So about that natural gas leak in California …
For a state that likes to considers itself a pioneer on environmental issues, the end of 2015 and the beginning of 2016 were disastrous for California.
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Why can’t you buy E15 in California?
California has a history being the first across the line when it comes to protecting the environment.
Volkswagen: Is it too late now to say sorry?
What do Justin Bieber and Volkswagen have in common? Well for both of them, it’s definitely “too late to say sorry.” Read more →
What does Shakespeare have to do with California gas prices?
William Shakespeare once said that there are “occasions and causes why and wherefore in all things” (Henry V). I would edit the Bard of Avon and add, except when trying to readily understand recent oil price increases in California.
Put two analysts in a room and ask about the cost of oil and you likely will get three or more answers. Many parents send their kids to college to study the hard economic sciences only to find out that their hopes and dreams are often dashed by ideology or weak methodology — sometimes both. Conservative economists argue it’s the fault of unnecessary environmental regulations and taxes. Liberals respond that high prices result from oil speculators and price management by oil companies. Non-ideologues merely respond with, “I don’t know,” and then give a lecture on probable causes, most times, without empirical data related to correlation or causation to back up their statements.
We now have lots of conflicting facts and observations without any real strategic comprehension of what both mean. For example, gasoline prices in California have increased relatively fast and by a large amount, while the cost of oil per barrel has stabilized or even decreased. Daily oil prices per barrel fluctuate, but the variations have been relatively small, and oil costs remain quite low.
The per-gallon price of gasoline in the state has surpassed $5 per gallon in a few stations and is well over $4 per gallon at many other stations. Consumers are dazed, depressed and angered by the severity and quickness of price increases. (Manic depression has likely set in, in light of recent exposure to the previously lower prices at the pump. The New York blackout generated more babies, and the gas crisis of 2015 will probably lead to more visits to psychiatrists.)
Guesstimates of the why and wherefore of price increases reflect more the skills of a carnival barker than that of a skilled economist. Step right up and name your selection of one or more factors leading to the significant and comparatively high gas price increase in California, compared with other states. California has earned the right to claim the title of most expensive regular gas in the nation. Maybe, like in the early ’60s, the Golden State can install an electronic sign celebrating its achievement on the Bay Bridge, in the “left my heart” city of San Francisco, as it did when its population surpassed New York’s. Of course, I am just kidding. It’s not a feat the state is proud about.
Forget the ideologues for a minute! What are respected observers saying about the whys and wherefores of the severe spike in prices in California?
Many journalists writing for newspapers (happily, we still have print!), in and out of California, grant causal status to increases in the state and federal gas taxes, now adding nearly 70 cents to the price of a gallon of gas. Approximately, 10 cents of the total in most stations reflects a new carbon tax on wholesalers.
Others suggest that frequent breakdowns and poor conditions of refineries, as well as recent fires at refineries in California, add up to production and inventory limits. These assertions make some sense, given the marginal room in existing refineries to build more capacity and production.
Some political leaders point to the fact that there are only a relatively small number of refineries in the state. Added to this fact, some say, is the almost oligopolistic control of refineries by two major oil companies. Did you know that Chevron and Tesoro together control nearly 60 percent of California’s refinery capacity? Some oil analysts say the percentage is much, much higher than that — up to 80-90 percent.
Clearly, there is a negative impact on prices generated by a lack of real competition. Significantly, many observers from in and out of the state have warned about the possibility of managed prices in light of the structure of the industry (and its secrecy). In a similar vein, investor speculation on oil has been raised as a variable leading to higher costs at the pump by Sen. Diane Feinstein and others. A few years ago, Sen. Feinstein sought hearings on possible skullduggery. Interestingly, despite assumed inventory shortages, refineries exported nearly 3.5 million gallons a day just before recent major gas-price increases. Gasoline is traded on a global market governed by profits and price disparities — not social welfare.
Coming around third and heading home! Both the costs associated with the state’s requirements to shift from one blend of fuel used in the winter to another in summer, combined with the apparent costs of California’s baseline environmental-blend requirements, are seen by some experts as factors generating higher gas costs and negligible imports from other states.
Blend and seasonal shift mandates normally do increase the costs of gasoline. They probably create extra costs, particularly when the inventory is short, as it is now.
California exports ideas, fashion and lots of other things. But generally, when shortages occur — real or not — the state must import gasoline. It is isolated from refineries in the U.S. and foreign refineries. California must rely on ships, trains and trucks to secure imported oil. No pipelines exist that move gas beyond the boundaries of the state or into the state. No swimmers are strong enough to carry oil on their backs. Pre-spike low prices and blend requirements appear to have muted the incentive to send gasoline to California among would-be exporters.
