The Texas war on California
It’s easy to view the four-day job-poaching foray into California, just completed by Texas Gov. Rick Perry, as an isolated incident. But this was really just the latest skirmish in an economic war the Lone Star state has waged against California for more than a decade.
The energy crunch California endured between 2000 and 2002 was the earliest episode in this conflict, illustrated by a year-2000 scene in a waiting area of Houston’s Intercontinental Airport.
There, a crowd of youngish men, many employed by big energy trading companies like Enron and Dynegy (now defunct in large part due to their illegal market manipulations), milled around in expensive suits, mocking California as they awaited a flight to Los Angeles.
Jokes rippled through the throng about how their companies were ripping off California “grandmas” for what would eventually amount to more than $10 billion in excessive electricity costs.
The manipulations that so amused the Texas yuppies sent California reeling through an unprecedented crisis of rolling blackouts and escalating rates. A steady barrage of attacks on California’s reputation and economy has followed since then, and charges abound about other Texas companies trying to gouge Californians.
The Consumer Watchdog advocacy group has claimed that Valero, for example, averages a 37 percent higher profit on every barrel of oil it produces in California than at its refineries elsewhere. Is that why gas costs more here than anywhere else in the lower 48 states?
Perry’s latest sortie in this conflict began with radio commercials in which he took shots at California’s business climate while trying to convince companies to move to Texas.
Gov. Jerry Brown laughed off Perry’s effort, calling it “not a serious story …it’s not a burp, it’s barely a fart,” and insisting that, “Everyone with half a brain is coming to California, home of Apple, Google, Hollywood studios.”
But the Perry effort, and the economic warfare of which it is part, is no laughing matter. California consumers got back pennies on the dollars extorted by corrupt energy traders during the electricity crunch.
And California companies have relocated to or placed new plants in Texas to the extent that Democratic Lt. Gov. Gavin Newsom went there shortly after taking office in 2011 to study what Texas was doing.
The bottom line: Texas and its cities can offer some companies big incentives to locate there because the state has lower taxes on corporations and individuals than does California. And that’s true mostly because of the Texas oil and gas depletion levies, which more than make up for lower revenues from income tax.
Meanwhile, Texas- and Oklahoma-based oil operators, such as billionaire T. Boone Pickens, resist fiercely every time California considers imposing a similar levy. California is now the only major oil producing state without such a tax.
Seems like it’s time for California to stop laughing and do something about Texas, whose denizens have schemed for more than a decade to harm this state and all its citizens.