Schwarzenegger Charms and Demonizes Big Oil — But Short Changes California’s Ratepayers and Economy

Commentary by Dave Harbour

We urge our NGP readers who have California friends to recommend a ‘yes’ vote TOMORROW for Proposition 23 that would delay implementation of AB 32.  We offer this advice after listening to others.

1.  First, listen to California’s current governor espouse — in his own words — a philosophy designed to bring a great state to her knees.  Click here and advance the presentation to minute 16:32.  As I sat in that Sacramento meeting of the National Association of Regulatory Utility Commissioners last July 21, I was amazed in two ways: a) that my longtime movie hero, Governor Arnold Schwartzenegger (NGP Photo) would so demonize the wealth and job creating oil industry, and b) that some regulatory commissioners in the room laughed and applauded as he made fun of oil companies in a deceptively charming and entertaining way.  You will hear the Governor embrace fossil-subsidized alternative energy as California’s economic holy grail — while it sinks further into financial malaise and approaches bankruptcy.  Schwartzenegger touted the "tremendous economic benefits" of "green energy" industries in spite of the fact that most currently produce uneconomic business models that can only be sustained with massive taxpayer supported grants and onerous laws like AB 32 requiring utility rate payers to pay dramatically increased bills to artificially support "green jobs".  It is a simple transfer of wealth from every Californian to an army of prosperous entrepreneurs who have constructed schemes involving government grants and rate payer subsidies with the help of California lawmakers and bureaucrats.  Sadly, the Governor refers to, "Greedy oil companies from Texas….."  He says they, "…want to come in here and tell us in California what to do so they can sell their oil and continue polluting the world…and send kids to the hospital….  If the special interests push I will push back…," he said.  To our California friends, I would ask, "Is this they way you hope to repair your economy?  Do you realize that buying Schwartzenegger’s snake oil, purchases for you (as yet) uneconomic industries, during a depression, that transfers wealth from rate payers to entrepreneurs, deprives the treasury of oil industry taxes and royalties in favor of "green industries" that absorb tax dollars and do not pay royalties to the treasury?

2.  Second, here is a letter written by oil industry executives representing thousands of employees and support industry employees who responded to Schwarzenegger’s similar oil industry vilification speech to Santa Clara’s Commonwealth Club on September 27th.  Listen to his attack on Tesoro and Valero here, for "self serving greed".  You will hear the ultimate strategy of convening a 2010 "Governor’s Global Climate Summit" with a goal of establishing an international alliance as a framework for worldwide carbon trading, where, "…everyone can be linked together."  Is this really the sort of world (and world government) Californians or Americans or Canadians want to create?  

Thanks to our Kenai, Alaska friend, Bob Favretto, we have the Tesoro and Valero response below. 

On behalf of Tesoro and Valero’s nearly 4,000 employees in California, we would like to express how disappointed we were to hear Gov. Schwarzenegger once again misrepresent and demonize our companies and our workers, who have been working day after day to provide Californians with the products and services they need to live their lives.  (Click below for more….)

 Schwarzenegger Charms and Demonizes Big Oil — But Short Changes California’s Ratepayers and Economy

Commentary by Dave Harbour

We urge our NGP readers who have California friends to recommend a ‘yes’ vote TOMORROW for Proposition 23 that would delay implementation of AB 32.  We offer this advice after listening to others.

1.  First, listen to California’s current governor espouse — in his own words — a philosophy designed to bring a great state to her knees.  Click here and advance the presentation to minute 16:32.  As I sat in that Sacramento meeting of the National Association of Regulatory Utility Commissioners last July 21, I was amazed in two ways: a) that my longtime movie hero, Governor Arnold Schwartzenegger (NGP Photo) would so demonize the wealth and job creating oil industry, and b) that some regulatory commissioners in the room laughed and applauded as he made fun of oil companies in a deceptively charming and entertaining way.  You will hear the Governor embrace fossil-subsidized alternative energy as California’s economic holy grail — while it sinks further into financial malaise and approaches bankruptcy.  Schwartzenegger touted the "tremendous economic benefits" of "green energy" industries in spite of the fact that most currently produce uneconomic business models that can only be sustained with massive taxpayer supported grants and onerous laws like AB 32 requiring utility rate payers to pay dramatically increased bills to artificially support "green jobs".  It is a simple transfer of wealth from every Californian to an army of prosperous entrepreneurs who have constructed schemes involving government grants and rate payer subsidies with the help of California lawmakers and bureaucrats.  Sadly, the Governor refers to, "Greedy oil companies from Texas….."  He says they, "…want to come in here and tell us in California what to do so they can sell their oil and continue polluting the world…and send kids to the hospital….  If the special interests push I will push back…," he said.  To our California friends, I would ask, "Is this they way you hope to repair your economy?  Do you realize that buying Schwartzenegger’s snake oil, purchases for you (as yet) uneconomic industries, during a depression, that transfers wealth from rate payers to entrepreneurs, deprives the treasury of oil industry taxes and royalties in favor of "green industries" that absorb tax dollars and do not pay royalties to the treasury?

