The oil industry more than doubled its spending on lobbying and campaigning in California last year, as the Jan. 1, 2015 date approached for gasoline to be included in the state’s cap-and-trade program. It’s part of a long trend of attempting to influence California policy that makes Big Oil the biggest lobbyists in the Golden State.
The oil industry and its allies have a long history of decrying regulations that protect public health and the environment. They holler about revenue losses, soaring energy costs, sky-high gas prices, an uncertain business climate, mass exodus of industry, basically THE END OF THE WORLD AS WE KNOW IT… which never seems to happen.
We heard all throughout last year – that on January 1, 2015, gas prices would soar.
• “Starting January 1, 2015, Californians will pay 16 to 76 cents more per gallon…”
• “This new mandate will increase fuel costs by 4% to 19%, or 16 to 76 cents per gallon at the pump.”
• “California will lose more than 18,000 jobs and $2.9 billion of economic output next year alone…”
• “We can’t afford a new double-digit gas tax…”
• “This new cost at the pump could push California over the fiscal cliff again and … back into recession.”
What’s really happening with gas prices?
• “The increase was so small and happened so fast that almost no one noticed,” reported the San Francisco Chronicle.
• “California did see a little bump … but it’s being washed out by the larger trends in the oil market,”i concluded James Bushnell, UC Davis economist.
• There was no price spike, not like in 2012, when the Chevron Richmond refinery fire caused prices to jump 30 cents per gallon almost overnight.
• By reducing demand for oil and providing drivers with more fuel choices, households will reduce their transportation fuel bills by $380 a year, growing to $850 in savings by 2020 and ballooning to over $2,000 annually by 2030.ii
• By 2020, consumers will pay 30% less in overall fuel expenses because policies like AB32 move us towards cleaner and more efficient transportation.
Why all the hype? Because claiming catastrophe is just what industry does.
• Take another California policy example. Some industry groups said a Clean Cars Program would serve to ban SUVs, reduce vehicle safety and performance and limit choice.iii
• “Californians are not going to get any health benefits, emissions benefits, etc., from these regulations.” iv
What really happened?
• The national 54.5-mpg fuel economy standard was based on California’s Clean Cars Program.
• In 2014, California surpassed 100,000 plug-in car sales, setting a new world record.v
• Tesla Motors has resurrected auto manufacturing in California.
• Analysis has found that California drivers will save 1.6 billion gallons of gasoline and $4 billion at the pump by 2016, while reducing 14 million tons of pollution.
And the automakers? Today, they support clean cars and clean fuels.
• “For greater energy security, automakers must continue producing advanced diesels, hybrids and vehicles powered by biofuels, electricity and hydrogen.”
• “Automakers support a national program for fuel economy and carbon dioxide that increases fuel economy,” says the Alliance of Automobile Manufacturers.vi
• “Automakers support a widely available range of energy sources including biofuels, clean diesel, electricity and hydrogen to reduce the carbon footprint of transportation fuels.”vii
We heard similar threats from industry about California’s cap and trade program.
• “… [Cap and trade] would raise energy costs, harm the economy and impact California’s competitiveness.”viii
• “These policies will create a large but hidden tax on families and will add new burdens to the fragile state economy.”ix
• “Small business will get hit from all sides. Consumers will have less money…”x
• “This poses great risks to manufacturers and other firms.”xi
What’s really happening to California’s economy?
• California’s economy is thriving and per capita carbon emissions have dropped 17% since1990.xii
• Per capita annual income in California was estimated to have increased by $1,700 in 2014, to $50,338.xiii
• The California economy expanded in 2014 by almost every measure and is set to overtake Brazil as the world’s seventh-largest economy, with even stronger growth anticipated from 2015–2017.xiv
• “California is growing faster than the U.S. economy, which is a bright spot in the global economic situation.” Prof. Sung Won Sohn, California State University Channel Islands.xv
• Unemployment is set to continue its decline through 2018, while the GSP is set to rise 3.4% over 2015 and accelerate to 3.8% in 2016.xvi
• $1.6 billion flowed in to the state’s clean tech sector in 2013.xvii
• California is the epicenter of the U.S. clean tech marketxviii and has the largest advanced energy industry in the United States, employing over 430,000 workers.xix
• California manufacturing leads the nation, with the highest total manufacturing output of any state.xx The manufacturing sector has grown in the past year and is projected to continue to do so in 2015–2016. Prior to 2010, before AB32 began having positive economic impacts, the sector was in a state of decline for a decade.xxi
• California leads U.S. states in agriculture, technology and manufacturing revenue growth, according to Bloomberg economic data.
