movement, global warming has become a dirty word. The National Journal in Washington, D.C., recently surveyed 21 GOP candidates for the Senate given a chance of winning their races, and found not a single one in support of a cap-and-trade bill to control greenhouse gas emissions. John McCain, a prominent supporter at one time, now questions climate change science, and Lindsey Graham, the lone Republican in support of a climate change bill, who worked for months with two Democratic senators to craft a measure capable of passing the Senate, has given up in disgust.

In the world at large, a quite different consensus has taken shape. Even conservative governments — in nations such as Germany, Britain and Japan — are calling on the U.S. to take action.

“Climate change is perhaps the 21st century’s biggest foreign policy challenge,” declared Conservative Party leader William Hague of the UK in a visit to New York last week. “An effective response to climate change underpins our security and prosperity.”

Back in Ventura County, Fran Pavley framed the question in similarly stark terms.

“It’s not just that these oil companies are trying to protect their bottom line,” she said. “They want to set policy for the nation, and if they succeed in passing Prop. 23, they could set us back for decades. If you remember 2001, and how Enron and other out-of-state companies manipulated our energy markets, you know we do not want to be dependent on other states for our energy. We should want to minimize the importation of fuel from foreign countries.

These oil companies do not have our best interests in mind.”   

kitstolz@gmail.com

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