California Fuel Tax Proposal Called Into Question

In November, Californians will decide on the Proposition 87, the Clean Alternative Energy Act, that would impose a 1.5 percent to 6 percent petroleum tax, depending on the per-barrel price of oil, on in-state oil extraction to fund the research, production and promotion of alternative energies. The tax is expected to raise about $400 million a year.

Vinod Khosla, one of the founders of Sun Microsystems and now a prominent Silicon Valley venture capitalist, could profit handsomely if the measure passes. Mr. Khosla put up more than $1 million in seed money for the alternative fuels measure earlier this year. He is also a big investor in ethanol, an alternative to gasoline and one of the energy sources that could benefit if Proposition 87 passes.

"Just because I could benefit from it, doesn't make it wrong," Khosla said. "This is the right thing to do, for a lot of reasons."

Sacramento Bee political columnist Dan Weintraub discusses the relationship between California's intiatives and their backers - exposing a financial relationship that may call them into question, warning that it "is not a good way to make policy".