Old Industry v. New Industry in California's Prop 23 Battle

By Chris Mooney | October 25, 2010 2:29 pm

Following on my Apple v. ExxonMobil post from last week, here’s more fodder. Bill Gates and Sergey Brin are now financial backers of the campaign to defeat Prop 23 in California; while “68 investors managing $415 billion in assets, including venture capital firms Kleiner Perkins Caufield & Byers and VantagePoint Venture Partners,” have also signaled their opposition.

Why so much corporate and big money opposition to a ballot initiative that is being pushed by industrial powerhouses? Simple: Prop 23 will give an economic advantage to old industry–dirty fossil fuel companies–while squelching opportunity for new industry–including clean energy and solar companies.

In other words, this isn’t an issue of industry vs the environment. Far from it. It’s an issue of the past versus the future–old dirty companies like Valero and Tesoro versus the fortunes that are yet to be made in clean energy.

I’ll say it again–when we have a solar company that’s worth as much as ExxonMobil, I’m quite confident our politics will change.

CATEGORIZED UNDER: Energy, Environment, Global Warming

Comments (46)

  1. Earl Richards

    PROP 26 is just as damaging as PROP 23. Prop 26 is a treacherous, Big Oil rip-off, which “passes the buck” from oil corporation, clean-up fees to the public’s taxes, who will pay the oil recycling fees, the materials hazards fees and other fees. If you do not understand the the ambiguities and the intrigues behind Prop 26, then, vote no. Power to the people . BP, Exxon Mobil and Shell are silent partners behind Prop 26.

  2. FUAG

    I wonder what the oil refinery employees will think when their plant moves to Mexico? Business needs a level playing field to compete. If they don’t have it in the US they will find a level playing field elsewhere… So, this isn’t as much an argument of past vs the future, it’s hear no evil see no evil…

  3. I wonder what the oil refinery employees will think when their plant moves to Mexico?

    Strange that they haven’t moved to Mexico yet. Cheaper labor, looser regulations. It’s almost as if there were some advantage to being located in a country with a well-educated, relatively prosperous middle class and a legal system that grants and protects their rights as a highly profitable business.

    Not that they should be willing to pay for any of that, but…

  4. Nullius in Verba

    #2,

    Except that the plant won’t simply move to Mexico, it’ll just shut down, and not be replaced. As Jinchi indicates, it’s more expensive to do it in Mexico, so prices will go up, so you’ll be able to sell less, so you’ll need less capacity, so there won’t be any point in opening the same number of plants abroad. The economy will produce less at higher prices, need to employ more people to achieve it, who will be paid a lot less on average, and have less to spend it on. They call it “green jobs”.

    Have you ever read Bastiat’s Sophisms of the Protectionists? I think you might enjoy it.

    #3,

    “Not that they should be willing to pay for any of that, but…”

    …but of course they do. They pay taxes.

    As I’m sure everyone knows, more than 50% of the government’s income tax revenue is paid by only 5% of the population. Or did you think it was the poor paying the bills?

  5. Duane

    48% against, 37% for, in the LA Times as of 10/21. Looks like it’s going down. Good.

  6. Sean McCorkle

    #2
    Seeing millions of single-driver SUVs all going in the same direction in the morning near where I live, and the same millions coming back the other way in the evening, day in and day out, often clogging the arteries, often sitting in place while engines idle and waste gigajoules of energy, its hard not to conclude that Americans are gasoline addicts and oil companies are the pushers.

    The air pollution is visible. The racket is god-awful. Whats that about hear-no-evil, see-no-evil?

    Businesses and corporations are in the competitive crucible that inspired Charles Darwin’s theory of evolution. Don’t lament the loss of dinosaur industries. They must adapt or perish. If they are unwilling to do so, they deserve no sympathy.

  7. Chris Mooney

    yes my sense is that prop 23 is going down at this point…..

