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Are Texas Oil Companies Funding Initiative to Roll Back AB32?

| Wednesday March 3rd, 2010 | 3 Comments

In 2006, the State of California passed a landmark piece of legislation known as AB32. The bill requires California to reduce emissions of greenhouse gases to 1990 levels by 2020. With California’s prominence as a major economy in its own right, the bill has had national and international repercussions and attention.

Now, one opposition group is attempting to repeal AB32 before it kicks in by means of a ballot measure proposed for this fall’s election – an effort they call the “California Jobs Initiative.” The measure would suspend AB32 until California’s recession-rattled unemployment rate dips to 5.5 percent, however long that takes. But something funny was revealed today: The New York Times reports that, as of now, the only financial backers of the initiative are very likely Texas-based oil companies Valero and Tesoro.

Hilariously, I just got done talking to a group of students at USC about mis-information campaigns in the media and politics and left feeling rather optimistic about their decline. I may have been wrong.

Although AB32 will clearly have costs and challenges associated with it, the general consensus among those not tied to any particular industry is that it’s going to be a huge stimulator for a new, greener economy and will produce, over time, many thousands of green jobs.

A few weeks ago, 3p guest author Cynthia Verdugo-Peralta summed it up:

The most comprehensive accounting to date of California’s green businesses, green jobs and green job growth, released recently by Next 10, shows that green businesses have increased 45 percent, with employment increasing 36 percent from 1995 to 2008. Total jobs in California expanded only 13 percent over that same time period. In the Los Angeles area, renewable energy generation jobs grew by 35 percent and energy efficiency jobs grew by 77 percent. Additionally, as the economy slowed between 2007 and 2008, total employment in California fell 1 percent, but green jobs grew by 5 percent. That is significant. A surefire way to ensure that these jobs migrate to other states and overseas is to dismantle AB32.

California’s cleantech sector is exploding partly because of smart governmental decisions that make polluting more difficult and encourage innovation in efficiency and new ways of producing energy. Greentechmedia’s Michael Kanellos offers some thoughts on this subject and some great points from one of Meg Whitman’s former colleagues. The worst thing a state like California can do right now is revert to a broken, old energy economy as a cheap job fix. Where would Bloom Energy be, for example, if that happened?

For carbon intensive industries, AB32 is a tough measure for sure, but given no less than 10 years to figure things out, and a likelihood of tax and other incentives to ease the transition, what’s the hold up? That brings me back to the headline at hand: What in the world are Tesoro and Valero thinking trying to mess with the political process in California? The New York Times points out that neither firm has officially confirmed their involvement in the derailment efforts, but the firms’ silence on the matter is telling.

What are Tesoro and Valero afraid of? Likely that AB32 will result in increased costs for their California refineries. But wouldn’t those costs be passed on to consumers at the pump anyway? Wouldn’t they affect all California refineries? Most people in car-dependent California won’t be happy to pay more for gas, but with 10 years or more to spread the costs out and ten years to work on new infrastructure and technology–which is exploding anyhow–I don’t see a huge consumer impact.

Furthermore, even if we doubled the impact of AB32, the reality is gasoline and other uses for petroleum are not going away any time soon, so even an oil company with its head in the sand is at no risk of going out of business. Smart oil companies are already looking to the future – looking at other sources of fuel, and other uses for petroleum such as advanced plastics and so on.

Spreading false hope about job creation and derailing what is arguably one of the more progressive energy bills in a long time is a primitive and fear-based reaction to a real problem that really ought to be looked at as an opportunity–for oil companies as well as everyone else.


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  • Mfenton

    If you want to stop the Valero Oil Initiative… Decline to Sign!
    http://salsa.democracyinaction.org/o/553/p/dia/

  • tdc2000

    It is interesting that Valero is being called a “large oil company.” Last I checked, Valero has never produced a single drop of oil. All of the oil that they process in their refineries is purchased from other companies. The public is mistaken when they think that a refining company is the same as “big oil.” Labeling Valero as big oil is just an attempt by media to scare the public.

    Another argument that people are getting excited about is that a Texas company is getting involved in California issues. Valero and Tesoro produce at least 30% of California's gasoline. Who cares where their company headquarters are, they do business in California. Does the reverse logic apply? Do they argue that they don't need to obey California rules and regulations because their main offices are in Texas? Absolutely not.

    California gasoline is already more expensive than almost everywhere else in the country because of tighter California regulations and anybody who thinks that adding regulation on CO2 should not increase energy prices is living in a dream.

    It will be more expensive to do business in California, causing existing businesses to leave the state and new businesses to avoid the state.

  • tdc2000

    It is interesting that Valero is being called a “large oil company.” Last I checked, Valero has never produced a single drop of oil. All of the oil that they process in their refineries is purchased from other companies. The public is mistaken when they think that a refining company is the same as “big oil.” Labeling Valero as big oil is just an attempt by media to scare the public.

    Another argument that people are getting excited about is that a Texas company is getting involved in California issues. Valero and Tesoro produce at least 30% of California's gasoline. Who cares where their company headquarters are, they do business in California. Does the reverse logic apply? Do they argue that they don't need to obey California rules and regulations because their main offices are in Texas? Absolutely not.

    California gasoline is already more expensive than almost everywhere else in the country because of tighter California regulations and anybody who thinks that adding regulation on CO2 should not increase energy prices is living in a dream.

    It will be more expensive to do business in California, causing existing businesses to leave the state and new businesses to avoid the state.

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