Advertisement

Barrels of Money Fuel Oil Tax Fight

Share
Times Staff Writer

Five weeks before election day, California oil companies and a rich Hollywood producer are waging an $85-million battle over an initiative that would impose up to a $485-million-a-year tax on the oil industry.

In any other state, the $45 million that oil producers have shelled out to block Proposition 87 would be a political gusher of historic proportions. But in California this year, there’s an equalizer: Stephen L. Bing, movie producer, heir to a real estate fortune and one of the biggest financiers of Democratic and environmentalist causes in the nation.

Bing has given $40 million to the campaign in favor of the initiative, which he helped launch. The sum is an unprecedented donation by an individual in a single initiative fight.

Advertisement

Venture capitalists and others have contributed an additional $5.7 million to the Yes-on-87 campaign, pushing the overall total toward $91 million. The fight almost certainly will set a spending record for one initiative.

The oil money dwarfs the industry’s spending in other states over the last six years. It’s more than oil and gas interests have donated to federal candidates and national parties in any single campaign for more than a decade, according to the Center for Responsive Politics in Washington, D.C.

With Bing’s infusion, the fight over Proposition 87 is no David vs. Goliath campaign. Both sides can afford to inundate airwaves with television commercials. Backers, who launched a new ad Monday, are blasting the oil industry. Foes are questioning the wisdom of a new oil tax. The heavy spending is helping to push the cost of political advertising to new heights.

“California really is ... like a country unto itself,” said Ed Bender, executive director of the Institute on Money in State Politics in Helena, Mont. “They’re off the chart.”

Bender’s organization surveyed political spending by major oil companies in other states at The Times’ request, finding that they had spent about $4.7 million since 2000. In other states, oil companies don’t need to spend much, Bender said: The “political culture” in many states is such that lawmakers generally side with them, and no interest groups seriously challenge them.

“The rest of the country doesn’t have a Hollywood,” Bender said.

Initiative battles are by far the costliest political campaigns in California. For now, the most expensive in state history remains Proposition 5, the $93-million epic to legalize Las Vegas-style casinos on Indian reservations in 1998.

Advertisement

“It looks like oil is going to break it. Incredible,” said Tracy Westen, chief executive of the nonpartisan Center for Governmental Studies in Los Angeles.

“Ballot measures are an extension of business, but by other means,” Westen said, alluding to the saying that “war is an extension of politics, but by other means.”

No-on-87 campaign spokesman Scott Macdonald said no one “should be surprised at the amount being spent,” given the stakes and the record amount that Bing has contributed. “It is a remarkable situation.”

California is the nation’s third-largest oil-producing state. Proposition 87 would generate $4 billion over time by taxing companies that extract oil from California land. The money would jump-start alternative energy research and use.

“Here is an initiative with a direct impact on an industry,” said Republican consultant Wayne C. Johnson, who is not involved in the campaign. “People respond to perceived threats. Where the threat is greater, the response is greater.”

Two companies would be most directly affected by Proposition 87: Chevron and Aera Energy, a partnership of Shell Oil and ExxonMobil. Combined, they pumped 60% of the oil from California wells in 2005, state records show. Under the initiative, they could pay 60% of the tax -- and are by far the largest donors to the opponents’ campaign.

Advertisement

Chevron has given $22 million, Aera $12.6 million. Neither company would comment.

Occidental Petroleum, the third-biggest producer last year, has given $4.75 million to the “no” side.

“California is one of our core operating areas,” said Occidental Vice President Lawrence Meriage, who oversees corporate communications. “Clearly anything that is related to the energy sector is something we care about.”

Year in and year out, San Ramon-based Chevron is one of the state’s biggest political spenders. Since 2000, the company has poured $34.8 million into California campaigns, including the anti-87 money, secretary of state records show.

Chevron also has given $3.2 million to federal candidates and national parties since 2000, according to the Center for Responsive Politics.

But the oil companies may have found a match in Bing, 41, who inherited $600 million from his grandfather and has become a donor to liberal causes. Before getting involved in the oil tax initiative, Bing had contributed $30.5 million to state and federal campaigns since 2000, according to California records and federal records compiled by the Center for Responsive Politics.

Bing gave $260,000 to Proposition 71, the measure voters passed in 2004 authorizing bonds to pay for stem cell research. He also donated $2.4 million to Proposition 10, the initiative that Hollywood producer Rob Reiner sponsored and voters passed in 1998. That measure raised tobacco taxes to pay for early childhood programs.

Advertisement

“The thing he is most concerned about is the environment,” said Yes-on-87 strategist Paul Begala, a former political aide to President Clinton and a friend of Bing. “He is trying to change the world.”

Bing, who declined to be interviewed, is an investor in a fund formed by Clinton that is expected to raise $1 billion for renewable energy.

Yes-on-87 spokesman Yusef Robb said the donors are not in the fight to make money.

“The bottom line is that if Steve Bing were looking to get rich, he’d be buying oil stocks,” Robb said. “Instead, he is putting his money into clean-air technology and Proposition 87.”

The heavy spending comes as the tobacco industry has raised $50 million to defeat another initiative, Proposition 86, which would raise taxes on tobacco products. The two campaigns are pushing the cost of television airtime to all-time highs.

The cost of airtime statewide is running at $2.5 million a week or more -- “and it is going higher,” said one political ad buyer who requested anonymity because clients did not authorize him to speak publicly.

“When there are so many dollars seeking a finite resource, that pushes rates higher,” said Johnson, the political consultant.

Advertisement

Adding to the cost, Johnson said, viewers increasingly watch cable television instead of network broadcasts. When they do see ads, they tend to tune them out and don’t recall the ones they see. And many radio stations refuse to run political ads, believing listeners will change stations when they hear campaign spots.

“There are fewer and fewer ways to reach voters,” Johnson said. “The remaining ways are very expensive.”

*

dan.morain@latimes.com

Advertisement