Surprisingly, there is no consensus-based factor analysis determining the various causes and their relative impact on the upward spike of gas prices. If I had to place a bet on the major causes, I would bet on the likelihood of managed prices and investor speculation, current limited statewide refining and pipeline capacity, and absence of storage capacity.
Are there antidotes to California’s problems? Maybe, but not one that can or will be available tomorrow! But they could be available relatively soon, with political courage and changes in consumer behavior and perceptions. Increased competition at the pump from alternative fuels, including ethanol, electric vehicles, natural gas and, perhaps in the near future, fuel-cell technology and a range of biofuels, would generate more stability and lower prices in the gas market. Public support for applied research into alternative fuels, particularly options that currently aren’t ready for prime market time, is also necessary. Congressional willingness to pass open-fuels legislation, converting gas stations to, in effect, fuel stations, would help.
The EPA’s willingness to lessen the expenses and speed up the process associated with certification of kits able to convert internal combustion engines to run on E85, and to test and increase the number and classes of potentially convertible flex-fuel vehicles, would create demand and supply. Detroit’s willingness to increase production of new flex-fuel vehicles would provide a real “fuel additive.”
William Shakespeare’s whys and wherefores could become a happening? If so, California Dreaming (The Mamas & the Papas) about lower fuel costs and environmentally friendly fuel could become a reality. Oh, and I just paid $4.33 for regular gas at my friendly gas station!
Lawmaker discusses far-reaching California climate bill
Sen. Kevin de Leon, president pro tem of the California state Senate, is not only confident a climate-change bill will pass the Legislature and be signed into law. He fully expects the rest of the nation to follow California’s lead.
“Leadership does matter. That’s why we will not wait,” de Leon said last week during an energy discussion in Sacramento.
The lawmaker went on:
“We have never waited for Washington, D.C. To be honest with you, while Washington, D.C., dithers on this issue, between members who are negative, climate-change deniers altogether when the empirical data is there … We’re not waiting for that. We’re not gonna wait for Washington, D.C. We never have; we never will. We are the state of California, and we are the leaders nationally. And they’re gonna have to follow, and they will eventually follow what is done here.”
Senate Bill 350 passed the Senate on June 3 and now goes to the Assembly. If it’s approved there and signed by Gov. Jerry Brown, the state will have achieved an ambitious plan that could have a huge impact on transportation and power generation in the state, and could affect the state’s economy long into the future.
The bill sets three goals to be achieved by 2030: cut petroleum use by 50 percent; increase the amount of renewables in electricity generation by 50 percent; and boost efficiency of buildings by 50 percent.
To discuss the measure, the group Diesel Technology Forum sponsored a gathering called “50/50/50 by 2030: Transportation and the California Energy Challenge. Carl Cannon, the Washington bureau chief of the website Real Clear Politics, moderated the event and interviewed de Leon.
De Leon said that if SB350 passes, it will save consumers money from “better fuel efficiencies” as well as reduce smog. “Air pollution knows no boundaries of political ideologies,” he said. The Democrat called the network of freeways in his Los Angeles district a “serpent that chokes the air out of a young child’s lungs.”
The bill was among several related to climate change passed by the Democrat-controlled Legislature. “These measures together represent the most far-reaching measures dealing with climate change, not in the history of California or the history of the country, but I would go a step further and say in the history but the world.”
De Leon said he’s looking forward to a “vigorous debate on the merits of the measure itself. … I think it’s going to be fun.” Democrats easily outnumber Republicans in both houses of the Legislature (26 out of 40 in the Senate; 52 out of 80 in the Assembly), but de Leon said that some Republicans had said to him privately that they “concurred that something must be done about this issue. Politically, that’s another issue altogether. But privately, I’ve heard on numerous occasions that ‘I agree with you, but it’s extremely difficult for us to do anything about this.’ ”
Watch the interview here:
And watch a panel discussion, with energy expert Amy Myers Jaffe and others:
Toyota, California go for hydrogen
California, the home of Elon Musk and his Tesla venture, is about to embark on another technological initiative as well — a car driven entirely by hydrogen.
