The Ties That Blind

Big Oil Goes Hunting for Electric Cars in California. If It Wins, We All Lose

It was 8 a.m., September 16, 1996, and the red light was on in the studio of KSFO-AM in San Francisco. “Hot Talk” host Lee Rogers was doing his best to get his drivetime listeners (who, then as now, breathe the worst air in the United States) charged up by hurling some lightning bolts at electric cars. “I don’t know how long it’s going to take for the rest of the country to catch up to what the enviro-Nazis are trying to do to us,” he shouted into the microphone, “but I expect some folks are going to wake up when they find out that the price of their new car is going to go up to subsidize a few rich idiots who want to buy electric cars that have been forced on the market by those crazies at the California Air Resources Board.”

Rogers’ guest, publicist Anita Mangels (known as “The Mangler” to her foes in the environmental community), couldn’t have agreed more. Mangels, the executive director of a “grassroots” lobby, Californians Against Hidden Taxes (CAHT), that is heavily subsidized by the oil industry, was grateful for the airtime, and she knew just what buttons to push, citing Tonight Show host (and car buff) Jay Leno as one of those “rich idiots” about to be subsidized by the citizenry to buy an electric car. “I just wonder if Mr. Leno realizes…that the taxpayers are going to be putting that $7,500 [subsidy] in his pocket,” she said, “not the shareholders of General Motors, not anybody but the taxpayers.”

The oil company-funded groups go to great lengths to establish themselves as grassroots-based, but the purse strings are clearly visible.

Aside from the softball questions being lobbed at her, Mangels had other reasons to be in a good mood that morning. Just five months earlier, on March 29, the “crazies” at the California Air Resources Board (CARB), a governor-appointed body with enormous power over the state’s clean air regulations, had-in the face of the huge industry-funded PR campaign against electric cars-backed down from its requirement that two percent of the cars sold in California by 1998 be “Zero Emission Vehicles” (ZEVs). While CARB kept its mandate that a full 10 percent of California’s fleet be ZEVs by 2003, its action gave the auto companies—and the oil executives who paid Mangels’ salary—a full five years breathing room, in which any electric car development and new model introductions would be voluntary (based on a loose Memorandum of Agreement). Thus ended a six-year campaign against a bold public initiative that industry hated.

The lobbying phase of the industry campaign, which ran through most of 1995, had several arms. CAHT, a so-called “astroturf” group because its appearance is deceiving, is mostly funded by the Western States Petroleum Association (WSPA). The trade group represents oil companies in California, Arizona, Nevada, Washington, Hawaii and Oregon; its members include Mobil, Shell, Chevron and Arco. Working closely with CAHT, though no longer as much of a factor, is the also-WSPA-funded Californians Against Utility Company Abuse (CAUCA). CAHT and CAUCA are joined at the hip. CAHT’s chief executive officer, Doug Henderson, is, according to state filings, CAUCA’s chief financial officer. Both groups have listed the same address in Burlingame, which is the home base of PR and political consultants Woodward & McDowell. CAUCA’s news bureau director, Barbara Simpson, works out of the Woodward & McDowell office (though she claims she’s not employed by the PR firm).

Charles Peale Illustration

The oil company-funded groups go to great lengths to establish themselves as grassroots-based (listing the California Manufacturers and Howard Jarvis Taxpayer Associations as coalition partners, among many others), but the purse strings are clearly visible. Henderson also happens to be WSPA’s secretary. “I believe most, if not all of our funding comes from WSPA-that’s no secret,” Mangels admitted in a rare moment of candor. “We don’t hide that we’re the major member of the coalition,” added WSPA spokesperson Jeff Wilson.

WSPA, which consistently ranks among the top five lobbyist employers in California, declines to say how much it poured into the campaign against the electric car mandates, but The American Automobile Manufacturers Association (AAMA) is more forthcoming. AAMA ran its own lobbying campaign against the mandates, with the details handled by the Los Angeles-based PR firm Cerrell Associates. In the six months ending in November 1995, Cerrell President Hal Dash says, the auto companies spent $500,000 on its campaign (by itself dwarfing the $160,000-a-year budget of the opposition California Electric Transportation Coalition). AAMA’s work is educational, according to Dash. “There are no front groups, no astroturf lobbying,” he says.

