LAO Rips $54,000 Valero Oil-Funded "Study" Designed To Ditch AB 32, California Climate and Energy Legislation

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The state’s Legislative Analyst’s Office (LAO) today released a report further discrediting a $54,000 oil-sponsored study that falsely exaggerated the costs of AB 32; California’s clean energy and air pollution standards law. The discredited study, trying to scare voters is the foundation for an oil-funded ballot initiative that the oil companies are relying on to roll back implementing the law.


Documents filed on Friday show that several out-of-state oil companies including Tesoro and Valero Energy Corp working with the conservative Howard Jarvis Taxpayers Association (Prop 13) are the prime movers behind a California House Republican’s attempted roll-back of AB 32, predicated upon the findings in the study.

Valero has been found to be one of the worst polluters in the U.S. and even during the Bush administration, in 2005, was hit with $711 million in EPA fines. Valero has battled cap and trade with these “Uncle Sam” ads at gas stations ever since the House passed Waxman-Markey ACES last summer.

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Falsely suggesting that they are for implementing the legislation, the oil-funded group named itself “The AB 32 Implementation Group”, and aimed to put something called “The California Jobs Initiative” on the ballot – that would delay implementation of AB 32 till unemployment was at 5.5% – something that is unlikely for at least ten years.

Last month Attorney General Jerry Brown put the first dent in polluter hopes with a more accurate description of the intent of their ballot initiative as “Suspends Air Pollution Control Laws Requiring Major Polluters to Report and Reduce Greenhouse Gas Emissions That Cause Global Warming Until Unemployment Drops Below Specified Level for Full Year.”

The ballot initiative was entirely dependent on a $54,000 study commissioned by the group to exaggerate the costs. They got their moneys worth. Sacramento State College Sanjay Varshney, Dean of the College of Business Administration, produced a study that claimed extraordinary costs associated with implementing AB 32 that at least one analyst found “too large by a factor of at least 10.”

Stanford’s James L. Sweeney, Professor of Management Science and Engineering analyzed the study and found it “very, very defective” saying that the study’s “estimates are highly biased, are based on poor logic and unsound economic analysis, and are likely to be too large by a factor of at least 10.”

Today he was joined by the normally reserved and cautious California Legislative Analyst; Mac Taylor, who found they were so seriously flawed that they were “useless” to policymakers.

“Both of the two studies you have asked us to review have major problems involving both data, methodology, and analysis” he wrote. “As a result of these shortcomings, we believe that their principal findings are unreliable.”

“The Texas oil companies behind the deceptive initiative to destroy California’s clean energy economy can no longer say with a straight face that AB 32 will increase costs to businesses and families,” said Steven Maviglio of Californians for Clean Energy & Jobs, a coalition of business, health, and environmental groups fighting Valero’s initiative.

“This study, the cornerstone of their flawed economic argument against the law, already was the laughingstock of the academic community” he continued, adding:

“Now the LAO has joined economists from Stanford, UCLA, and Tufts to put the final nail in the coffin of the polluters’ bogus economic argument.”

Image: Media Matters

Sources: Assembly member Kevin de León, Chair of the Assembly Appropriations Committee who asked for an oversight hearing, saying “I am concerned that the false and misleading conclusions of the Varshney reports are being used to mislead California voters” and the original Legislative Analyst’s Office (LAO) on the Varshney studies.

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