2.  Second, here is a letter written by oil industry executives representing thousands of employees and support industry employees who responded to Schwarzenegger’s similar oil industry vilification speech to Santa Clara’s Commonwealth Club on September 27th.  Listen to his attack on Tesoro and Valero here, for "self serving greed".  You will hear the ultimate strategy of convening a 2010 "Governor’s Global Climate Summit" with a goal of establishing an international alliance as a framework for worldwide carbon trading, where, "…everyone can be linked together."  Is this really the sort of world (and world government) Californians or Americans or Canadians want to create?  

Thanks to our Kenai, Alaska friend, Bob Favretto, we have the Tesoro and Valero response below. 

On behalf of Tesoro and Valero’s nearly 4,000 employees in California, we would like to express how disappointed we were to hear Gov. Schwarzenegger once again misrepresent and demonize our companies and our workers, who have been working day after day to provide Californians with the products and services they need to live their lives.  
 
We understand that our companies and the governor are on opposite sides of the debate over Proposition 23, the ballot initiative that gives California voters the opportunity to postpone implementation of the state’s costly go-it-alone greenhouse gas reductions until the state’s economy recovers. However, opposing a political initiative is no excuse to retreat to the defense of the desperate: attacking the messenger instead of the message by insulting the more than 1 million Californians who work at our locations, who are vendors at our sites, and who shop at our retail outlets every day.
 
It may make for great headlines for the governor to denigrate Proposition 23 supporters as “greedy” or “cynical” – or even to compare them to Nazis, as he did in his speech on Sept. 27 to the Commonwealth Club – but doing so ignores the facts: Valero and Tesoro have donated millions of dollars to California charities in the years that we have operated in the state. Our employees have volunteered thousands of hours of their own time to charitable causes. We have met or exceeded California’s very rigorous environmental standards. And we have continued to do so even as our companies suffered financial losses in the current recession. In short, we have worked to make all of the communities where we do business better places.
 
Tesoro and Valero are just two of many, many California organizations that support Proposition 23. Neither of our companies can be properly characterized as “Texas oil companies.” Our companies have diverse operations in many states, particularly in California. Combined, we employ 3,841 people in California with annual payroll of $259 million. We also pay over $100 million in taxes in the state. Nor are we, strictly speaking, “oil companies.” We do not produce oil or own any crude oil reserves. Instead, we buy crude from third parties and turn it into the transportation fuels so vital to the California economy. 
 
Proposition 23 isn’t a yes or no vote on the need for climate change regulation, but is simply one about timing of the regulation. Proposition 23 simply states that now is not the time to impose such an economic burden on the citizens of California. The proposition would only delay the imposition of the state’s climate change rules until unemployment drops from its current 12.4 percent to 5.5 percent, a rate that is still higher than when the law was passed. We believe that without the passage of Proposition 23, California’s economy and its citizens will suffer:
  • 1.1 million lost jobs
  • $3.7 billion a year in higher fuel costs
  • Up to a 60% increase in electricity and natural gas costs
  • Up to $50,000 added to the cost of a new home
 
Valero and Tesoro have a vested interest in seeing California’s economy improve, but at this point, California’s economy is in deep trouble. We disagree with the governor and other Proposition 23 opponents about whether this is the proper time to implement costly new regulations, but surely we can agree that this is not the time for insults, invective and demagoguery. Let the voters weigh the cost of climate change rules and decide if they want to bear that cost right now. They should decide on the basis of facts, not on the basis of attacks on concerned corporate citizens who are working in the best interest of Californians.
 
Sincerely,
 
Greg Goff, CEO, Tesoro Corp.
Bill Klesse, Chairman and CEO, Valero Energy Corp.