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Prop. 23: Oil giants are divided

September 14, 2010 |  8:46 pm

Prop 23 signs 
Are the big oil companies really backing Proposition 23?

Maybe not. Among California's major oil refiners, Shell Oil opposes the November ballot initiative to suspend the state’s global warming law. Chevron Corp. is officially neutral. Exxon Mobil and BP have decided not to get involved. ConocoPhillips has yet to contribute. 

On Tuesday, Charles Drevna, president of the National Petrochemical and Refiners Assn., issued an urgent appeal for funds to back the measure. “I am pleading with each of you -- for our nation's best interest and for your company's own self-interest,” he wrote in a confidential e-mail to the industry's 416 members.

“The money raised so far, he wrote, “is not enough to win the fight against environmental zealots led by Gov. Arnold Schwarzenegger, who seems hell-bent on becoming the real-life Terminator of our industry.”

Three independent refiners -- Valero Energy Corp., Tesoro Corp. and Koch Industries -- have contributed most of the $8.2 million behind the measure. Backers would need to raise far more to make a dent in the state's expensive and saturated media markets in the seven weeks remaining before the election.

The state's top business groups also are divided. The California Manufacturers and Technology Assn. supports Proposition 23, but the state Chamber of Commerce decided on Sept. 3 to remain neutral. Silicon Valley, which is heavily invested in alternative energy technology, strongly opposes the initiative.

So far, opponents have raised $6.1 million, with the largest contribution, $2.5 million, coming from San Francisco hedge fund manager Thomas F. Steyer.

The initiative would suspend the 2006 law until the state’s unemployment rate, now more than 12%, drops to 5.5% for a year, which it has done only three times in the last four decades. The law, known as the Global Warming Solutions Act, or AB 32, aims to slash carbon dioxide and other planet-heating pollutants from industry and transportation to 1990 levels by the end of the decade, a drop of about 15% below today’s emissions.

In his e-mail, Drevna said the initiative could “mean the difference between life and death for our industry in this century.... AB 32 would give the California Air Resources Board (CARB) powers any dictator would envy.... For all practical purposes, AB32 would have the effect of outlawing petroleum-based fuels in California in the second half of this century.”

Drevna added that the law, which aims to slash greenhouse gases by 80% by mid-century, would  put 1.1 million Californians out of work, raise gasoline and diesel costs and boost electricity rates by 60%.

Laura Dixon, a Schwarzenegger spokeswoman, called the letter “a sad and pathetic attempt by Big Oil to keep California in the dark ages of energy efficiency and clean air.”

Oil-company divisions may reflect the fact that firms such as Chevron, which have upgraded their facilities, may have to spend less than competitors to comply with future rules to cap refinery emissions. International companies, such as Shell, which already operate under a greenhouse gas cap-and-trade program in Europe, may also be counting on offsetting their emissions in California with credits from overseas facilities.

Companies may also have decided they have more to gain by lobbying state officials who are developing greenhouse gas regulations, than by fighting for an initiative that is, so far, lagging behind in the polls. “The costs to reduce greenhouse gas emissions will fall to California consumers,” Chevron said in a prepared statement.

But the company that operates the state's second- and third-largest refineries, in El Segundo and Richmond, added, “At this time we are working closely with the California Air Resources Board to develop a reasonable program that ... allows for California’s economy to grow and remain competitive.”

BP, which operates the state’s largest refinery, in Carson, said it has not taken a position on the initiative. AB 32 does not adequately protect California industry from unregulated competitors outside the state, said BP spokesman Steve Rinehart. But the company, he added, is "focusing our resources on advocating for a well-designed AB 32 program that delivers on the emission reductions goal in a way that minimizes impacts on California consumers and businesses."

Environmentalists acknowledge that big money could still come into the state to support the initiative. "But is interesting to see the industry divided, isn’t it?" said Bill Magavern, California director of the Sierra Club. "My hunch is that those companies know that the initiative is a loser, and most of them see a lot more to gain in working on the AB 32 implementation process....

"When you’re having some influence on the rules that will affect your business, why divert attention and resources to an unpopular, expensive ballot fight?"

-- Margot Roosevelt

Photo: Signs protesting Proposition 23 at a Valero station in Mountain View, Calif. Credit: Jack Owicki/ www.StopTexasOil.org
 

 

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