Fossil Fuels Witchhunt is a Quest for Cash

natural gas1The oil and gas industry was born in Pennsylvania on Aug. 27, 1859, when Edwin L. Drake drilled the world’s first commercial oil well. A critic said Drake should leave the oil underground because it was needed to fuel the fires of hell, and to pump it out would protect the wicked from their eternal punishment.

That’s how long some people have believed oil companies are in league with the devil.

Today’s anti-petroleum alarmists warn of the hellish climate that someday will result from civilization’s reliance on fossil fuels. Fortunately they’ve hit on a solution: cash payments. 

The strategy was hatched in 2012 at a two-day meeting in La Jolla organized by the Union of Concerned Scientists and the Climate Accountability Institute. It brought together 23 experts on law, science and public opinion for a workshop titled, “Establishing Accountability for Climate Change Damages.”

The idea was to compare “public attitudes and legal strategies related to tobacco control” to those related to climate change, according to a report of the meeting.

The group found a few problems with the comparison to tobacco. For one thing, they couldn’t identify a specific harm from climate change that had damaged anybody.

“What is the ‘cancer’ of climate change that we need to focus on?” asked one attendee.

And there was a bigger problem. “The fact is, we do need some form of energy,” one participant said. Another lamented, “The activities that contribute to climate change are highly beneficial to us.”

Oh, that.

Originally published in the Los Angeles Daily News. For the remainder of the column please go here.

CA gas prices expected to jump 30 cents by weekend

As reported by the San Diego Union Tribune:

The slide in California’s gasoline prices could abruptly end Friday, with prices possibly jumping 30 cents a gallon due to seasonal changes in the state’s refinery operations, a consumer group predicted Thursday.

Prices often climb in California this time of year because refineries switch from the winter blend of fuel to the more expensive state-mandated summer blend, which evaporates less quickly during warm weather.

But this year’s switch to summer gasoline has triggered a jump of 52 cents a gallon on the gasoline wholesale market in Los Angeles this week, which will lead to the higher pump prices predicted by advocacy group Consumer Watchdog.

“The summer blend should not be responsible for more than a few pennies, maybe a dime,” Consumer Watchdog President Jamie Court said at a news conference. …

Click here to read the full article

50% Petroleum Cut Dropped From SB350

Gas-Pump-blue-generic+flippedAfter the governor and legislative leaders announced pulling the 50-percent petroleum cut mandate from Senate Bill 350, the controversial climate change bill, fallout whirled about the capitol from finger pointing to relative silence from a main supporter to a defiant stand from the state’s chief executive.

As argued here previously, the economic consequences of passing the measure in tact would certainly affect lower income and middle class Californians. It was an argument that moved some Democrats who stood up for their constituents against pressure brought by legislative leaders and even movie stars.

Still, Senator Kevin de León yesterday was dismissing the argument that electric costs would increase when a Univision reporter asked him on camera about costs. De León’s answer was to suggest the information was a mistake put out by oil companies. However, a study issued by the Manhattan Institute reports that California’s green energy policies have driven up energy costs.

Meanwhile, one of the most noticeable proponents of SB350, billionaire environmental activist Tom Steyer, was mostly invisible after the measure was amended. Steyer, who stood with Sen. de Leon when the bill was introduced seven months ago, simply put out a short release praising the pieces of the measure that remained in SB 350 and said more work must be done.

On this site yesterday, Loren Kaye, president of the California Foundation for Commerce and Education associated with the state Chamber of Commerce urged legislators to wait and see if what has already been passed to confront climate change works before rushing ahead with new plans that could put the economy at risk.

But perhaps the most significant message delivered in the aftermath of the intense battle over this one bill came from a frustrated Governor Jerry Brown. He told a press conference that; “I am more determined than ever to make our regulatory regime work for the people of California.” He added, “We don’t have a declaration in statue but we have absolutely the same authority. We’re going forward.”

This Admiral Farragut declaration (“Damn the torpedoes, full speed ahead!”) hints at bypassing the people’s representatives and making changes through executive regulatory action, this time through the authority of the California Air Resources Board.

CARB’s authority to implement the provisions of SB 350 with no legislative oversight was a major sticking point in discussions about the legislation. The governor declared he would not diminish CARB’s power. From his statement, it appears he intends to use it.