“Whatever small part we played in rescinding the 1998 mandate, we’re pleased,” said Gerald A. Esper, AAMA’s Detroit-based director of the Vehicle Environment Department. “We believe that the decision by CARB to rescind its mandates was the correct thing for them to do, the only logical thing to do given the information that was available.” Esper said that while the AAMA doesn’t “fund or support” CAHT and CAUCA, “We have a common objective and provide information to them.”

Between 1991 and 1995, according to a study called Pollution Politics by the California Public Interest Research Group (CALPIRG), oil companies and automakers spent nearly $34 million to influence public policy in the state, the sum including $29 million in lobbying; $3.97 million in donations to statewide and legislative candidates; and $945,000 specifically to the gubernatorial campaign of Republican Governor Pete Wilson. WSPA’s lobbying expenditures were $7,349,718 in the period, the CALPIRG study shows.

The cash-rich auto and oil companies-acting together or not—made a formidable lobbying team, their slick PR materials preying mostly on fear of new taxes and higher car prices. “We oppose the assessment of nearly $18 billion in hidden taxes and other costs to promote electric, natural gas and other alternative-fueled vehicles,” read a CAHT petition. A flyer added, “Once again, the vast majority of motorists who use gasoline are forced to subsidize the minority that uses alternative fuels. That’s just not right.”

Left out of CAHT’s materials, of course, is the billions in taxpayer subsidies raked in by the oil companies themselves. The Union of Concerned Scientists (UCS), in a 1995 report, pointed out that the industry is taxed at just 11 percent compared to the 18 percent paid by non-oil industries-“which amounted in 1991 to $2 billion in corporate income tax benefits from the federal government alone,” the report said. “State and local tax breaks were even higher-more than $4 billion in 1991.” Federal foreign tax credits added another $63 billion in subsidies between 1984 and 1993, says the Washington grassroots group Citizen Action. Between 1919 and 1973, according to The Domestic Fuels Alliance, the U.S. oil industry received preferential tax benefits of more than $123 billion. And overall, reports the UCS study, oil industry subsidies today top $300 billion a year.

While WSPA’s motives are transparently clear-the oil industry stan

ds to lose trillions of dollars if electric cars succeed and Americans stop consuming 13.3 billion gallons of gasoline a year-industry groups like AAMA (whose budget, once $20 million, received a $50 million boost between 1993 and 1995) represent a constituency that could be seen to have divided loyalties. The irony of General Motors contributing to the fight against the 1998 ZEV mandate is that it will directly hurt the marketability of its own product, the EV-1 electric car, which is available on a lease-only basis in California and Arizona. GM spent an estimated $300 million developing the lead-acid-battery-powered EV-1.

Charles Peale Illustration

Chrysler and Ford are not yet ready for production, but both recently demonstrated sophisticated alternative-fueled vehicles, the Dodge Intrepid ESX (with electric motors in the rear wheels) and the Ford Synergy 2010 (which uses four-wheel-drive and futuristic flywheel technology).

While industry spokesmen like AAMA’s Jeff Wilson insist that the group is not against electric cars-just unfair mandates that foist them on the public-its own internal documents make it clear that its objective all along was to modify public sentiment that, it concluded, was too friendly to ZEVs. According to a March 1995 “Request for Proposal” marked “Confidential” by AAMA, “Recent surveys indicate a majority of Californians believe…ZEVs…are a ‘workable and practical’ means of reducing air pollution. This is a shift from surveys and focus group results of 1993, and may indicate greater consumer acceptance of electric vehicles.” In other words, people would buy them, with or without mandates.

The oil industry stands to lose trillions of dollars if electric cars succeed and Americans stop consuming 13.3 billion gallons of gasoline a year.

