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Proposition 87 is a foolish idea. It will increase the ratio of
imported over domestic oil, increase the price of gasoline, and add
little to the growth of alternative energy.
Drive up Stoker Street in Windsor Hills, Freshman Drive in
Culver City, or Redondo in Long Beach, and you will see a
remarkable sight: oil wells.
They are hidden, but they are neatly and quietly drawing from
the earth a portion of the oil we Californians use every day,
whether we drive to work or merely eat food brought to a market by
trucks.
Prop. 87 would tax this oil, produced in and for California, but
would not tax imported oil.
As any first-year economics student can tell you, this will
quickly result in less domestic oil.
Thus, it will likely increase the quantity of oil we import.
A televised commercial for Prop. 87 begins by showing the sins
of the Exxon Mobile Corporation.
This is ironic because the Exxon Valdez oil spill was caused by
shipping oil from Alaska, not by pumping oil in California.
The Organization of Petroleum Exporting Countries (OPEC) oil
embargoes of the 1970s, the petro-dollars funding terrorism, and
the rapacious exploitation of lands and peoples unprotected by
California’s stringent environmental laws ““these all
depend on the prevalence of international oil importation, the very
thing that Prop. 87 would immediately increase.
Over the past few years, Californians have come up with many
popular initiatives to fund state services by making someone else
pay (for example: cigarette smokers, the rich, or anyone
mathematically challenged enough to pump 10 dollars into the state
lottery every week).
This is what Prop. 87 attempts to do. It has provisions to
prevent the oil companies from passing on the cost of this new tax
to us consumers.
Of course, it won’t work: the oil companies will still
raise prices in order to maintain a profit.
Finally, Prop. 87 is wholly unnecessary.
As oil becomes scarcer worldwide, its price rises, and as
alternative fuels’ technologies improve, their prices
fall.
This, more than anything else, encourages change.
We have already seen this, for example, in the introduction and
growing popularity of gas-electric cars.
High-tech batteries are getting lighter and more durable, making
electric cars more practical, and the oil companies themselves may
be investing more and more in alternative energy, such as
biodiesel.
California should be striving for energy independence, not
stifling local energy producers.
Investors in alternative energy, like myself, might benefit
slightly from Prop. 87.
But we all will surely pay for it.
Helperin is a UCLA alumnus.