THE SAN FRANCISCO CHRONICLE

Sacramento, CA — Big Oil remains a potent political force inside the state Legislature despite growing public unrest over soaring gas prices and the industry’s record profits.

With time running out on the current two-year session, oil company lobbyists have helped tie up or kill almost a dozen bills considered hostile to the industry, including a plan to tax windfall profits and a proposal to regulate refineries as public utilities.

So far, supporters said, no bill that would have significantly changed the status quo has passed out to the governor’s desk.

While there remains some optimism among supporters, history is not on their side.

“I cannot believe how many legislators don’t have the courage to stand up to them,” said Assemblyman Johan Klehs, D-San Leandro, whose legislation to levy a 2 percent surtax on oil company profits of more than $10 million never made it out of the Democrat-controlled Assembly.

“Republicans I understand,” he said. “But what surprised me was the number of Democrats that don’t have the courage to vote with their own constituency.”

Backed by profits last year that ran into the billions of dollars, oil giants like Chevron Corp., ConocoPhillips Co. and Occidental Petroleum — all active in California politics — have almost unlimited resources to throw into political campaigns.

Chevron, for example, spent $1.2 million in political contributions in 2005 and $1.7 million in 2004. So far, the company has donated $57,000 this year to candidates but has put an additional $4 million into an effort to help defeat a ballot measure that would tax oil production to pay for alternative-fuel programs.

Oil industry representatives said failed legislation is the result of bad ideas, not their political clout.

“There’s a common thread that links them all — they all carry the risk of seriously disrupting a delicate and sensitive transportation fuel market,” said Tupper Hull, spokesman for the Western States Petroleum Association.

“We learned to our dismay what happens when the Legislature attempts to interject itself into a market with electricity deregulation,” he said. “And a number of thoughtful legislators recognize that tampering or attempting to tinker with the market can be dangerous.”

Don Campbell, spokesman for Chevron, said his firm has no more influence than any other interest in the Capitol. “Lawmakers weigh our opinions against many others and make decisions that are in the best interests of the state,” he said.

Sen. Joe Dunn, D-Garden Grove (Orange County), said his bill, SB1794, was a victim of Big Oil just before lawmakers left on summer recess.

Dunn said he has concerns that oil refinery production has been kept at times artificially low to drive up demand. His idea was to give the California Public Utility Commission the authority to monitor production to ensure fair market competition.

“The gasoline industry has an enormous voice,” he said. “No matter how many times I sat down with members explaining the bill, there just didn’t seem to be much interest.

“Too many folks were too concerned about what this industry might do in the campaign this fall.”

Some noted that Gov. Arnold Schwarzenegger, who has accepted more than $2 million from oil companies, might not sign any of the oil-related bills — especially those that might raise taxes or impact trade. Still, critics blame Democratic leaders for not doing more to even get the bills on Schwarzenegger’s desk.

“Democrats are supposed to care about people who are being forced to choose between filling up their cars and having more food on the table,” said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica.

“It is insane that in a state where Democrats control both houses of the Legislature, they can’t attack this issue,” he said. “The only reason there has not been more action is that politicians are scared to take them on.”

A spokesman for Assembly Speaker Fabian Núñez rejected the notion that Democrats are not supportive of consumer and environmental issues, but said lawmakers may have differences over specific bills.

“Our support on environmental issues speaks for itself,” said Richard Stapler, who also noted that Republicans almost unanimously oppose all the bills in question.

Núñez has two major bills pending before the Legislature that, if approved, could have a dramatic impact on the oil business. One, AB32, would make California the first state to require businesses to report how much greenhouse gas they emit and place caps on those emissions beginning in 2012.

Núñez is also pushing AB457, which would allow for temporary price caps on gasoline and impose new fines and penalties for gas producers found to be price gouging — a bill that is stalled in the Senate.

Sen. Christine Kehoe, D-San Diego, also has two bills pending that have been targeted by oil lobbyists, and while she is optimistic, both face an uphill struggle.

One measure would require diesel fuel sold in California to contain a higher percentage of biodegradable material. Another would require the state to reduce its consumption of fossil fuels and increase its use of alternative fuel.

“I think there’s a lot of people thinking about what our public policies ought to be,” she said. “Am I going back to my district and say that Shell Oil made $13 billion in profits but we could not figure a way to get legislation through that would help reduce our reliance on gasoline? That’s becoming a more and more untenable position.”
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Oil bills stalled

Here is a list of key oil-related bills introduced this session and their status:

AB457: Assembly Speaker Fabian Núñez, D-Los Angeles. Imposes new penalties for gas price gouging, allows temporary price caps. Held in Senate committee.

AB2442: Assemblyman Johan Klehs, D-San Leandro. Raises taxes on oil profits. Failed in Assembly; inactive.

SB1794: Sen. Joe Dunn, D-Garden Grove. Provides regulation of oil refineries as public utilities: Failed in Assembly; inactive.

AB1012: Assemblyman Joe Nation, D-San Rafael. Requires half of new cars and trucks sold in California by 2020 to run on clean fuel. Pending in Senate.

SB1675: Sen. Christine Kehoe, D-San Diego. Requires a higher percentage of diesel contain biodegradable ingredients. Pending in Assembly.