California Oil Tax Pits Venture Capitalists Versus Big Oil

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18 years ago

California Oil Tax Pits Venture Capitalists Versus Big Oil

mongabay.com
September 27, 2006

Oil firms are locked in a fierce battle with venture capitalists and environmentalists over Proposition 87, California’s proposed oil tax, according to an article in today’s issue of The Wall Street Journal. California votes on the initiative November 7.

Backing the proposition, which calls for a tax on oil output to fund conservation and alternative-energy initiatives, are some of the Silicon Valleys’s most prominent figures including Vinod Khosla, a venture capitalist (VC); Larry Page, a co-founder of Google; Wendy Schmidt, wife of Google Chief Executive Eric Schmidt; and John Doerr, a one of the best known VCs. California’s oil producers and refiners strongly oppose the measure which would result in up to $4 billion in higher production costs over the next decade.

A little more than half the money raised by the Prop 87 tax would be go towards programs to cut gasoline and diesel use, while 27% fund alternative-energy research at California universities. The rest, according to The Wall Street Journal, would be used to help alternative-energy start-ups, to retrain energy workers, and for administration.

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Because nearly 10 percent of the tax would by earmarked for start-up companies, critics of the ballot measure say the venture industry is acting its own self-interest to pass the initiative.

“It’s one thing if you see someone championing a cause that they believe, rightly or wrongly, will benefit a wide group of people,” The Wall Street Journal quotes David Combs, president of Termo Co., a Long Beach, Calif., oil company, as saying. “But this is a very self-motivated bill. It’s benefiting the ethanol industry, which is already being subsidized.”

George Anders and Rebecca Buckman, authors of the article, write that Wendy Schmidt, a philanthropist and environmentalist who happens to be the wife of Google CEO Eric Schmidt, doesn’t see a problem with venture-capital investors possibly profiting from the proposition’s passage.

“Those who have donated money to help pass the proposition ‘are not the only ones that would profit from it,’ says Ms. Schmidt… “Society broadly profits from it. The oil companies are in a position to profit from it.'”

“[Oil companies] are ripping us off. There are cheaper alternatives to oil that they don’t want us to have,” the article quotes Mr. Khosla as saying.

This article uses information and quotes from “Venture Firms Ignite Bitter Fight With Push for California Oil Tax” by George Anders and Rebecca Buckman. The article appeared in the The Wall Street Journal on Wednesday, September 27, 2006.