And AAMA had a ready solution to counter this alarming trend in public thinking. “The AAMA is conducting a search for a qualified contractor to manage a statewide grassroots and educational campaign in California to create a climate in which the state’s mandate requiring automakers to produce a fixed percentage of electric vehicles beginning in 1998 can be repealed,” the proposal says. Interested parties, who had to make a one-hour presentation to a selection committee featuring representatives from Chrysler, Ford and General Motors, were instructed to “outline a communications/grassroots plan to describe how you would educate state officials and expand and mobilize third party allies, including media relations and targeted advertising.” AAMA found its contractor in Los Angeles’ Cerrell Associates, and it did indeed lead to climactic change.

But should the auto industry really be popping the champagne corks in celebration? One of the auto industry’s most respected critics, Amory Lovins, doesn’t think so. Lovins, director of the Rocky Mountain Institute in Snowmass, Colorado, is skeptical that the standard lead-acid battery electric car will be ready for prime time, instead promoting an ultra-lightweight hybrid alternative that uses electric motors located in the wheels in conjunction with a small onboard engine-possibly a gas turbine or a conventional internal-combustion motor-to extend the range. (Lovins thinks it’s possible to achieve 400 miles-per-gallon in such a car.)

“What the industry did was a straightforward attempt to strangle competition in its crib,” says Lovins, who likens today’s auto industry culture to an IBM trying to hold on to Selectric typewriter sales in the face of competition from notebook computers. “But I don’t even think it was in business’ interest, especially GM’s because the company is so far ahead in electric vehicle design. It is rather puzzling why they take that attitude. The logical explanation is that they’re trying to snuff out competition from startup companies like [the Massachusetts-based] Solectria by killing a market that would be favorable to small companies.”

Buying Opinion

For its part, CARB denies that pressure from the business coalition-or any other external factor-caused it to change its six-year commitment to a 1998 mandate. And although its 11 members are all appointed by the governor, CARB spokesman Jerry Martin denies that Governor Pete Wilson played any role in the new policy. His influence? “None,” says Martin. “It’s certainly worth mentioning that we work for the governor, but there was no pressure. Not to my knowledge.”

CALPIRG scoffs at the idea that Wilson was a passive observer, noting that the oil industry contributed $866,613 to his campaigns between 1991 and 1995 (Arco alone was his single biggest supporter in the period, weighing in with $369,950). The Sacramento Bee quoted an unidentified CARB spokesman in late 1995 as saying that Wilson’s office had instructed the agency to draft a repeal of the mandate, but CARB officially denies the charge. Bill Magavern, director of Public Citizen’s Critical Mass Energy Project, says he’s pretty sure what happened. “Pete Wilson caved in to pressure from the auto and oil industries and gave up his tiny claim for having any environmental credentials,” he said. “There was presidential politics involved. He was basically threatened by the auto companies through John Engler, the governor of Michigan. If he kept the mandates, he could forget about doing well in Detroit.”

Where’s the Beef?

Not all of the battles of the electric car war take place over their cost to taxpayers. The coalition’s various arms also claim that they won’t help clean up California’s air very much. CAHT charges that “the widespread introduction of electric vehicles will achieve less than one percent [emphasis theirs] of the smog reduction required under the state’s own clean air plan.”

“What the industry did was a straightforward attempt to strangle competition in its crib,” says Amory Lovins

Most frequently cited by anti-electric advocates is a scientific study by Lester Lave, an economist at Carnegie-Mellon University (written with three engineer collaborators), that was published in Environmental Science and Technology in the summer of 1996. “The new car is no longer much of the smog problem,” Lave told The New York Times, “and therefore can’t be much of the solution.” Add 500,000 electric cars in Los Angeles, the study concludes, and the ozone level is only reduced from 200 parts per billion to 199 (a safe level is considered to be 120 parts per billion). The study also concluded that production in mass quantitites of the lead-acid batteries used by electric cars will release dangerous amounts of lead into the air, destroying all the gains made (roughly $100 billion in reduced annual health costs) by taking lead out of gasoline. “A 1998 model electric car is estimated to release 60 times more lead per kilometer of use relative to a comparable car burning leaded gasoline,” the study said.