• The LCFS alone can contribute at least 9,100 new jobs in an industry with a strong future, and potentially many more if the state attracts more clean fuel production facilities and technology providers.xxii
• Right now, more than $872 million in proceeds from the Greenhouse Gas Reduction Fund are flowing back to California communities into programs designed to benefit all Californians, like affordable housing, sustainable communities, natural resources protections, low-carbon transit operations and energy efficiency. In 2016, it’s predicted that $1 billion in proceeds will be available for investment.xxiii
• By law, a minimum of 25% of proceeds go towards projects that benefit disadvantaged communities, enhancing equity in the state.
i David Baker, Fears of a Hidden Gas Tax Vastly Overblown, http://www.sfgate.com/business/article/Fears-of-a-hidden-gas-tax-were-vastly-6021148.php
ii S. Mui, NRDC blog. http://switchboard.nrdc.org/blogs/smui/why_gov_browns_goal_of_cutting.html
iii California Clean Cars Campaign, Automakers Cry Wolf Again.
viii 13 things to know about California’s cap-and-trade program, Dana Hull, San Jose Mercury News, February 22, 2013, http://www.mercurynews.com/ci_22092533/13-things-know-about-california-cap-trade-program
ix Jack Stewart, President, California Manufacturers and Technology Association
x John Kabateck, Executive Director, National Federation of Independent Business/California 2012
xi Jack Stewart, President, California Manufacturers and Technology Association
xii 2014 Green Innovation Index, Next 10.
xiii Michael B. Marois and Shin Pei, California Zooms Past Russia, Italy and Soon Brazil in Economic Might, Bloomberg, Jan 15, 2015. http://www.bloomberg.com/news/2015-01-16/brown-s-california-overtakes-brazil-with-companies-leading-world.html
xvi California economy continues steady improvement, Sep 11, 2014, University of the Pacific. http://www.pacific.edu/About-Pacific/Newsroom/2014/September-2014/California-and-Metro-Forecast–September-2014.html
xvii Next 10, 2014 California Green Innovation Index, http://next10.org/policy-clean-tech-innovation-accelerate-consumer-demand-spur-additional-economic-growth
xviii 2013 US Clean Tech Leadership Index
xix AEE Institute, https://www.aee.net/articles/california-has-largest-advanced-energy-industry-in-u-s-with-over-430-000-workers-according-to-first-ever-state-employment-survey
xx 2014 State Manufacturing Data Table, National Association of Manufacturers.
xxi Michael B. Marois and Shin Pei, California Zooms Past Russia, Italy and Soon Brazil in Economic Might, Bloomberg, Jan 15, 2015. http://www.bloomberg.com/news/2015-01-16/brown-s-california-overtakes-brazil-with-companies-leading-world.html
xxii ICF International, California’s Low Carbon Fuel Standard: Compliance Outlook & Economic Impacts, April 2014. http://www.caletc.com/wp-content/uploads/2014/04/ICF-Report-Final-2.pdf
You remember Fillmore. He’s the resident hippie of Radiator Springs in the Pixar blockbuster Cars. Much to the chagrin of his neighbor, Sarge the Army Jeep, Fillmore greets each new day with Jimi Hendrix’s Woodstock rendition of A Star Spangled Banner—“respect the classics, man”—and is quick with a conspiracy theory about why biofuels never stood a chance at America’s gas pumps. Perfectly voiced by the late, great George Carlin, Fillmore has a slight paranoiac edge, as if his intake of marijuana may exceed what’s medically indicated.