  8. Over at Age of Engagement, I have a series of posts on the formidable fundraising and mobilization advantage that environmentalists have over oil industry-backed foes in the Proposition 23 battle:

    http://bigthink.com/ideas/24438

    http://bigthink.com/ideas/24354

    http://bigthink.com/ideas/24608

  9. FUAG

    @6: I agree that we have issues with our love of oil. That is the problem not the oil companies satiating our needs.
    Expanding on “hear no evil see no evil”: This issue is that if they can’t be profitable in CA, they will move somewhere else. Thus, the pollution problem still exists so there is no environmental gain to putting more burden on the oil companies here. If you don’t hear/see the refineries it doesn’t mean they do not exists…

  10. Sean McCorkle

    #9

    Now I see what you’re saying, and I agree with you. But we must surmount the problem. We can’t let the fear of displacing the fossil fuel industry freeze us into inaction.

    If we don’t lead the way forward, then who will?

  11. FUAG

    @4:

    It’s really supply and demand. As long as the demand is high the supply must come from somewhere. I understand that with the higher prices the demand will fall, but in the quantities we are talking about I don’t see it as having much affect. Gas prices have tripled since I started driving, but it hasn’t affected how much I drive. (although, I did get a 30mpg car so that is something…)

    My point is that we need to find a way of killing demand without further decimation of our manufacturing infrastructure. It’s getting the the point that the only thing we create in this country any more is money. And, unfortunately, the world is starting to realize that.

  12. FUAG

    @10
    There are other options. For me, I’d be happy to stop sending more money to oil sheiks. I think they have enough gold plated Ferraris! And certainly we will run out at some point. Those concepts are very easy for people to grasp. Certainly more so than than the nebulous environmental/global warming route. Clever marketing of these types of ideas can go a long way…

    Find a solution to the problem, don’t tax the problem.

  13. Jon

    FUAG: My point is that we need to find a way of killing demand without further decimation of our manufacturing infrastructure.

    No reason why we couldn’t do that

  14. FUAG

    Jon: Cap and trade is same issue… You go get China and India on board and we’ll talk!

  15. Jon

    OK, we led with industrialization, but now we *follow* with greening our industries? Seems backward to me.

  16. FUAG

    It’s just not that simple Jon. If we green our industries, but other countries (primarily China) do not, then we did nothing to protect the world from pollution. We’ll just buy the goods that polluted the environment elsewhere.

    We can lead the way on “green energy”, while at the same time, keep the existing industry in place. Killing the “old industry” here doesn’t help as long as we are still consuming the products of “old industry” from abroad.

  17. Jon

    Well the other argument is that if we go to the table, but have shown no willingness to clean up our own act, how serious do we look? Especially since we have been emitting a lot more for a lot longer–especially per capita–than the people we’re negotiating with.

    Also, it’s in our future interest to look like a good faith party in dealing with this problem. It’s very likely that tariffs and trade wars will develop if the problem gets worse. During the Cold War we benefited from looking like the city on the hill versus totalitarian societies. How will we look to the populations of the rest of the world if we make no good faith effort to deal with this problem?

    Also, I would argue that not importing our energy but creating it here *creates* jobs–not to mention that increasing energy independence helps our long term economic security, and literal security as well, considering the regimes we have to deal with to get our imported energy.

  18. FUAG

    I agree with all you said. I just don’t see how taxing our industry helps us. Even in a perfect world we are many years away from significantly reducing our oil needs. Thus my argument, keep the business here rather than adding to our ridiculous trade deficit. Or burdening our lower and middle class with higher energy prices.

  19. Jon

    Fossil fuel industries are benefiting from not paying externalities–at the expense of the interests of the present and future public. (I mentioned most of those externalities above.) Gradually, the price of fossil fuels should reflect their real cost.

    The concept of externalities, by the way, is in Adam Smith. Nothing terribly exotic.

  20. FUAG

    The level of benefit is certainly up for debate, but I don’t wan’t to tangent into a global warming debate.

    For arguments sake, lets say that they are receiving a significant benefit externality. If you remove that benefit, prices will go up, jobs will be lost, and lower and middle class will be affected by the increased prices. The benefit is currently being passed onto the consumers and employees. The oil companies don’t care how much it costs as long as people still NEED it.

