October 19, 2006

Prop. 87 fuels high octane fight on oil production tax

By Idan Ivri

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"We have the technology today to move beyond oil. You need a deployment of existing technologies," Luft said.

Even some of the more practical portions of Proposition 87 don't go far enough for Luft. Though the measure would subsidize retrofitting public agency vehicles to run on an ethanol-gas fuel mixture, Luft said that it is aiming to fix the wrong problem.

"Their proposition does not have a clear idea of where the [ethanol] fuel will come from," he argued.

Luft worries that a research-heavy approach like Proposition 87 would focus on experimental "cellulosic" ethanol from biomass, rather than more tried-and-tested solutions.

Luft said the first real barrier to alternative fuel use in California is the federal tariff on imported sugarcane ethanol from Brazil, not a lack of technology, research or vehicles. The federal government's protectionism on behalf of Midwestern corn-growing ethanol producers forces California to truck the ethanol into the state inefficiently, instead of shipping from South America. Since California lawmakers can do nothing to affect those federal tariffs, Luft saw Proposition 87 as an expensive diversion.

"The winners of all this will be universities [and] research institutions," Luft said. "That's nice, but I don't want people to think if they pass Proposition 87 that California oil use will dramatically decline."

Luft also doubts that the broad focus of Proposition 87 on wind, solar and other power-generating technologies will at all displace oil use, because the United States uses petroleum for only 3 percent of its electrical generation. To reduce oil use in the short term, Luft advocated simple policies: government incentives to work at home; incentives for ethanol-providing gas stations, which are included in Proposition 87, and more mass transit.

"Yes on 87" advocate Willon responded that oil can be displaced in new ways, pointing to a Torrance FedEx facility that uses solar power to recharge its fuel-cell powered trucks.

Luft's final point was geopolitical.

"All these [Western] companies, Exxon and Chevron and BP and Shell, all of them together are about 8 percent to 9 percent of the world's oil market," he noted.

If Proposition 87 does weaken U.S. oil companies like Exxon Mobil, said Luft, that plays into the hands of the state-owned giants like Saudi Aramco.

In 2006, all parties are talking about the lofty goal of alternative energy sources. But Proposition 87 poses far deeper questions, asking voters to gauge their trust in government subsidies and bureaucratically funded research, to decide where they believe technological change should come from and to weigh those considerations against their opinions of multinational oil companies and the federal government. One thing is for sure: Battles on this issue are just beginning, no matter what happens on Nov. 7.

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