Consumer Group Says Oil Industry, Not California Consumers, Should Pay New Gas Tax

Governor Jerry Brown and First Minister of Scotland Nicola Sturgeon sign a letter of cooperation on climate change on April 3. Photo Credi...

Governor Jerry Brown and First Minister of Scotland Nicola Sturgeon
sign a letter of cooperation on climate change on April 3.
Photo Credit: Joe McHugh, California Highway Patrol. |   

By Dan Bacher | April 4, 2017 |   

Governor Jerry Brown and legislative leaders hail the Governor’s plan to fix roads, freeways and bridges across California as a “landmark transportation investment,” but a prominent consumer group says Brown’s gas tax to fix roads should come out of oil companies’ windfall profits — and not out of consumers’ wallets. 

At a press conference on March 30 with Senate President pro Tempore Kevin de León, Assembly Speaker Anthony Rendon and labor, business and local leaders, Brown claimed the $5 billion-a-year program will cost most drivers less than $10 a month and comes with “strict new accountability provisions to ensure funds can only be spent on transportation.” 

“California has a massive backlog of broken infrastructure that has been neglected far too long,” said Governor Brown. “Fixing the roads will not get cheaper by waiting – or ignoring the problem. This is a smart plan that will improve the quality of life in California.”

Then on April 3, Governor Brown testified at the Senate Appropriations Committee and Assembly Transportation Committee hearings in Sacramento in support of the Road Repair and Accountability Act of 2017 – SB 1, co-authored by Senator Jim Beall (D-San Jose) and Assemblymember Jim L. Frazier Jr. (D-Discovery Bay. The bill invests $52.4 billion over the next decade to fix roads, freeways and bridges across California and put more dollars toward transit and safety, according to the Governor’s Office.

Funds split between state and local investments

Brown said the funds will be split 50/50 between state and local investments. SB 1 will make the following investments in the state’s infrastructure:

Fix Local Streets and Transportation Infrastructure (50 percent): 
  • $15 billion in “Fix-It-First” local road repairs, including fixing potholes
  • $7.5 billion to improve local public transportation
  • $2 billion to support local “self-help” communities that are making their own investments in transportation improvements
  • $1 billion to improve infrastructure that promotes walking and bicycling
  • $825 million for the State Transportation Improvement Program local contribution
  • $250 million in local transportation planning grants.  
Fix State Highways and Transportation Infrastructure (50 percent): 
  • $15 billion in “Fix-it-First” highway repairs, including smoother pavement
  • $4 billion in bridge and culvert repairs
  • $3 billion to improve trade corridors
  • $2.5 billion to reduce congestion on major commute corridors
  • $1.4 billion in other transportation investments, including $275 million for highway and intercity-transit improvements. 
The bill also includes a constitutional amendment to prohibit spending the funds on anything but transportation and other accountability measures. 

Invoking the principles set forth by President Ronald Reagan when he increased the federal gas tax in 1982, Brown claimed this transportation investment package “is funded by everyone who uses our roads and highways.” Here is the breakdown on where the funding will come from:

  • $7.3 billion by increasing diesel excise tax 20 cents
  • $3.5 billion by increasing diesel sales tax to 5.75 percent
  • $24.4 billion by increasing gasoline excise tax 12 cents
  • $16.3 billion from an annual transportation improvement fee based on a vehicle’s value
  • $200 million from an annual $100 Zero Emission Vehicle fee commencing in 2020.
  • $706 million in General Fund loan repayments.  

Environmental justice groups oppose weakening of air quality rules on diesel trucks

In the bill hearing, environmental justice organization representatives said they oppose a provision of the legislation to weaken existing air-quality rules on diesel trucks, while agricultural groups said the diesel tax increase and truck rules in the bill would harm farmers.

“The Dirty Truck Amendment in #SB1 will hurt EJ communities living along freeways first & worst,” said the California Environmental Justice Alliance, a community-led alliance advancing statewide policies and a movement for environmental justice, on Twitter. 

“’Just put us in a room and we could work it out,’ said Erica Martinez of Earthjustice, who called for lawmakers to delay Thursday’s vote deadline and continue negotiations on the bill,” according to the Sacramento Bee.

Read more here: 
Since the vote is about a tax increase, it requires a supermajority vote of two-thirds of the legislators in both the Senate and Assembly. 

Jerry Brown acknowledge the unpopularity of the gas tax when he spoke before the members of the Senate Appropriations Committee. A floor vote is scheduled for Thursday, April 6.

“I know there’s a political concern because people don’t like gas taxes. I got that. But what do you do? What do you guys come here for? We’ve got a real problem,” said Brown.  

Funds to repair roads should come from Big Oil

Liza Tucker of the Santa Monica-Based Consumer Watchdog has proposed an alternative to Brown’s gas tax. She said the funds for repairing California roads should come from the oil companies’ windfall profits and not from consumers.

“No one disputes that California’s roads are crumbling and we need to invest in fixing them,” wrote Tucker in a letter to California lawmakers. “In recent years, Californians have been paying an unjustifiable amount at the pump, and oil companies should be giving some of that back to fix the roads themselves. Consumer Watchdog calls upon you to oppose the gas tax Governor Brown has proposed until it requires oil refiners to pay some of the billions of dollars in windfall profits they have made recently at the pump.”  

