Earlier this year, I took California to task for a foolhardy legislative gambit that attempted to raise taxes on oil companies operating in the Golden State. The proceeds from the higher taxes were supposed to go toward making tuition at California's public universities more affordable after students protested tuition hikes. Higher taxes are bad enough because they never lead to an increase in collected revenue, but California's plan was worse because it is not like oil production is increasing in the state.
In fact, production will probably fall a bit again this year after Gov. Arnold Schwarzenegger scrapped plans to expand drilling off the California coast following the Gulf of Mexico tragedy. To put things delicately, California has the wrong attitude toward traditional energy sources and the companies that extract and sell the subsequent products. That attitude was on display in San Francisco today where several special interest groups gathered to encourage voters to vote against Proposition 23.
Proposition 23, which found its way onto November's ballot, is an attempt to strike down AB 32, California's landmark climate change bill. AB 32 is not good news for any oil company doing business in California, but it is a real thorn in the side of refiners Tesoro and Valero. Supporters of AB 32 have pointed to those companies as reasons to vote against Prop 23 because Tesoro (TSO) and Valero are supposedly two of the biggest polluters in California.
AB 32 supporters and Prop 23 detractors, essentially the same group, are lineups of the usual special interest groups. It might come as a surprise to some that AARP, the California Teachers Association and the California Nurses Association are out in force vilifying Tesoro and Valero (VLO). Who knew the teachers union cared so much about the energy industry?
One detractor, a gentleman from a California-based green jobs coalition, went so far as to compare to Tesoro and Valero with BP (BP). At a time when California's unemployment is above 12%, far higher than the national average, and attracting private sector jobs to a state where tax burdens suffocate employers and employees alike has become an epic task, this vitriol is unproductive to say the least.
Some Californians are badly in need of some AA: Attitude Adjustment. I encourage you to go to this link (HERE) to read a recent story about the Prop 23 debate. Scroll down to read some of the comments people make about the oil industry, several of which lambaste the state of Texas. Someone ought to tell the voters of California that two of the four largest U.S. oil companies are based in the Golden State, Chevron (CVX) and Occidental Petroleum.
Chevron is the second-biggest company by market value that calls California home and Occidental (OXY) is only a few billion dollars away from occupying the fifth spot. No, California isn't Texas when it comes to the presence of the energy industry, but that is not the point. The point is skewering private sector employers for the sake of politics in a state with a 12% jobless rate makes it easy to figure out how California got into its current mess in the first place. The state should embrace ANY company or industry that can put Californians back to work. Period.