Yet, a full-blown public debate over an important issue affecting all Californians should not be disregarded because it did not come out the way proponents wished. Any major change on climate legislation should be accomplished only after the people’s representatives or the people themselves vote.

Originally published by Fox and Hounds Daily

California’s Government by Lottery

LotteryCalifornians can now “Play at the Pump.”

Under a new California Lottery initiative being rolled out across the state, we can purchase lottery tickets while buying gas, without even going inside. Presented with the options of “Play Lotto” or “Gas Only,” we’ll actually have to decline the opportunity to play before fueling our vehicles.

As a matter of principle, this intrusion of the lottery into our most routine of daily activities is hard to justify. Conservatives should balk at a state-run monopoly. Liberals should recoil at a regressive source of revenue. Californians of all political stripes should wonder why exactly our government is encouraging us to gamble. Morally dubious as it is, there is one argument for expanding the lottery: it generated $5.5 billion last year, $1.3 billion of which went to education. But a well-governed state should not have to fund its schools by enticing citizens – usually the poorest of citizens – into irrational economic decisions. That 10 percent of players accounts for 80 percent of sales lays bare the hidden social cost of the lottery.

What is more troubling, though, is that the California Lottery is not California’s only lottery.

Fiscal policy in our state is itself a grand game of chance. Every year, California’s politicians effectively buy a ticket and hope that the right numbers come up. Our tax system depends so deeply on capital gains and income from high earners that state revenue fluctuates wildly from year to year, and in an unpredictable fashion. A strong stock market performance or a well-timed IPO can mean the difference between a windfall surplus and unmanageable deficits. The result is not just budgetary chaos, but sluggish economic growth, diminished opportunity, and an uncertain future.

In a similar vein, the state’s largest manager of assets, CalPERS, has effectively thrown California’s long-term solvency into the POWERBALL. Entrusted with more than $300 billion and the benefits of 1.7 million employees, the agency minimizes both the amount of pension contributions and the reported size of liabilities by assuming a 7.5 percent investment return – a figure it must beat or unfunded liabilities will grow. Last year, the actual rate of return was 2.4 percent. This means that unless CalPERS hits the jackpot again and again, future debt will reach staggering levels, with taxpayers bearing all liability.

As a state, we can no longer afford to leave our future to chance. Just as buying reams of scratchers is poor financial planning for a person, lottery-like public policy is leading our state down an unsustainable path. A change of course is urgently needed. We must begin the hard work of reforming California’s core governing institutions in line with some basic guideposts: math, common sense, and an awareness of the future.

To start with, this means reforming our tax structure to produce stable revenue from a broad base, instead of relying on the stock market returns of the rich or the sale of lottery tickets to the poor. It means reforming our pension system to institute professional accounting and realistic projections, in place of gimmicks and can-kicking. And it means reforming the budget process to eradicate the rigid formulas and one-way ratchets that have caused state spending to double over the last 15 years.

Californians are not asking for the chance to Play at the Pump. We are asking for legislators to stop gambling with our state’s future.

Kevin Kiley is a candidate for the California State Legislature.

Originally published by Fox and Hounds Daily

VIDEO: James Lacy — Why CA Gas Prices Remain Sky-High

James Lacy, author of Taxifornia, explains to Fox Business’ Stuart Varney how CA’s over-the-top environmental regulations cause the state’s gas prices to soar above the rest of the nation.

 

Whether Politicians Like It or Not Gasoline Is California’s Life Blood

The Field Poll reports that for the first time in seven years more California voters believe the state is moving in the right direction (50 percent) than feel it is on the wrong track (41 percent). Those living in coastal California are much more likely to have a positive outlook on our state’s future than inland residents. And Democrats are more optimistic than Republicans, so it may be safe to assume that Democrats living in Malibu, Silicon Valley and the Bay Area are much happier than Republicans living in Central Valley and other areas with high unemployment.

Like politicians everywhere, California’s governing class will attempt to claim credit for this reversal of what had been nearly unanimous pessimism.  Moreover, they will also claim that this is vindication of progressive policies that have given California one of the most harsh tax and regulatory environments in the nation.

However they explain the voters’ optimism, they are unlikely to bring up the one thing for which they can claim no credit whatsoever; the lower gas prices that existed during the period the poll was conducted, January 26-February 16, just before the cost of a gallon of gas began to vault upward again.  With prices in late January down almost 2 bucks per gallon since the high in 2014, many Californians have had reason to smile. It is also interesting to note that the last time more voters than not were positive about their state, gas prices were also down.