In late February Toyota began producing and selling the Mirai (the name means “future”), a hydrogen-powered vehicle that will be available in Tokyo this year and go on sale in the U.S. in December. Always conscious of its history and ready to make amends, Toyota made the announcement five years to the day after it testified before Congress about a sudden accelerator problem that caused the company a great deal of embarrassment and led to a recall. “Every Feb. 24, we at Toyota take the opportunity to reflect on the recall crisis, doing everything we can to ensure its lessons do not fade from memory,” company CEO Akio Toyoda said. “For us, that date marks a new start.”
To say that Toyota is being cautious in entering the hydrogen car market would be an understatement. The Mirai won’t even be mass-produced but is being hand-crafted by Japanese workers who are turning out three cars per day. The model will sell for $57,000 in Tokyo and is not designed to take off like a rocket. The company only plans to sell 2,000 individual models in Japan this year. “The Mirai program, especially once all the research and development costs are factored in, is clearly unprofitable at this point, and even selling a few thousand units at $57,500 each is not going to turn the tide,” the Motley Fool’s Alexander MacLennan wrote. “But the Mirai is not about short-term profits; it’s about long-term market advantage through brand acceptance and technological development resulting in better vehicles.” Even Japanese Prime Minister Shinzo Abe got into the act, saying we are headed into a “hydrogen era.”
Right now Toyota’s main rival as an alternative to gasoline will be Elon Musk’s all-electric Tesla Model 3. Musk is not taking the challenge lightly. He has called the hydrogen car “an extremely silly idea” and mocked its fuel cells as “fool cells.”
But Musk might have reason to worry. The Mirai will offer drivers a range of 300 miles and take only three minutes to fill its tank. Tesla’s Model 3, due out in 2017, will offer only a 265-mile range and consume 40 minutes to offer an 80 percent recharge of its batteries. (Ideally, EVs should be recharged overnight.) Of course, the big test will be the availability of refueling stations, and here electric vehicles have a big head start. Tesla already has 393 Supercharging stations nationwide and is building them out as fast as possible.
There are only a dozen hydrogen stations now, all of them in California, as a result of Gov. Arnold Schwarzenegger’s “hydrogen highway” initiative of 2004. But California has seized the gauntlet again and is promising to spend another $20 million in building out the Hydrogen Highway with 28 new stations in the next few years. The Mirai will be initially aimed exclusively at California and its requirements for zero-pollution vehicles, then try to expand to the East Coast as well. Hyundai’s hydrogen-powered Tucson is already being sold in California.
Where Toyota and Tesla have found agreement is in opening up their patents to rivals to try to promote the technology. Musk famously made his EV patents available last year, and now Toyota is doing the same with its hydrogen research. The obvious aim is to get other manufacturers involved in order to increase the demand for fuel outlets. “We think this is a different way to look at the market and collaborate and hopefully with this get a lot more people coming into the game,” Nihar Patel, Toyota’s vice president of North American business strategy, told Forbes.
Still, the switch to hydrogen vehicles has some challenges ahead. Musk’s main criticism — echoed by many others — is that hydrogen fuel is too difficult to handle and transport. Hydrogen is, after all, the smallest molecule and leaks through everything. One of its biggest critics is Joseph Romm, who worked in the Clinton administration promoting the technology and finally became so disillusioned that he wrote a book critical of the technology called The Hype About Hydrogen. Romm is now a senior fellow at the left-leaning Center for American Progress and heads the Climate Progress blog. Another problem with hydrogen, of course, is that it is not available as a free resource but must be manufactured from other resources, principally natural gas. This, of course, requires costs and energy.
Still, hydrogen vehicles have the advantage of producing no air pollution (its exhaust is water vapor) and will be able to reduce the release of carbon into the atmosphere, since the CO2 is easily captured in the reforming process. Overall, hydrogen is likely to be a big plus for the environment.
It also offers car buyers what may be the most important factor in reducing our foreign oil dependence — free choice. It hardly matters if electric vehicles prove to be more popular than hydrogen vehicles or vice versa. The important thing is that they will both be available as alternatives to gasoline-powered cars. They could also open up the door to other alternative fuels: compressed natural gas, E85, and the dark horse of them all, methanol manufactured from natural gas. All these alternatives cannot help but make a dent in our current dependence on foreign oil.
Calif. lawmaker wants oil trains banned from ‘treacherous passes’
A California state senator has asked Gov. Jerry Brown to stop oil trains from traveling through the state’s “most treacherous” mountain passes.
As California goes (on energy and climate), so goes the nation?
In the throes of a severe prolonged drought, California energy leaders, environmental scientists, and activists convened recently in advance of the 25th annual Bioneers Conference at the Marin County Civic Center for an energy and climate strategy session that could have national and global implications.