    If the green fairy came down and gave everyone a plug in car tomorrow, the energy grid would melt about 3 seconds later. We still need fossil fuels, we have no other choice at this point.

  21. Jon

    Yes, we NEED it right now. But that doesn’t mean we have to NEED it in the future. And as a matter of fact, it’s in our interest not to. So… maybe there’s some legislation that could help us transition out of this situation? Hmm….

  22. For more on AB 32 and the attempt to undo it through Prop 23 and Prop 26, see:
    http://8020vision.com/2010/10/25/californias-prop-23-morphing-into-prop-26/

    There are some good charts there showing renewable transportation trends in California, and also a list of the major funders of the Props – out of state big oil, etc.

    Jay Kimball
    8020 Vision

  23. FUAG

    Good information Jay, California can be applauded for it’s push for green energy. But, with that, the state is BROKE! You must maintain economic viability as part of an energy policy.

    Also, how about those rolling blackout! Good times!

  24. But, with that, the state is BROKE!

    Complete non sequitur. Most of the western world is broke. Maybe you’ve heard of the economic collapse that took down the construction industry and nearly destroyed the banking industry as well. What has that got to do with California’s clean energy law?

    And nice reference to the (Houston-based) Enron’s manipulation of the energy market. It’s one of the reasons the clean energy bill passed in the first place, and why the “No on 23″ campaign’s strongest message is simply “Stop Texas Oil”.

    What was the point you were trying to make again?

  25. In reply to FAUG’s comment “You must maintain economic viability as part of an energy policy.”

    Exactly. If you read the post I linked to above, and check out where the growth is in California jobs, it is Cleantech. It’s growing about 10 times faster than anything else in the California job market.

    As with chips, internet, biotech, etc. California’s economy has a track record of outstanding performance when it leads into the future. Cleantech is the latest hotspot of venture funded activity.

    For an example of what business leaders in the venture community think, see:
    http://8020vision.com/2010/08/12/google-implications-of-californias-proposition-23/

    AB32 is good energy policy and good jobs policy.

    Jay Kimball
    8020 Vision

  26. FUAG

    It was an extension of the point I was going towards in all my posts. Taxing fossil fuels does not reduce our need for them. We can continue down the green energy path without causing fossil fuel energy to be significantly more expensive.

  27. Taxing Fossil Fuel, cigarettes, soda, and a variety of other things that we want to decrease use of (and that cause damage to public health, and increased cost to clean up), are a tried and true method of discouraging use.

    As the price goes up, the population seeks alternatives. In the case of gasoline, they stop buying gas guzzlers, start using public transportation, etc.

    When oil hit $140+ per barrel, metropolitan mass transit use increased – e.g. in New York, for example, usage was up over 35%.

    Though I don’t want to pay unnecessary taxes in general, I am all for taxing what we want to discourage, and taking those funds to incentivize what we want to encourage.

    For an excellent example of ways to encourage transition to renewable energy transportation, see:
    http://8020vision.com/2010/08/31/feebates/

    Jay Kimball
    8020 Vision

  28. FUAG

    @28. Mass transit use up over 35%: How many CEOs stopped driving their Escalades? It went up because lower and middle class couldn’t afford to drive! So you are saying that the poor should carry the burden? And you can’t compare to cigs, booze, etc… I don’t know anyone that heats their home by burning cartons a camels.

  29. Taxing fossil fuels does not reduce our need for them.

    Prop 23 is not about taxes on fossil fuels. It explicitly suspends the voter approved initiative AB32, whose purpose was to reduce greenhouse gas emissions which have a significant detrimental impact on the environment of the state of California.

    The proposal would suspend all of AB32, including incentives for clean energy alternatives and for monitoring and emissions reporting, it is not simply an end to fees on major polluters.

  30. FUAG

    And, yes, let’s go green! I’m all for it! Jut dont crush our economy/industry in the process’

  31. So you are saying that the poor should carry the burden?

    The poor do carry the burden. It wasn’t taxes or regulations that caused the spike in prices in 2008. The spike was completely outside the control of the U.S. government or industry to deal with and it hit those dependent on oil for fuel the hardest. What stronger argument can there be for creating an alternative energy industry? Even climate denialists should understand this. California will never be a leader in the oil industry. But it can be a leader in the clean energy industry, if it makes an investment, now. Most Californians know that.