Even if there is not an exact correlation, when drivers who fill up their cars two or three times a month see that they are saving money, they are definitely in a better mood.What is ironic is that while the Sacramento political class may want to take credit for voter optimism, they have been working overtime to keep the cost of gasoline high. Between the high gas tax and the additional “carbon tax” imposed on manufacturers that is putting upward pressure on prices, the politicians have proven they are no friend of the millions of average folks who must depend on their cars for transportation.  According to State Board of Equalization Member George Runner, even with the price dip, Californians in January were paying as much as 47 cents more per gallon than drivers in other states.

Acknowledging that gas taxes are providing sufficient revenue, the State Board of Equalization last week reduced the state gas tax by 6 cents a gallon beginning this July. The reduction is based on a formula enacted by the Legislature in 2010, a formula that is so complicated that most news reporters don’t understand it.  Runner rightfully objects to this confusing system that hides the actual cost of the gas tax by hiding the second carbon tax that is only reflected in the overall price.  Currently, Californians pay about 64 cents per gallon in taxes and fees — the second-highest rate in the nation — but we become number one when the hidden tax of about 15 cents is added in.

If the Sacramento politicians really want to see voters smile, they should lay off trying to increase costs for the millions of Californians who depend on their cars to go to work, take their children to school and to do the weekly shopping.  Because one thing is certain – the optimism that Californians are feeling now will disappear in a heartbeat if gas prices return to what they were less than a year ago.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

Political Attacks on Gasoline Designed to Create Conflict

The Western States Petroleum Association is strongly opposed to legislative or regulatory mandates designed to force a 50 percent reduction in gasoline and diesel use in California by 2030.

Mandates to force reductions in gasoline use are not climate change policies.  They are attacks on an important industry in California designed to create conflict and controversy.

A mandate to reduce petroleum consumption by 50 percent is an impossibly unrealistic goal.

SB 350 by Sen. de Leon gives the unelected California Air Resources Board open-ended authority to adopt mandates by regulation to achieve unrealistic cuts in gasoline and diesel use.

History tells us two things; mandates designed to achieve a goal of this magnitude will require unacceptably coercive restrictions on our mobility choices and will be crushingly expensive.

Achieving so radical a goal in so short a time will require the removal of 8 billion gallons of gasoline and diesel from our fuel supply annually – with no guarantees that something will be available to replace them.

This proposal is a major distraction from the much more important work that must be done to move California’s climate change agenda beyond the 2020 horizon established by AB 32.

California’s petroleum producers and refiners will be participants in shaping those policies so we can continue the progress we have made toward achieving greenhouse gas reduction targets.

It is one thing to establish goals like those identified in the Governor’s inaugural address and to use those goals to measure the effectiveness of climate change policies.  It is another thing entirely to empower an unaccountable regulatory agency the authority to impose regulations to achieve those goals.

We look forward to working with the Governor and the Legislature to develop serious climate change policies and programs that will move us toward a lower carbon future.  We urge legislators to reject Sen. de Leon’s proposed policy as quickly as possible so that we can get back to work on the real tasks at hand.

Catherine Reheis-Boyd is President of the Western States Petroleum Association

Originally published by Fox and Hounds Daily

Falling Gas Prices Mask Hidden Tax

So why is it that while other states are now enjoying gas prices of less than $2 per gallon, California is still paying higher prices?

Due to high taxes and costly regulations, our state’s gas prices are higher than other states. It’s been that way for years.

But what’s new is that the gap between California’s and other states’ gas prices has grown.

To get a sense of the change, compare California gas prices with those of the nation as a whole. According to GasBuddy.com, even while overall prices have fallen, the gap has grown from about 32 cents per gallon just a month ago to as much as 47 cents this January.

That’s a 15 cent increase in just one month!

The likely culprit is a new “hidden gas tax” that took effect January 1. The new regulation expands the state’s cap-and-trade program to include transportation fuels. The expansion is the latest in a series of sweeping and costly regulations developed by the California Air Resources Board as it implements the California Global Warming Solutions Act.

Luckily for the Governor and his Air Board appointees, gas prices barely budged when the new rule kicked in; in fact, prices have continued to fall, masking the rule’s true impact and ironically causing the new “hidden gas tax” to be even more hidden.