Read the letter here:

She also criticized the Governor for continuing to protect the oil industry at the expense of consumers while he portrays himself as a “climate leader.”

“Governor Brown has consistently given the oil industry a pass while talking about the evil effects on the climate of the products they sell,” explained Tucker. “Brown is letting the oil companies keep their ill-gotten gains while protecting them from taxation— including nixing an oil severance tax that lawmakers favored in 2014 that could have raised $1.5 billion a year in revenue. It’s outrageous that the governor would continue to protect the oil industry at the expense of consumers by taxing the rest of us for road repairs when Big Oil can well afford to pick up the tab.” 

According to a review of oil refiners’ quarterly reports submitted to the California Energy Commission’s Petroleum Market Advisory Committee by Consumer Watchdog, Californians paid $10 billion dollars more for their gas than the rest of the nation in 2015 alone, with the gap between state and national prices reaching as much as $1.50 a gallon.

“Prices skyrocketed at the pump in the wake of mismanagement that put two refineries offline in 2015,” the letter said. “Consumers are currently paying nearly 70 cents a gallon more than the $2.30 a gallon price in the rest of the country. The price gap can only be explained as price-gouging by an oligopoly that keeps too little gasoline on hand.”

“Big Oil has Californians over a barrel,” the letter told lawmakers. “Driving up gas prices still further at the pump for millions of California drivers is not the right course. Let the oil companies reimburse Californians by paying to fill in the gouges and the potholes. It’s only fair.” 

Windfall profits fund Big Oil's attack on environmental laws

She said a vote for this gas tax is a “vote against the consumer and  for the “oil companies that have feathered the governor’s campaign committees and causes and the California Democratic Party with $3.8 million in contributions” — and urged the legislators to stand by consumers and against Big Oil.

The windfall profits also funded massive lobbying by oil companies and WSPA during 2015 that resulted in the defeat or gutting of  most bills that the oil industry opposed, including SB 788, legislation to ban oil drilling in a state marine reserve that was created under the helm of Catherine Reheis-Boyd, President of the Western States Petroleum Association. This intense lobbying also helped to kill off a provision in legislation on renewable energy standards to slash petroleum use in cars in half.

“Too few refiners in the state keep us running on empty by keeping too little gas on hand, driving up prices whenever there is a refinery outage,” Tucker emphasized. “You know there is a problem when four refiners control 78 percent of California’s gasoline market.”

The Western States Petroleum Association, the trade association for the oil industry in California, Oregon, Washington, Nevada and Oregon, ranked number one in lobbying expenses for all organizations in California during the 2015-16 legislative session, spending a total of $18.7 million. It also ranked first in spending among the state’s oil industry lobbying organizations in the state during the session, with Chevron finishing second among oil industry spenders with $7 million.

A groundbreaking Consumer Watchdog report, Brown’s Dirty Hands, also found that 26 energy companies, including Chevron, Occidental, ExxonMobil, and Conoco-Phillips, contributed $9.8 million to Jerry Brown’s campaigns, causes, and ballot initiatives, as well as to the state Democratic Party since Brown’s election. See:

“The report traced a pattern of legislative and administrative favors done for these companies sometimes in close proximity to donations,” noted Tucker. “The pattern included donations of $4.4 million by these companies to the state Democratic Party, which in turn donated $4.7 million to Brown’s 2014 re-election campaign. Brown’s Dirty Hands led the Fair Political Practices Commission to open an investigation into the Democratic Party and potential violations of the Political Reform Act the report uncovered.”

WSPA hires five new staff members

Meanwhile, the Western States Petroleum Association recently hired five new staff members to expand its already enormous power and influence in California Politics, made possible by the oil industry’s windfall profits.  In a classic case of the “revolving door” of California politics, WSPA announced the hiring of Assemblyman Henry T. Perea (D-Fresno) as Senior Vice President, Policy and Strategic Affairs, on March 27. The group also hired three new members for its communication team and an in-house general counsel.

Catherine Reheis-Boyd, President of the Western States Petroleum Association, is no stranger to the  "revolving door” of California politics herself. From 2009 to 2012, the Big Oil lobbyist chaired the privately-funded Marine Life Protection Act (MLPA) Initiative Blue Ribbon Task Force to create so-called “marine protected areas” in Southern California. She also “served” on the task forces to create alleged “marine protected areas” on the Central Coast, North Central Coast and North Coast.

The “marine protected areas” created under her helm fail to protect the ocean from oil drilling, fracking, oil spills, pollution, military testing and all human impacts on the ocean other than sustainable fishing and gathering.
For more information, go to:…

Background: SB 1 “Accountability” Measures 

  • Constitutional amendment to prohibit spending the funds on anything but transportation
  • Inspector General to ensure Caltrans and any entities receiving state transportation funds spend taxpayer dollars efficiently, effectively and in compliance with state and federal requirements
  • Provision that empowers the California Transportation Commission to hold state and local government accountable for making the transportation improvements they commit to delivering
  • Authorization for the California Transportation Commission to review and allocate Caltrans funding and staffing for highway maintenance to ensure those levels are reasonable and responsible
  • Authorization for Caltrans to complete earlier mitigation of environmental impacts from construction, a policy that will reduce costs and delays while protecting natural resources.

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