California's Big-Bucks Battle over Clean Energy

Prop 87, which would tax oil drilling and use the money for alternative energy sources, has pitted Big Oil against an array of political Hollywood heavyweights

How much will Americans do to help clean up the air, reduce global warming and promote energy independence? One test will come in November, when voters in California, the nation's biggest state, decide on a ballot measure that would raise $4 billion for alternative energy investments by taxing oil drilling. The explosive battle over Proposition 87, known as the Clean Alternative Energy Act, has turned into the costliest initiative campaign in American history — with $105 million spent so far, mostly on television spots.

Some call it Bing vs. Big Oil. The bulk of the money behind the measure comes from Stephen Bing, 41, a Hollywood producer who was, until now, best known for fathering actress Elizabeth Hurley's baby out of wedlock. Bing, heir to a $600 million New York real estate fortune and a generous contributor to Democratic candidates, has spent $40 million of his own money on Prop 87 so far. Though he won't talk to the media, he has recruited two prominent spokesmen, former President Bill Clinton and former Vice President Al Gore, as well as such Hollywood supporters as Julia Roberts, Geena Davis and Jamie Lee Curtis.

Both Clinton and Gore appear in TV ads for the initiative. "Prop 87 is the one thing Californians can do now to clean up the air, help stop the climate crisis and free us from foreign oil," Gore says in his spot. Clinton, accompanied by Davis (who starred as the first female President on last season's TV series Commander in Chief) appeared at a Prop 87 rally at the University of California in Los Angeles last week. "California is being given an opportunity and an obligation to do something remarkable to save the planet," Clinton told the crowd of 5,000. "You are dangerously dependent on unstable sources of oil, and your air is too polluted." Silicon Valley bigwigs, including Google founder Larry Page and venture capitalists John Doerr and Vinod Khosla — wagering that clean tech will be the next bonanza — have also ponied up several million in favor of the initiative.

If the measure passes, oil drilled in California, the world's sixth largest economy and the fourth largest oil-producing state in the U.S., would be taxed at a rate from 1.5% to 6%, depending on global crude prices. The proceeds, capped at $4 billion, would fund a state agency to sponsor research and projects in wind, solar, ethanol and other energy alternatives. The idea of putting a tax on oil extraction is not new — both Texas and Alaska have one — but California's idea to use the money for alternative energy projects is.

About 37% of California's oil is pumped in the state, and another 21% comes from Alaska. But the rest is imported, and the campaign for the initiative has sought to draw a link between foreign oil and global terrorism. One spot features a photograph of King Abdullah of Saudi Arabia and an angry Middle Eastern mob burning American flags, as the narrator asserts: "We buy their oil, they burn our flag." Gore warns at the end of his ad that the sooner Californians pass Prop 87, "the safer we'll be."

Such scare tactics are being used on both sides. Oil companies, led by Chevron and Aera Energy, an operation of Shell and ExxonMobil affliates, have poured $73 million so far into defeating the measure, claiming that it will raise gas prices at the pump. Proponents dispute that, pointing out that crude oil prices are set globally, not locally. (What's more, the measure includes a provision barring companies from passing the tax on to consumers.) Oil companies also claim the extraction tax will put marginal operations out of business — thus reducing the supply of domestic crude and forcing California to import even more foreign oil. "Aren't gas prices high enough?" ask anti-Prop 87 flyers distributed to voters this week.

Big Oil's campaign seems to have been effective so far. Support for the initiative has dropped from a 52%-31% lead last July to a statistical dead heat at 44% to 41% in a Field survey released on Oct. 4. Several of the state's leading newspapers are urging defeat of the initiative, including the Los Angeles Times, which called the measure "an extortion tax," arguing that "high gas prices are already creating a powerful market incentive for privately funded research on alternative fuels." Moreover, a lack of enthusiasm for California's Democratic candidate for governor, Phil Angelides, lagging far behind Republican Arnold Schwarzenegger in the polls, could discourage likely Prop 87 supporters from turning out to vote.

Supporters hope that the Gore and Clinton TV spots could give new impetus to the initiative. "It comes down to: Who do you trust?" says consultant Paul Begala, a former Clinton aide who is a strategist for the Yes on 87 campaign. "Do you believe Al Gore, Bill Clinton and [Los Angeles mayor] Antonio Villaraigosa? Or do you believe the oil companies?" In a blue state such as California, that argument carries weight. But in a state where gas prices are the highest in the nation, consumers are also worried about whether taxing Big Oil for clean air and energy independence will affect own pocketbooks.


Source: Time

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