Oil industry allies in California are filling television and computer screens statewide with a multimillion-dollar ad campaign that blames state climate policies for pushing up gasoline and electricity costs.
Some key details around the ads are unclear, including who exactly is funding the spots and what — if any — policies or votes they are trying to influence. But some observers see the fossil fuel industry exerting its financial muscle, as the nation’s most populous state seeks to transition away from oil and gas and toward cleaner energy options.
The ad blitz “tees up the messaging that it’s government that’s at fault here,” said Ethan Elkind, director of the climate program at the University of California, Berkeley’s Center for Law, Energy & the Environment.
One ad comes from Californians for Energy Independence (CEI), which has ties to fossil fuel interests. The other comes from Californians for Affordable and Reliable Energy, which is linked to a big business association. Both groups describe themselves as nonprofit coalitions. Neither would provide specifics on their membership.
The two groups have spent a combined $4.3 million so far this year to put the ads on television and Facebook in both English and Spanish, according to data from AdImpact. The commercials take a broad approach to energy and climate issues, and they don’t mention specific regulations, referendums or candidates.
“California is an energy island” with “no pipelines and limited rail transport” to get domestic oil, says the commercial from CEI. “Experts warn policies to shut down our highly regulated local oil production before we have enough alternative energies in place would force our state to depend on volatile foreign countries for the oil we still need.”
Meanwhile, the ad from Californians for Affordable and Reliable Energy argues that “since 2018, California’s energy policies raised residential electricity rates by 54 percent, but only increased renewable electricity supply by 2 percent.” It also says that the “California government is adding $1.12 in taxes and fees to a gallon of gas” and that “working people pay for state capital politics.”
Neither ad makes direct mention of a major electoral fight on the horizon.
Next year, California voters will decide whether they want to throw out a state law prohibiting new oil wells near schools, homes, parks, and other sensitive sites. Oil drillers and their allies spent $21 million to get that measure on the ballot.
Officials affiliated with the groups behind the ads said the commercials aren’t aimed at the 2024 ballot measure.
They “are in no way, shape or form an attempt to sway the discussion and debate on that measure,” said Brooke Armour, executive vice president at California Business Roundtable. Its president, Rob Lapsley, also heads Californians for Affordable and Reliable Energy. Armour wouldn’t reveal members of the Business Roundtable nor provide names of its current board of directors.
Armour said the ads, which are running statewide, are “designed to kind of explain, as Californians see the costs going up and up and up, and not just at the gas station but their electric bills as well, where some of those costs are coming from.”
The group earlier this year ran a slightly different version of its ad, which said the California “legislature assigned a bureaucracy to add penalties to gasoline prices.” That’s a reference to the California Air Resources Board and its approval of adding fees to gasoline as part of the state’s carbon cap-and-trade program, Armour said.
Rock Zierman, chief executive officer of the California Independent Petroleum Association, a trade group for oil drillers, said the ad from CEI has “nothing to do with the referendum” on the 2024 ballot.
“The commercials are discussing the importance of domestic energy production and the dangers of being overly dependent on foreign imports, as California currently is,” he said in an email.
For the interests behind the ads, there’s an advantage to being vague, said Jamie Court, president at Consumer Watchdog. Under state and federal laws, any political ad that calls out a specific policy is required to list funders of the ad.
The timing of the ads, with the 2024 election approaching, is raising eyebrows among activists and academics.
“It can create this sort of framing, at the outset, that the problems with high energy prices in California” come from government policies and not industry said Elkind at UC Berkeley’s Center for Law, Energy & the Environment.
Going forward, he added, the groups or allies can follow up with ads asking voters to overturn the drilling law on next year’s ballot “or take other electoral actions.”
Court took a similar view.
“They are doing what we call issue advocacy, which is laying the groundwork for an argument that they are going to use once the referendum has a [ballot] number and can be targeted,” Court said in an email. “This is soft money, does not have to be reported, so it can be hidden, and there does not have to be disclosure about the true source of the money on the ad.”
In addition to the ballot measure, California officials are considering other efforts that are likely to affect petroleum companies. Those include potentially penalizing price gouging from gasoline sales, toughening up regulations for the state’s carbon market cap-and-trade program, and revising another rule that seeks to lower the carbon content of fuels.
