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New energy tax? California might vote on it

Submitted by News Desk on Sun, 02/05/2006 - 10:00pm

LOS ANGELES - A California constitutional amendment taxing oil production to fund a range of alternative energy efforts may go to voters this November, setting up a nine-month battle between environmentalists and oil companies.

Some big names in California business including movie producer Steven Bing and Silicon Valley venture capitalist Vinod Khosla will help fund the “Californians For Clean Alternative Energy” effort to get the measure on the ballot and convince voters to approve it.

The two and other leaders of the group will kick off a signature-gathering drive later this month.

They seek to cut petroleum fuel consumption in California by 25 percent of 2005 levels in 10 years. The tax would end in 2017 unless the California legislature votes to extend it.

To get the measure on the Nov. 7 ballot, the group must gather 598,105 signatures of registered voters by April 28.

Wind, solar push

The “Clean Alternative Energy Act,” if enacted, would raise about $4 billion in tax on oil produced in California from 2007-2017, allowing about $380 million per year in spending on various alternative energy programs, its proponents say.

It would fund research of alternatives to petroleum and expanding wind and solar electricity generation, the development of hydrogen and other renewable fuels such as biofuels, as well as development of hybrid vehicles and those that run fully on non-petroleum fuels.

Leading the charge against the measure will be the ”Californians Against Higher Taxes,” an umbrella group of petroleum and anti-tax interests.

“This is a proposal by a group of wealthy venture capitalists who stand to gain,” said Al Lundeen, spokesman for Californians Against Higher Taxes. “California already pays the third-highest gasoline taxes in the nation and this will end up coming out of the pocketbooks of consumers.”

Not true, said Fiona Hutton, spokeswoman for the Californians For Clean Alternative Energy. There is a provision in the proposed constitutional amendment stating that oil companies cannot pass on the tax to consumers.

“That’s an easy scare tactic for the oil companies to use against consumers,” Hutton said.

She said there are clear ways to ensure oil companies do not pass along the assessments. She said other major oil-producing states Texas, Louisiana, Alaska and New Mexico all have versions of the tax in place and do not have gasoline prices as high as California.

But Lundeen of the anti-tax group said the state legislative analyst’s office in a report last week said keeping oil companies from passing along the tax will be difficult.

State's production stats

California ranks fourth in both crude oil production and crude oil reserves, but production has fallen 34 percent since 1986 and is expected to fall 2 percent annually over the next 20 years, according to the California Energy Commission.

California produces 656,000 barrels of oil each day, the U.S. Energy Information Administration said.

California has 3.37 billion barrels in proven oil reserves, accounting for 16 percent of overall U.S. reserves, EIA data shows.

The tax would be levied on a sliding scale depending on the cost of crude oil produced. At $60.01 per barrel and more, the tax would be 6 percent of the gross value of the oil. At $40.01 to $60 per barrel, the tax would be 4.5 percent.

The current value of representative California crude oil grade Buena Vista in the past few days has bounced from just under to just over $60 per barrel.