But the study’s findings have by no means gone unchallenged. The International Center for Technology Assessment (CTA), in a detailed refutation of the Carnegie-Mellon findings, charged that the report “reached its conclusions [about lead] by using erroneous quantitative data up to one thousand times greater than the actual figures; failed to address the significant advances in the environmental p

rotection policies regarding lead-acid battery production; [and] overlooked the great strides made in the development of more efficient battery technologies for EVs.”

Most troubling, CTA reported, the study’s objectivity was in question. It was funded in part by grants from the National Science Foundation (NSF), which noted that “the Ford Motor Company will work with us in transferring the research results.” Other support came from The Green Design Consortium of the Carnegie-Mellon University Engineering Design Research Center, whose membership is “open to industrial partners”-including (and paying up to $20,000 a year for the privilege) Daimler-Benz, General Motors Delco Chassis, British Petroleum America, Exxon Research and Engineering, Mobil R&D and Shell Development.

There’s nothing new about industry’s financial support of scientific studies that support its point of view. Sierra Research, whose anti-electric car work is frequently cited by CAHT, is funded by WSPA. The Washington-based group Ozone Action, in a study entitled The Ties That Blind: Case Studies of Corporate Influence on Climate Change Policy, noted that two of the leading critics of the theory of global warming (which points an accusing finger at the fossil fuels industry) are directly subsidized by industry foundations and governments.

It’s certainly not hard to find support for the pollution-fighting qualities of electric cars. CARB, for instance, answers the frequently-cited assertion that EVs simply move the pollution from tailpipe to electric utility smokestack. While its true that no car is really “zero emissions,” CARB admits, “On a mile-for-mile basis, these power plant emissions [from EVs] are over 10 times lower than emissions from a conventional vehicle.” CALSTART also contends that electric cars produce 97 percent fewer emissions than gasoline cars, and that their use in urban areas will reduce carbon monoxide emissions overall by 99 percent, hydrocarbons by 98 percent and nitrogen oxides by 92 percent.

According to UCS, California would save $370 million in pollution control costs from the EVs that were introduced in just the first year of the state’s program. And it adds that replacing a single gasoline-powered car with an EV would save $17,000 in pollution-related expenditures.

A study by the California State University at Fullerton’s Institute for Economic and Environmental Studies answers some of the anti-EV taxpayer scare tactics. “The most pessimistic analysis of which we are aware forecasts slightly higher [their emphasis] personal income in 2010 with electric vehicles than without.”

The Road Ahead

Though its been made abundantly clear what the auto and oil industries think of EVs, they’ve been much quieter about the type of hybrid car championed by Amory Lovins. As ready battery technology appears to be left wanting, CARB will likely adopt a slightly different standard for 2003, EZEV, or Equivalent Zero Emissions. California’s current program is restricted to battery-powered EVs, since nothing else can claim to be “zero emissions.” But EZEV, if CARB votes it in, would relax that restriction, permit ultra-low emission vehicles to meet the mandate, and allow the still-embryonic hybrid car industry to flourish. And that’s good news according to Lovins, who says that as many as two dozen hybrid carmakers are working on prototypes.

Hybrid cars might turn out to be what comes out of the government/industry coalition known as the Partnership for a New Generation of Vehicles (PNGV), an early initiative of the Clinton Administration and the Big Three automakers with the goal of producing an 80-mile-per-gallon prototype by 2003.

But while the auto industry seems to like alternative-fuel vehicles just fine as long as they’re restricted to prototypes and displays at car shows, it’s unclear that it’s willing anytime soon to abandon the traditional gasoline-fueled internal-combustion engine. Like it or not, Big Oil has been the auto industry’s waltz partner for the last 100 years, and there’s no indication it’s willing to enter another name on its dance card.