Read more at: Communities Digital News
Natural gas vehicles take the halfway route
In the early 1990s, California tried to force the introduction of electric cars by requiring that auto companies produce a zero-emissions vehicle in order to remain in the state. The result was Chevrolet’s EV1, which everyone agreed was the best electrical vehicle that could be built at the time. Owners loved them, but somehow the effort didn’t take off.
The infrastructure simply wasn’t in place. The car only had a 70-mile range and drivers spent much of their time worrying about their next charge. Many EV1s ended up on the lots of rental agencies where they attracted little attention. All this, of course, was interpreted by some people as the fault of the oil companies and the auto industry, which didn’t push the case hard enough. The award-winning documentary “Who Killed the Electric Car?” made this argument.
Then three years later, Toyota introduced the Prius, a gas-electric hybrid that gave drivers some breathing room. It was a spectacular success. By not trying to make the technological transition in one giant leap, the Prius introduced drivers to the advantages of electric propulsion without asking them to sacrifice anything in terms of a nerve-wracking search for a refill. In fact, when Toyota brought out the Prius it deliberately left off a home charger so that buyers would not associate it with the failed EV1. Not until several years later did the company release a plug-in hybrid. In both cases, the Prius has been the most successful of all hybrids.
Natural gas vehicles seem determined to avoid the same mistake. This year both Ford and General Motors are releasing commercial NGVs in their light-truck and sedan lines. But they are taking care to make them bi-fuel vehicles that run on both gasoline and natural gas, although they are expensive. (Both companies have been making tri-fuel — gasoline, ethanol and CNG — for many years in Brazil.) First out of the box will be the immensely popular Chevrolet Silverado and the GMC Sierra, both full-sized pickups that sold 480,000 and 184,000 last year, respectively, the highest sales mark since 2007. GM is offering bi-fuel versions for every cabin configuration. The 2015 model will offer a 16-gallon gasoline tank and a 17-gallon-equivalent compressed natural gas tank. When both are filled, the truck will have a remarkable range of 650 miles.
Along with that, GM will be releasing a bi-fuel Chevrolet Impala to introduce ordinary drivers to the advantages of natural gas. The Impala will feature an 18.5-gallon gasoline tank and a 7.7-GGE CNG tank. The result will be a 500-mile range.
Not to be outdone, Ford has already introduced a bi-fuel version of the immensely successful F-150 half-ton pickup truck. Released only last November, the company managed to sell 15,000 vehicles across eight models in 2013. That beat 2012 sales by 25 percent. When combined with its conventional gas tank, the CNG boost gives the F-150 an astounding 700-mile range, beating the Silverado by 100 miles. Unfortunately, the price differential for all these NGV models will be about $10,000.
But motorists could see a 2-3-year payback if the price gap between gasoline and its natural gas equivalent holds up. Right now it has settled around $1.50 gap per gallon and has remained there for almost five years. Give motorists the opportunity to save almost half the price on a gallon of gas is bound to make the new bi-fuel models more attractive.
Other developments are also moving in the direction of a transition to natural gas for high mileage vehicles. In 2012, ARPA-E, the federal government’s program for advanced energy research, awarded $2.3 million to GE Global Research, Chart Industries and the University of Missouri to design a gas refueling station for homeowners. GE already makes a $5,000 medium-sized refueling kit for commercial businesses called “CNG in a Box” that takes gas out of the utility pipes and compresses it for fleet vehicles. The target price for the scaled-down homeowner version is $500. The consortium has set a release date for later this year, at which point we’ll find out if they’ve been successful. The launching of such a cheap conversion system that would allow homeowners to tap the natural gas pipes in their house to refuel their cars would revolutionize the whole NGV effort.
Of course there’s always another possibility — converting our abundant natural gas supplies to ethanol or methanol that would fit right into our current gasoline delivery system. Switching to liquids would not require a new on-board gas tank but would simply involve adjusting existing engines so they could run on a variety of liquids — the “flex-fuel” system. Giving motorists the widest variety of choices would let them experiment with different strategies without having to make a giant leap over some technological chasm. That’s what California learned twenty years ago when it tried to rush the introduction of the electric car and the lesson still holds good today.
Madera Pacific Ethanol plant lands sweet neighbor
It’s better times for California’s ethanol producers, with investment dollars flowing into technology to make production plants more efficient and diverse in the feedstocks they accept.
“We are just about there,” said Paul Koehler, spokesman for Sacramento-based Pacific Ethanol, referring to the long-time effort to begin making ethanol from farm waste and nonfood feedstock instead of corn
