Can Money and Celebrity Test the Influence of Oil Companies?




Oil tax fight becomes costliest Calif. initiative campaign as producer, oil companies ante up.

In any other year, a $60 million opposition campaign fueled by a deep-pockets industry would almost certainly spell doom for a California ballot initiative.

But the infusion of $40 million by a Hollywood producer has given environmentalists pushing Proposition 87, an oil-production tax, plenty of financial firepower against the petroleum companies that oppose it.

The battle over the so-called oil tax has become the costliest initiative campaign in California history, with a combined $104.4 million raised so far on both sides.

That surpasses the pharmaceutical industry's lobbying in last year's special election on two prescription drug measures and a $93 million contest in 1998 by Indian tribes to legalize tribal gambling.

"The numbers are so amazingly large," said John Matsusaka, president of the Initiative and Referendum Institute at the University of Southern California, who specializes in economics and government.

The stakes got higher last week with the introduction of a television commercial in which former Vice President Al Gore promotes the initiative.

"Here is the truth the oil companies won't tell you," Gore says in the 30-second spot. "Half of the foreign oil they're importing to California is from the Middle East. As a result, California is dangerously dependent on foreign oil."

Spokeswoman Kalee Kreider said Gore has been following the California initiative campaign in an effort to educate people about global warming.

One of the initiative's goals is to reduce oil dependence in California by 25 percent over the next decade, which would reduce the greenhouse gases that scientists blame for warming the Earth's atmosphere.

Proposition 87 would tax companies drilling for oil in California until the state has generated $4 billion. The money would be set aside for loans, grants and subsidies to promote alternative fuels and more energy-efficient vehicles.

A Field Poll from early October showed 44 percent of likely voters supported the initiative, down from 52 percent in July. Historically, California voters have approved 40 percent of ballot initiatives.

Hollywood producer Stephen Bing has given a little more than $40 million to support the initiative, the largest donation by an individual to an initiative in state history, according to California Common Cause, which tracks campaign activity. In all, supporters have collected $45.7 million.

Yes on 87 spokesman Yusef Robb said the producer wants to give advocates enough money to fight back against the oil industry.

"The bottom line is Steve Bing is trying to level the playing field against the oil companies so California can break our dependence on oil," he said. "The oil companies have an infinite well of profits to draw from to kill Proposition 87."

Opponents — mostly oil companies — have contributed nearly $60 million, most of which has been poured into a massive advertising blitz.

Oil pumped in California accounted for 37 percent of the state's demand in 2005, according to the state Legislative Analyst's Office. Twenty-one percent of the state's oil comes from Alaska, while the rest is imported from abroad.

The initiative would tax oil producers between 1.5 percent and 6 percent depending on the per-barrel price of oil.

Scott Macdonald, a spokesman for the No on 87 campaign, said oil companies that do business in California pay the fifth-highest taxes in the country. Adding another tax would deter them from pumping California oil, he said.

The oil companies say a tax on oil production would drive up gas prices for consumers, increase the state's dependence on foreign oil, siphon money from public safety and education, and create a new government bureaucracy.

In one commercial, Kevin Nida, president of the California State Firefighters Association, says the oil tax comes with a big price tab.

"It reduces revenues for all of us and reduces critical public safety needs," he says.

Neither side will disclose its advertising costs or where it plans to advertise in the campaign's closing weeks.

Dan Schnur, a Republican political observer and instructor at the University of California, Berkeley, estimated that supporters will spend $1.5 million a week to saturate the state with the Gore commercial.

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