California oil tax measure to fund renewables soundly defeated

California oil tax measure to fund renewables soundly defeated

Washington (Platts)--8Nov2006

A controversial measure on California's November 7 ballot that would tax
oil production to fund alternative fuels and renewables has gone down to
defeat, with 55% voting against and 44% voting for the proposal.

The measure, Proposition 87, would have imposed a severance tax on oil
production in California to fund up to about $4 billion in energy programs
over 10 years.

The proposition's goal was to reduce California oil consumption by 25%
over 10 years, while increasing the state's use of renewables and alternative
fuels. The tax would have ranged between 1.5% and 6%, depending on the price
of oil, and was expected to generate between $200 million to $380 million
annually.

The $150 million-plus campaign over the measure pitted supporters,
including former President Bill Clinton and former Vice President Al Gore, who
said the initiative would reduce California's dependence on foreign oil,
against oil companies, who claimed the measure would actually increase the
state's reliance on foreign oil by reducing in-state production. San Ramon
California-based Chevron recently said the oil tax would reduce its profits by
up to $200 million.

California produces 12% of the nation's oil and is the country's third
largest producer of the resource.

The vote will not be final until absentee and provisional ballots are
certified, according to staff for the California Secretary of State, but more
than 94% of precincts had reported.

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