Election 2006: California's Oil Tax/Alternative Energy Fund Proposition Fails

Worries about pump prices and bureaucracy doomed Prop. 87, according to observers.

[From the LA Times:]

After months of being hammered with threats of higher gas prices at the pump, voters yielded to concerns about Proposition 87 and turned down the proposed tax on crude oil, supporters and opponents agreed Wednesday.

The "no" side swept most parts of the state with 54.7% of the vote. The "yes" side received 45.3%, carrying only Los Angeles County, the Bay Area and a handful of Northern California counties.

"Voters were interested in the specifics of the proposal, and the more they looked for details, they found flaws," said Al Lundeen, spokesman for Californians Against Higher Taxes, the "no" campaign.

Proposition 87 spokeswoman Beth Willon conceded that the opposition — mainly oil companies — was "able to plant seeds of doubt on the issues of cost and accountability."

The initiative sought to levy a tax of 1.5% to 6% on the price of every barrel of oil pumped from a California well. The estimated $4 billion that would have been raised over 10 years was to be given as grants to scientists and universities or as subsidies to industries for developing nonpolluting alternatives to petroleum.

The argument over whether a tax on oil company production would be passed along to motorists dominated television commercials since early spring.

The oil industry spent about $95 million to back Californians Against Higher Taxes. Meanwhile, supporters at Californians for Clean Energy raised $57 million. The battle was the most expensive in California initiative history.

Proponents of Proposition 87 knew from the start that the potential impact of the tax on retail gas prices could be an issue. With that in mind, they included a provision in the initiative that made it illegal to pass the tax along to motorists, and they highlighted the provision in their ads.

But that assurance never seemed to persuade voters. Analysts said that despite extensive television exposure, proponents never could overcome people's concerns that Proposition 87 would affect "what he or she pays at the pump" just as gasoline prices are coming down, said Larry N. Gerston, a political science professor at San Jose State.

Many voters also were apparently swayed by the oil companies' contention that the initiative would create an unaccountable bureaucracy to pass out grants and subsidies from the proceeds of the extraction tax.

"Bureaucracy is a bad word anywhere," Gerston said.

The barrage of televised criticism made it hard for the "yes" campaign to get its message across "to make the value of our initiative clear to the voters," said Anthony Rubenstein, a Los Angeles community organizer who had the idea for Proposition 87.

Election day exit polls conducted by the Los Angeles Times Poll indicated that a majority of votes cast "were all about the money" that motorists feared they might have to pay because of a new tax, said poll Director Susan Pinkus.

In the poll, 79% of Republican voters opposed Proposition 87, and only 65% of Democrats supported it. Independent voters were split, while majorities of men and women voted no. White voters opposed the measure, while Latinos were split and Asians and blacks voted yes, the poll said.

Propelled primarily by the personal wealth of Hollywood producer Stephen L. Bing, and combined with campaigning by former President Clinton and a bevy of movie stars, the campaign couldn't allay voters' skepticism and the fear of higher gas prices sowed by oil company advertisements.

Environmentalists placed much of the blame for their defeat on being outspent two to one by the oil industry.

"The take-home lesson here is that with $100 million and scaremongering tactics, it's hard to fight," said Roland Hwang, a San Francisco-based official with the Natural Resources Defense Council.

But political observers countered that the loss couldn't be written off solely due to a lack of money.

The campaign should have been able to take advantage of the many Californians who worry about pollution and global warming, and harbor deep suspicions of international petroleum corporations, said Julie Buckner, a Los Angeles media consultant involved in the early stages of the Proposition 87 campaign.

"The campaign had enough resources to win. But it didn't do a good enough job of raising doubts about who was the opposition," Buckner said.

Indeed, some of the pro-Proposition 87 ads that ran earlier in the campaign featured "windmills and clean air" and were not aggressive enough in criticizing oil companies for allegedly keeping America dependent on petroleum, said Terry Tamminen, who recently resigned as a top environmental advisor to Gov. Arnold Schwarzenegger. "Those arguments needed to be made sooner," he said.

Meanwhile, the oil companies that bankrolled the opposition campaign — mainly Chevron Corp. and Aera Energy LLC, a joint venture of Exxon Mobil Corp. and Royal-Dutch Shell — were careful to stay out of the campaign limelight, referring all campaign queries to their political consultants and allies in the California Chamber of Commerce.

Environmentalists, though disappointed with Proposition 87's defeat, said they remained hopeful that the fight over the initiative may have stoked people's interest in combating the nation's dependence on polluting oil from overseas and California's oilfields.

Hwang of the Natural Resources Defense Council said: "Everyone agrees that we've got to figure out a way to solve this problem."