Wednesday, October 25, 2006

Yes on Prop 87

So I made a slip up before and wrote that prop 87 was a bond measure. This is wrong. Prop 87 is a program funded by a tax on oil produced in California. The money would be used to fund alternative energy research. That seems like a laudable goal; becoming a leader in Alternative energy research would do a lot to boost California's economy.

I took a look at the pro and con sites here and here. You can take a look at the official Prop 87 summary from the Attorney general here (PDF) . Let's take a look at the arguments against Prop 87 one at a time.

Argument: Prop 87 means higher gas prices.
Counter-Argument: When something is taxed it's price goes up. The problem is the implication that the increased price of oil will be born by Californians only. This is not true. Oil is fungible meaning it can be cheaply transported and sold elsewhere. That's why the price of oil is the same in Finland and Japan and the US. A tax on production won't change that so any oil price increase due to prop 87 will be born by the whole world more or less equally. (In contrast, a tax on California oil consumption would increase the local price of oil. That's why different countries pay different amounts at the pump.)

Argument: Prop 87 would mean more reliance on foreign oil
Counter-Argument: The US doesn't actually purchase that much oil from Saudi Arabia. The problem is that if Saudi Arabia falters in production, the people we buy oil from will suddenly have a lot more buyers and will raise their price accordingly. So we should make it clear that "Independence from foreign oil" is really about economic independence and not physical independence. So given that oil is fungible, prop 87 won't increase our economic dependence on foreign oil perceptibly. More importantly it won't increase our reliance on foreign oil any more than it'll increase South Africa or Germany's reliance on foreign oil.

Argument: Prop 87 will create a new bureaucracy of 50 political appointees with no accountability to taxpayers
Counter-Argument: Wait, I thought the whole point of political appointees is that their boss is accountable to the taxpayers? Ok, so they're going to have to form a committee. And yes, committees are soul-crushing. But committees are sometimes necessary. At my company we have more than one committee and they didn't form by accident. They were formed because our business leaders understand that committees are sometimes the best way to accomplish a goal.

Argument: Prop 87 reduces available revenues for schools & public safety
Counter-Argument: Evidently Prop 98 from a few years back said that X% of the budget should be spent on education. In order to not screw up with the existing funding system Prop 87 exempts the tax revenue it generates from the Prop 98 calculation. This doesn't seem like a big deal to me especially give that pass-or-fail prop 87 will not change the amount going to education one iota.


Rebecca C. Brown said...


Good run-down.

Thinker said...

The Yes on 87 campaign has just posted a YouTube video of the last 6 minutes of Al Gore's Monday speech in Berkeley.