Well, as they say, it’s not paranoia if they really are out to delay, rewrite, or kill off a meaningful effort to reduce the build-up of carbon in the Earth’s atmosphere. APowerpoint (MSFT) deck now being circulated by climate activists—a copy of which was sent to Bloomberg Businessweek—suggests that there is a conspiracy. Or, if you prefer, a highly coordinated, multistate coalition that does not want California to succeed at moving off fossil fuels because that might set a nasty precedent for everyone else.
Created by the Western States Petroleum Association (WSPA), one of the most powerful oil and gas lobbies in the U.S., the slides and talking points comes from a Nov. 11 presentation to the Washington Research Council. The Powerpoint deck details a plan to throttle AB 32 (also known as the California Global Warming Solutions Act of 2006) and steps to thwart low carbon fuel standards (known as LCFS) in California, Oregon, and Washington State. Northwest Public Radio appears to have been the first to confirm the authenticity of the deck, which Bloomberg Businessweek did as well, with WSPA spokesman Tupper Hull.
Specifically, the deck from a presentation by WSPA President Catherine Reheis-Boyd lays out the construction of what environmentalists contend is an elaborate “astroturf campaign.” Groups with names such as Oregon Climate Change Campaign, Washington Consumers for Sound Fuel Policy, and AB 32 Implementation Group are made to look and sound like grassroots citizen-activists while promoting oil industry priorities and actually working against the implementation of AB 32.
The deck also reveals how WSPA seized on a line from a California Air Resources Board memo that the cap-and-trade program for gas and diesel that goes into effect on Jan. 1, 2015, may affect gas prices in order to launch an ad campaign warning of a “hidden” gas tax that devious Sacramento pols are sneaking through.
“The environmental community is used to sky-is-falling analysis from fossil fuel interests in response to clean energy initiatives, so that part isn’t surprising,” says Tim O’Connor, a senior attorney at the Environmental Defense Fund, to whom I sent the deck for comment. “But it’s eye-opening to see the lengths [the WSPA] has gone to push back rather than move forward. I don’t think anybody knew how cross-jurisdictional, cross-border, and extensive their investment is in creating a false consumer backlash against [climate legislation].”
In California, O’Connor points out, “we have 70 percent voter approval on clean energy alternatives, so it’s offensive and atrocious they’re using these supposed everyday citizens—who are really paid advertisers—to change the public discourse.”
Reheis-Boyd’s Powerpoint deck, entitled “WSPA Priority Issues,” starts by announcing that these are the “the best of times.” Crude oil production in the U.S. is higher than it has been since 1997, with imports subsequently reduced to a 20-year low, according to the American Petroleum Institute. The next six slides describe why these are also “the worst of times” and include images of demonstrators protesting the Keystone XL oil pipeline, demanding government action on climate change, and pictures of professor-cum-activist Bill McKibben and billionaire Tom Steyer, with the latter quoted as saying he wants to “destroy these people”—i.e., people like the members of WSPA.
Then there’s a slide with all the different groups that WSPA has funded to make it seem as if there’s a broad group in three states opposing a series of initiatives to reduce carbon pollution from fossil fuels. The most clever of these is the “Stop the Hidden Gas Tax!” campaign. Who, after all, wants that?
“Let me be clear,” says Hull, the WSPA spokesman. “We did not oppose AB 32 when it passed. We believe it’s good to have the reduction of greenhouse gases as a goal. We support that goal.” In the years since, he says, “hundreds of pages of regulations have been added to what had been a page-and-a-half document, and we do object to many of the additions.” What’s more, Hull says, “we have a legitimate concern over what will happen when the cap-and-trade program goes into effect for gas and diesel.”
Hull describes AB 32 as “a stool with three legs”: cap and trade for stationary power sources (already in effect); low carbon fuel standards (which he characterizes as too aggressive); and the cap-and-trade program that goes live on Jan 1. “Lots of people—drivers, small business owners—don’t realize that they may be impacted by this.” Hull insists that WSPA has not created any opposition groups but has funded those that share its sincere concerns.
