Fact Check: Proposition 87 ads

Sep. 4 - KGO (KGO) -- It's the most expensively fought proposition on the ballot. And one that's getting a lot of play in ads for and against.

Proposition 87 would establish a 1.5% to 6% tax on oil extracted from California fields, depending on the price per barrel.

It would prohibit oil companies from passing the tax onto consumers. Revenues estimated at $400 million a year would be used to fund alternative energy programs. The goal is to cut California oil consumption by 25% over 10 years.

Film producer Stephen Bing and venture capitalists from Silicon Valley with financial interests in alternative energy are the big financial backers of Prop. 87. The opponents are the big oil companies and business groups like the Chamber of Commerce.

Big oil and tossed in more than $30 million to defeat 87. The Yes on 87 forces have raised close to $18 million.

Here are the ads:

Yes on 87 TV Ad: "The oil companies are making us pay. They made 78 billion last year."

Fact Check: The $78 billion refers to the combined profits of Exxon, Shell, Occidental and Chevron.

And it's true outgoing Exxon Ceo Lee Raymond got a $400 million golden handshake.

Yes on 87 TV Ad: "They pay billions in drilling fees to Texas but not to Californians."

Fact Check: That's sort of accurate. Over the years oil companies have paid Texas billions, last year it was $680 million. Texas takes 4.5% cut from it's oil fields, California has no oil production tax.

But opponents of 87 say it's not fair to compare the two states because Texas has no state coporate income tax and California does it's 8.8%. Though analyst say the oil companies pay far less than that because of tax breaks. Oil companies won't say how much they pay and those tax records aren't public.

Yes on 87 TV Ad: "It's time for them to pay their fare share. Yes on 87 make oil companies pay and make it illegal to pass the cost to us."

Fact Check: Fair share is anybody's opinion but making it illegal to pass the cost to consumers is accurate. The proposition forbids passing on the cost of the tax by raising price of gas or diesel.

Here's the No on 87 ad:

No on 87 TV Ad: "So now they want to increase oil taxes, really a four billion dollar state tax increase on oil, ouch"

Fact Check: The location of the ad is misleading. 87 is not a tax on gasoline it's a tax on oil production paid for by oil companies when they pump oil out of California fields. And prop 87 prohibits passing the cost of the tax onto consumers at the gas pump.

No on 87 TV Ad: "And for what to fund a new alternative energy beaurocracy with no accountability to tax payers and no requirement they produce any results."

Fact Check: That's not accurate. The proposition sets up a nine member panel of experts including the Secretary for Environmental Protection the chair of the State Energy Resources Commission. The proposition provides for independents audits of how the tax money is spent along with annual reports to the governor and legislature and the formation of a citizen oversight committee.

No on 87 TV Ad: "Vote no on 87, it's a recipe for waste not progress."

Fact Check: That's the opinion of the No on 87 campaign.

But will 87 raise the price of gas? The price of oil is set on a world market, not state by state.

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