Thursday, November 25, 2010





The scene was the waiting area for a flight to Los Angeles from what was then called Houston Intercontinental Airport (the airfield had not yet been renamed for ex-President George Bush pere). The date was mid-2000, before most Americans had heard of either Osama bin Laden or Barack Obama.

The waiting area teemed with young men milling around in expensive suits making jokes at California’s expense. These were almost exclusively Texans employed by big energy companies like Enron and Dynegy and Reliant or their law firms.

Just then, California was reeling through an unprecedented electricity crunch, enduring rolling blackouts and hearing giant utilities like Pacific Gas & Electric and Southern California Edison say they needed huge rate increases to cover the suddenly astronomical cost of power provided by the Texas-based generating companies. Those outfits and a couple of others had bought up many large California generating stations under a deeply flawed deregulation scheme pushed through in the late 1990s by ex-Gov. Pete Wilson with lobbying help from some of the same Texas-based firms.

The young Texans joked about “just going in and taking Grandma’s pension check.” They chortled over getting rich at the expense of Californians.

And they did – for awhile. Even now, Californians pay some of America’s highest electricity rates because of supply contracts forced on the state by Texas companies at that time. This is true even though dozens of energy traders who worked for firms like Enron and the Williams Cos. have done prison time for their market manipulations which caused the price spikes of a decade ago. Ex-Gov. Gray Davis called those firms “buccaneers.” He was right.

But they’re not the only Texas interests that have victimized California or tried to. Take the giant Valero and Tesoro oil refining companies. (Valero sells gasoline under its own name here, while Tesoro products are sold under the Shell and USA labels.) Those firms and the Kansas-based Koch family oil interests were behind Proposition 23 on the fall ballot, a losing initiative that aimed to get rid of the landmark law making California a global leader in fighting climate change and greenhouse gases.

Among them, the three companies invested about $10 million in Proposition 23, hoping to avoid modernizing their refineries in both Northern and Southern California.

Two years earlier, it was Texas oilman T. Boone Pickens trying to milk Californians for $5 billion worth of bond money via Proposition 10, which would have fed most of those funds to a Pickens-owned firm for natural gas-powered cars and trucks.

Before that, Texas members of Congress united as Californians in Washington, D.C. almost never do to make sure the University of Texas at Austin got the federal contract for a multi-billion-dollar “supercolliding supercollider,” a pioneering project conceived at Stanford University and the Lawrence Livermore National Laboratory, both in the San Francisco Bay area.

Now there’s a new study from the Consumer Watchdog advocacy group charging that Valero and Tesoro don’t merely want to keep polluting California air, but they also have been gouging California drivers for at least 10 years.

Valero, for instance, averages a 37 percent higher profit margin on every barrel of oil it processes in California than at its refineries in other states. It does this, Consumer Watchdog charges, by keeping supplies artificially low during periods of high demand. Wonder why California has the highest gas prices in America? That’s at least part of the explanation.

The same group uncovered a slide show Tesoro presented to potential investors that highlights the “West Coast premium” collected by refiners here, placing oil profit margins at $8.50 per barrel higher than anywhere else.

No other state has seen its major companies and officials try so hard to cheat or take advantage of Californians and influence this state’s politics to their benefit. No other state has paid for studies about how to take business away from California. Not from other states, just California. Arizona hasn't done this, nor Nevada. Not Idaho, not New York or North Carolina. Only Texas.

It’s also a Texas company that’s now trying to buy up the choicest of California’s state office buildings and lease them back to this state at a considerable profit in a deal that’s not quite finalized yet. Tough to blame Texas for this one, though. It was the brainchild of California’s own shortsighted soon to be ex-Gov. Arnold Schwarzenegger.

There’s more, too. Taken together, it’s as if Texas has been waging economic warfare on California most of the last decade.

No wonder some Californians felt good last fall when an unranked UCLA football team traveled to Austin and creamed a Texas team ranked in the top ten – until then. And when the San Francisco Giants whipped the Texas Rangers in the World Series.

The bottom line: It may be time for California’s government to recognize that Texas is not just a friendly competitor, but an economic enemy whose denizens scheme often to harm California and every one of its citizens.


Email Thomas Elias at His book, "The Burzynski Breakthrough," is now available in a soft cover fourth edition. For more Elias columns, visit

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