Like the rest of us, corporations determine from time to time that their concerns are being overlooked or misunderstood by lawmakers, and they may wish to improve things by correcting the record, getting their stories told. Hull is surely right that how cap and trade will affect everyday motorists deserves greater study. But the reason environmental activists are excitedly swapping the WSPA deck via e-mail is because it is not about correcting the record. The deck clearly describes a strategy to confuse people about an important law that has already passed and to prevent the enforcement of regulations that represent an effort—however imperfect—to reduce the risk of catastrophic effects from global warming.
Is it a coincidence that this strategy, backed by millions of dollars, promotes a consumer backlash against climate policy in three of the states nearest to having cleaner alternatives to liquid fossil fuels at most gas stations? Go ask Fillmore.
- A variety of climate and clean energy measures that are part of California’s landmark Global Warming Solutions Act of 2006 (AB 32) are reducing California’s oil dependence, transportation costs, and pollution-related health bills. But with the petroleum fuels sector scheduled to begin paying for its portion of climate pollution in January 2015, oil companies have intensified their campaign to undermine the clean energy policies that will reduce their market share.
- NRDC has identified at least eight front groups appearing to be grassroots organizations speaking for consumers or broad coalitions, but they have strong ties to the oil industry. Oil companies such as Chevron, Shell, ExxonMobil, BP and ConocoPhillips are working against California’s clean energy policies, often through the industry’s trade association, the Western States Petroleum Association (WSPA).
- The oil companies’ campaign to maintain their profits and continue California’s dependence on petroleum-based fuels has been supported by more than $70 million of oil money spent on lobbying in California since 2009.
- Reversing or delaying the scheduled inclusion of transportation fuels — which account for nearly 40 percent of California’s climate pollution — under the state’s emissions cap, as the oil industry and its front groups advocate, would undermine clean energy progress, keeping Californians more dependent on oil and more vulnerable to roller-coaster gas prices.
California’s Climate Policies Reduce Dependence on Oil
California’s Global Warming Solutions Act (AB 32) has put the state on a pathway to reduce harmful carbon pollution to 1990 levels by 2020 and beyond. By 2030, AB 32’s clean energy policies will enable California to:
- Save more than $2,000 per household on gasoline each year due to more efficient cars that go farther on a gallon, greater fuel competition, cheaper fuels like clean electricity, and better access to transit;
- Reduce carbon pollution by 150 million tons every year compared with business as usual, which is equal to halving the emissions of all cars and trucks on the road in California;
- Eliminate 14 billion miles driven annually, thanks to more sustainable communities with walkable neighborhoods and expanded public transit; and
- Save well over $8 billion on health care costs due to fewer asthma attacks, cardiac hospitalizations, and premature deaths from poor air quality.
The Oil Industry’s (Renewed) Campaign Against AB 32
California’s transportation fuel providers are slated in January 2015 to join the state’s other major polluting industries (such as power plants and cement factories) already under the cap-and-trade emissions limits. Including the emissions from transportation fuels like gasoline under the statewide cap has been in the works for almost a decade.
The cap-and-trade system places an upper limit on greenhouse gas emissions (cap) and requires polluters to either reduce their pollution or buy or trade a diminishing number of pollution allowances (trade). The proceeds from selling pollution allowances to large emitters fund projects that further reduce emissions in California, and at least one-quarter of the funds must benefit disadvantaged communities, which are disproportionately affected by climate pollution.
Rather than investing in cleaner sources of energy, more efficient production and refining processes, and less-polluting products that would reduce climate pollution and improve air quality for California’s residents, the oil industry has invested in a front group-led marketing campaign to avoid being held accountable for its pollution. Since 2009, the oil companies have spent more than $70 million on lobbying in the state.
A Better Future Is Possible
Despite the oil industry’s opposition, Californians and their elected leaders are engaged in building a better future, with clean and affordable solutions that reduce dependence on oil. AB 32 invests the proceeds from pollution permit sales in programs that will cut carbon pollution and reduce Californians’ fuel bills, with an emphasis on projects that deliver benefits to the state’s most disadvantaged communities. Californians should see the oil industry’s latest campaign attacking AB 32 for what it is: a thinly veiled attempt to maintain their share of the market and avoid responsibility for the fuel sector’s climate pollution.