Just a few years ago gas prices were soaring dangerously near $5 per gallon. Imagine public outcry if the government had caused gas prices to soar then!

When government imposes higher costs on fuel providers, California consumers inevitably pay the price in lost jobs, income and opportunity.

As economist Severin Borenstein notes: “Every analysis of cap-and-trade — or of a gas tax or, for that matter, of movements in the price of crude oil — finds that a change in the cost of selling gasoline, up or down, is quickly and fully passed through to consumers.”

We’d likely all be paying 10 to 15 cents less per gallon if not for the new regulation. Depending on the auction price of emission credits, some fear the cost could grow far higher in future years.

Concern about the economic impact of high gas prices led to a bipartisan effort last year to postpone the planned cap-and-trade expansion. Unfortunately, Assemblyman Henry Perea’s legislation (AB 69) died when Senate President Pro Tem Darrell Steinberg refused to authorize a hearing.

Republicans have already announced a repeal effort this year in the form of SB 5 and AB 23, but it’s hard to imagine their bills will fare better.

Of course, with hidden taxes, exactly how much more we’re paying is anyone’s guess. That’s just one of many reasons hidden taxes are such a bad idea. Taxes should be transparent, straightforward and easy to understand. You shouldn’t need to hire an economist to know how much money you’re sending to Sacramento—or Washington, D.C.—each year or how it’s being used.

We do know that 25 percent of the billions in new revenue the State of California collects from its cap-and-trade system is being used to fund the state’s costly and controversial high speed rail project. Yet even with this funding source, the project—which recently broke ground in Fresno—still lacks the necessary funding to finish the job.

So next time you fill up at the pump, remember you’re helping pay for a train you won’t be able to ride until the year 2029—assuming it ever gets built.  (Even then you’ll still have to pay to ride the train.)

Maybe that’s why politicians try so hard to keep taxes like these hidden.

George Runner represents more than nine million Californians as a taxpayer advocate and elected member of the State Board of Equalization. For more information, visit boe.ca.gov/Runner.

Hydraulic Fracturing Major Contributor to CA’s Economic and Energy Future

The release of the draft EIR on Well Stimulation Operations marks an important milestone in meeting the deadlines set by Senate Bill 4. WSPA and our members are reviewing the details of the draft EIR and will continue to participate in workshops and public discussion regarding SB 4.

While we are pleased with the state’s process on implementing Senate Bill 4, it is important to note the draft EIR contemplates hypothetical development scenarios and provides a high level review.

To date, well stimulation in California has never been associated with any known adverse environmental impacts.

California has been a major producer of oil for well over 100 years.  We produce close to 600,000 barrels of oil per day, making us the third largest oil producing state in the nation, behind Texas and North Dakota. The vast majority of this production takes place in Kern County at the southern end of California’s San Joaquin Valley.

California also is home to significant shale oil resources, the largest of which is the Monterey Shale Formation that lies under large parts of the San Joaquin Valley and Southern California.

Hydraulic fracturing is a safe and proven energy production technique used to obtain oil and natural gas in areas where those energy supplies are trapped in tight rock and shale formations. Once a well has been subjected to hydraulic fracturing, crude oil or natural gas production may occur for years without additional fracturing.

Hydraulic fracturing operations occur over very short time periods, usually two to five days. Once an oil or natural gas well is drilled and properly lined with steel casing, fluids are pumped down to an isolated portion of the well at pressures high enough to cause tiny fractures in rock formations thousands of feet below the earth’s surface. These fractures allow oil and natural gas to flow more freely.

Hydraulic fracturing is a common well stimulation technique that has been linked to America’s dramatic domestic energy resurgence and economic recovery. Most notably, hydraulic fracturing is connected with natural gas production in parts of the Northeast and Intermountain West regions of the United States and with oil shale production in North Dakota and Texas. Hydraulic fracturing, a technology that has been used safely for more than 60 years, has played a critical part in helping the United States become energy independent.

Energy producers in California continue to fuel the West with affordable and efficient domestic energy and are major contributors to the state’s economy and energy future.

 is president of the Western States Petroleum Association

This article was originally published on Fox and Hounds Daily

CARTOON: Carbon Tax Grinch

Carbon Tax

Rick McKee, The Augusta Chronicle