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The Oil War at Home





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by William S. Becker

Who should we blame for high gasoline prices? The president? Oil companies? Price gougers? Protesters in the Arab Spring? People who drive Hummers?

The answer to that question is one of the first serious issues of the 2011 presidential campaign. It's an issue that could -- and perhaps should -- become an oil war at home, politically speaking.

The issue is heating up because gas prices affect us all, whether we're buying fuel, food or consumer goods. Rising gas prices threaten our recovery from the recession and our ability to put Americans back to work.

To anticipate how the price of oil might unfold as a campaign issue, we can look to California in 2006. One of the initiatives on California's ballot that year was Proposition 87 to establish a new tax on petroleum extracted from the state's oil fields. The tax would have raised $400 million annually to fund alternative energy programs, with the goal of cutting the state's oil consumption 25 percent over 10 years.

Proposition 87 contained a clear prohibition against oil companies passing the cost of the tax to consumers by raising fuel prices. The tax would have to come out of profits. In July 2006, polls indicated that 51 percent of California's voters supported the initiative.

Then in August, opponents launched an aggressive campaign of television ads supported in part by more than $30 million from Chevron. The ads claimed Proposition 87 would result in higher gasoline prices -- despite the prohibition in the initiative.  Continued...


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