Californians currently pay the highest gas price in the nation, at $4.78 per gallon this week, AAA said, compared with the national average of $3.22 per gallon.
Close ties to the fossil fuel industry
Consumer advocates say both coalitions are “front groups” for the oil industry.
In 2014, the Western States Petroleum Association — the largest oil trade group — gave a presentation to the Washington Research Council on how it was combating some California climate policies. It showed a slide deck with several groups it was using to push out messages.
Among them are the two organizations behind the new ads: Californians for Energy Independence and Californians for Affordable and Reliable Energy, said Consumer Watchdog. It cited a report from Bloomberg Businessweek.
Kevin Slagle, spokesperson for the Western States Petroleum Association (WSPA), said the link with Californians for Affordable and Reliable Energy was accurate in 2014 but is not accurate now.
In terms of CEI, Slagle wrote in an email, it was “possible WSPA helped get CEI started back then, I just don’t know for sure.” He noted the 2014 presentation was nine years old, and said the oil trade group is not funding either of the current California ads, nor is it directing strategy.
However, Catherine Reheis-Boyd, president and CEO at the Western States Petroleum Association, is listed as “principal officer,” president and director at CEI on a 2021 document filed with the Internal Revenue Service.
Reheis-Boyd is on the group’s board but is not in a leadership role, Slagle said.
Zierman, with the California Independent Petroleum Association, is also listed as CEI director on its IRS paperwork.
CEI “was created over 10 years ago to educate the public on energy policy and the in-state oil and gas industry,” Zierman said.
The group is active and lobbying on California policies. Through September it spent $6.9 million on influence efforts. according to the California secretary of state database. The filing doesn’t specify whether that included money paid for the television and internet ads.
About $4 million of the money went to Winner & Mandabach Campaigns, which says on its webpage that it’s “managed and consulted on over 200 statewide and local ballot measure campaigns in 31 states, and has maintained a win rate of 90%.” The company did not respond to a request for more information on its work for the group.
Californians for Affordable and Reliable Energy spent more than $3.4 million on influence work in January through March, including for some advertisements, the California secretary of state database filing said.
Fact checking the ads
The ads from the two coalitions lack key details, experts said.
The commercial from Californians for Affordable and Reliable Energy says that California’s energy policies have raised residential electricity rates by 54 percent, but it doesn’t say why beyond government policies.
Armour, with California Business Roundtable, said the claim is based on data from the Center for Jobs and the Economy, a nonprofit she called a “sister” organization to the roundtable.
For the 12 months that ended in August 2023, the average annual residential electricity bill in California was up 72 percent compared to 2010. That tracks with the time frame when California put into effect AB 32, a major climate law, she said.
James Sweeney, Stanford professor of Management Science and Engineering, said bills have increased sharply for several reasons. Those include that in the early years of California’s push towards renewable energy, utilities were required to buy power from wind and solar projects when it cost more than the current prices. Ratepayers are still paying off some of those contracts.
Benefits given to households that have added rooftop solar also have increased bills, he said, as other households cover more of ongoing costs. And catastrophic wildfires drove up bill totals, too — with utilities passing on expenses for preventing future wildfires.
As for the claims about California policies adding $1.12 to gas prices, the figure is close to what’s found in California Energy Commission data, Sweeney said.
That data lists 33 cents per gallon tacked on from state environmental regulations, 65 cents in state and local taxes and a 2-cent charge for the state’s underground storage tank fee, for $1 total. There’s also an argument that the state’s requirement for a cleaner burning fuel raises refinery costs, he said.
However, the ad is misleading, said Court, with Consumer Watchdog, because it infers the difference between California gas prices and those of other states is $1.12. Other states also add in taxes, he said, and the actual difference between California and other states is about 70 cents per gallon.
The CEI commercial argued that limiting local oil drilling could drive up gas prices. But the biggest factor in higher gas prices “by far” is the cost of crude oil, Sweeney said, and that’s set in a worldwide market.
The secondary reason for price spikes in California is refinery shutdowns for maintenance or following accidents when “you have a big chunk of the supply” unavailable, he said. Then, because of California requirements for cleaner burning fuel, it’s difficult to import more oil quickly.
Timothy Cama contributed to this report.