  32. Jut dont crush our economy/industry in the process’

    You’ve yet to make a case that the law will adversely affect anyone besides the Texas oil barons .

  33. FUAG

    @33: what do californians pay for gas vs the rest of the country?

  34. FUAG

    @32: Yes yes yes, green industry I what we need and we must get there. But in the mean time, let’s live with the reality that fossil fuel will be around for a while…

  35. FUAG

    And, sorry about my typing, it’s difficult to blog on an iPhone while ON A TRAIN!

  36. Sean McCorkle

    @36

    And, sorry about my typing, it’s difficult to blog on an iPhone while ON A TRAIN!

    Better that you do it on a train than WHILE DRIVING!

  37. what do californians pay for gas vs the rest of the country?

    More.

    They’ve always paid more. Again, what does this have to do with Prop 23? And why doesn’t the answer make it obvious that they’d like to get off oil as quickly as possible.

  38. FUAG

    @38 ok, fine, I got a bit off topic. But it’s the premise of taxing industry and oil for supplying things we currently NEED

  39. FUAG

    When if we don’t produce it, it will be produced elsewhere with the same amount of pollution.

  40. Sean McCorkle

    @39

    But it’s the premise of taxing industry and oil for supplying things we currently NEED

    Need? Maybe “need” as in an addict “needs” their fix.

    Taxing bad behavior is simply “tough love”. With no discipline, the child will never, ever give up bad habits. With no incentive, why would they want to change the status quo?

  41. FUAG

    @41 Had some suggestion (see #12). There are lots of great reasons to get off of oil. Myself, I can’t wait to get a plug in car (or any car that is powered solely by energy produced in this country). But, until we have an infrastructure to support whatever that energy is, we need fossil fuels. And, again, if we tax them it’s a burden on lower/middle class and manufacturing.

    I would be more willing accept taxing of industry as a solution if we, along with it, tax any competitive product being imported into the country to keep a level playing field. Issue there is have fun telling China that every tire they export to us will be taxed 25%?

  42. But it’s the premise of taxing industry and oil for supplying things we currently NEED

    Putting aside the fact that the fees in AB32 are for the things that we want to get rid of (pollution). How exactly should governments raise revenue? We need people to work, but we tax income. We need food but we tax groceries. We need homes, but we tax property. We need investments, but we tax capital gains. Etc., etc., etc,…

    We also need roads, schools, firefighters, cops. I sincerely doubt legalizing marijuana will raise any revenue. So how do you think we should pay for these things?

  43. FUAG

    Yes, the tax revenue you speak of is a necessity. I argue that all of them are more fair. We NEED homes, but we don’t NEED $2 million estates. So, in that case, if you WANT a more expensive home you pay more in tax. If you WANT Filet Mignon rather than hamburger you’ll pay more tax. On and on…

NEW ON DISCOVER
OPEN
CITIZEN SCIENCE
ADVERTISEMENT

Discover's Newsletter

Sign up to get the latest science news delivered weekly right to your inbox!

About Chris Mooney

Chris is a science and political journalist and commentator and the author of three books, including the New York Times bestselling The Republican War on Science--dubbed "a landmark in contemporary political reporting" by Salon.com and a "well-researched, closely argued and amply referenced indictment of the right wing's assault on science and scientists" by Scientific American--Storm World, and Unscientific America: How Scientific Illiteracy Threatens Our Future, co-authored by Sheril Kirshenbaum. They also write "The Intersection" blog together for Discover blogs. For a longer bio and contact information, see here.

ADVERTISEMENT

See More

ADVERTISEMENT
Collapse bottom bar
+

Login to your Account

X
E-mail address:
Password:
Remember me
Forgot your password?
No problem. Click here to have it e-mailed to you.

Not Registered Yet?

Register now for FREE. Registration only takes a few minutes to complete. Register now »