Over 100 Economists Agree: Prop. 87 Will Cause More Foreign Oil Imports and Higher Gas Prices

(Alexandria, VA) -- Citizens and public officials who've been speaking out against the Proposition 87 oil tax added a whole new chorus of influential voices to their ranks today, as 104 economists (including a Nobel Laureate) warned of serious spikes in prices and imports if the measure passes. The non-partisan National Taxpayers Union (NTU), which has 350,000 members nationwide and 60,000 members in California, organized the joint statement.

"If enacted, Proposition 87 on California's November ballot will have dramatic and negative consequences for the state's economy and its citizens," the statement began. "In their quest to extract money from the oil sector, sponsors have trapped consumers in the crossfire."

The 104 signatories of the open letter include economists from the academic and the professional sectors. In addition to Nobel Laureate Edward C. Prescott of Arizona State University, distinguished individuals from institutions such as the University of Chicago, Boston College, and Penn State endorsed the statement. Of course, California schools and think tanks were well-represented, including Stanford University, UCLA, the Hoover Institution, USC, Pepperdine, the Pacific Research Institute, and the Polytechnic State University.

Reasoning that "[t]axing an activity, by its nature, generally decreases that activity," the economists contend that Prop. 87's tax on oil production would "encourage the premature closing of existing oil fields and discourage new investments." Since California can't pipe in oil from Canada or elsewhere, they contend that "expensive tanker imports" will be the only option, made all the more costly by the state's tough environmental regulations. The result would be higher prices at the pump.

The economists also wrote that the goals of Prop. 87 - more alternative energy sources and less oil use -- "appear to be nothing more than wishful promises." Without measurable standards that actually tie future funding for the programs (and the bureaucracy overseeing them) to demonstrable results, "[t]he only thing Proposition 87 mandates is the higher taxes." The $4 billion proposal would make California's oil the heaviest-taxed in the nation.

"Based on economic history, we can safely predict that this measure will cause further reductions in state oil production, increased reliance on imported oil, and higher gasoline prices," the 104 experts observed. "...[T]he known negative consequences of Proposition 87 will certainly outweigh any elusive benefits."

NTU is a non-profit citizen organization founded in 1969 to work for lower taxes and smaller government at all levels. The group's members are actively involved in California and elsewhere with other measures affecting taxpayers, including tax-repeal and expenditure-limitation proposals. Note: The full text of the economists' letter and a list of signatories are available at www.ntu.org.