Lone LNG terminal would lower gas prices 10-20%

University of Oregon Economist Peter Romero predicts that adding just one Liquefied Natural Gas terminal along California's coast will lower natural gas prices between 10 and 20%:

Peter Romero, a University of Oregon economist who once served as former Gov. Pete Wilson's top economic adviser, said such a reduction in gas prices would lead to the creation of as many as 50,000 new jobs and add up to $4.6 billion to California's gross domestic product.

"Numbers like that are equal to one to three months of the economic growth in the entire state, so that is not chump change," Romero said.

Natural gas prices in California have been as much as four times higher than the national average in recent months and have doubled since 2002, according to a California Energy Commission study released in February. Although it is also the fuel most commonly used to heat households, the two biggest uses are for electricity generation (33 percent) and industrial use (32 percent).

Star misrepresents LNG debate

The Ventura County Star has fallen into a trap that is way to easy--if something fits your editorial bias, accept it as fact and act upon it. They make this mistake twice in a recent article on President Bush's Liquefied Natural Gas policy:

The president's remarks, part of a broader speech about the need for a national energy strategy, brought swift criticism from environmental groups and others fighting the development of two LNG facilities off the coast of Oxnard.

Giving the federal government the final say on the location of LNG terminals would cut states out of the process and leave residents powerless to keep the facilities out of their communities, opponents argue.

"In the end, it may be that all of these potential energy sources are sited and permitted without any significant involvement from the people most affected," said Alan Sanders, conservation chairman of the Los Padres chapter of the Sierra Club. "And I think that is troubling, certainly to Californians."

Oxnard Shores attorney Tim Riley, who produced a documentary about the dangers of LNG, agreed.

"By appointing all of the FERC commissioners, President Bush has jockeyed himself into position to fast-track an LNG agenda," Riley said. "All he needs now is to convince the U.S. Senate to go along with his demolition derby of states' rights."

First of all, as regular readers will know, the FERC language Bush is referring to applies only to onshore LNG facilities in California, such as the one being proposed by Sound Energy Solutions/Mitsubishi in Long Beach. The two projects proposed in Oxnard will remain under their current jurisdictions. For example the Cabrillo Port will remain under the US Coast Guard and State Lands Commission.

Rather than do research, the paper then goes to their go-to-guy to attack LNG, Tim Riley. Getting him to say something negative about liquefied natural gas is like getting Michael Moore to protest President Bush--damn the facts, I need a quote! And Riley, the lawyer who's movie has been debunked by two internationally renowned scientists, is cited as a credible source simply because he produced a video. For such an important issue for the community and the State, you'd think the Star would seek to up its journalistic standards a notch and not give this Riley guy and ounce of ink until he can back up his bluster.

Luck needed to avoid summer blackouts

California's on-again, off-again predictions of a summer power crisis are on-again:

Keepers of the state's power grid say supplies are stretched so thinly that a widespread heat wave or wildfire could mean homeowners and businesses may once again wait their turn for the lights to go out.

Rolling blackouts -- planned power outages that are "rolled" from area to area to protect the power grid when electricity supplies are critically low -- became part of Californians' life during the state's power crisis four years ago.

Explosive growth in areas far from cooling ocean breezes means such outages will be increasingly likely unless the state boosts supplies with more power plants and transmission lines and better efforts to use power wisely.

Financial and political uncertainties following California's 2001 energy crisis slowed efforts to build new power plants as antiquated power plants go off-line.

Since then, the state's population and economy have continued to expand.

Californians (heart) Hybrids

One item in President Bush's energy plan--the measure to incentivize hybrid vehicles--is sure to warm the hears of at least a few Californians. The San Jose Mercury News profiles owners' love affairs with the gas-conscious cars:

As gasoline prices rise, sales of hybrids -- high-mileage, low-emission vehicles powered by both gas and electricity -- are rising. Last year, sales were up 94 percent in the Bay Area, 102 percent in California and 81 percent nationwide.

March was the best month ever for hybrid vehicle sales in the United States, and the trend will almost certainly continue. Three new models are hitting the market this year, including the $48,535 Lexus RX 400h, which went on sale last week. And five or six more models arrive in 2006.

The bottom line? Hybrid mania is at an all-time high. Interest in these cars and their environmentally friendly technology, combined with fans' enthusiasm and obsession over details like gas mileage, sometimes makes hybrid ownership seem like a cult.

If you want to see a cult of car owners, try reading Bimmerfest.

ChevronTexaco Rejects Environmental proposals

ChevronTexaco shareholders are skeptical about becoming stewards of the environment:

Shareholders turned down a measure asking the oil giant to study how drilling could damage fragile ecosystems, including the Arctic National Wildlife Refuge. They also voted against spending more to clean up a stretch of the Amazon rain forest where Texaco once worked before its 2001 merger with Chevron.

Both measures failed by roughly the same margin, with 91 percent of shareholders voting against them in preliminary results. Last year, a similar motion on Ecuador also garnered 9 percent of the vote.

Chevron is currently considering building a liquefied natural gas facility off the coast of Camp Pendleton in Oceanside, CA.

Bush Backs Broad Energy Agenda

Planning for the future, President Bush is pushing a broad set of measures to grow energy supplies and constrain demand:

Officials said Mr Bush would set out his vision for tackling the “root causes of today’s high price environment” through increased domestic energy production and processing, and use of technology to develop renewable energy sources and promote energy efficiency.

In the most novel proposal contained in Mr Bush’s speech, officials said he would call for the construction of new oil refineries on former military bases, creating new jobs in communities hit by base closures while also easing the country’s acute shortage of refining capacity.

No new oil refineries have been built in the US since 1976 and existing facilities are struggling to cope with demand.

Officials said Mr Bush would also call on Congress to remove barriers to new liquefied natural gas terminals by giving federal authorities the power to override opposition to the facilities from states. The US needs more than the existing four terminals to handle surging imports of LNG.

Mr Bush was also expected to call for Congress to extend tax benefits for fuel-efficient cars to include “clean diesel” vehicles, in addition to the hybrid and fuel-cell vehicles which are already included. The incentive would be worth $2.5bn over 10 years, according to White House officials.

The combination of tax breaks for “green” cars with expansion of nuclear power and traditional fossil fuel supplies shows how Mr Bush is seeking to strike a balance between competing calls for increased energy capacity and energy conservation.

Solar Power Bill Gains Steam

Legislation proposed by Governor Schwarzenegger to incentivize solar power is gaining momentum in Sacramento:

Gov. Arnold Schwarzenegger's plan to power a million homes and businesses with the sun moved forward yesterday, despite concerns that ratepayers would be stuck subsidizing the ambitious expansion of solar energy.

The legislation would invest $2 billion in rooftop photovoltaic systems – panels that turn sunshine into electricity. Customers with solar panels would save money by producing energy and could sell excess power to the electric grid.

Homeowners and businesses would get a rebate for installing the panels, with 10 percent of the subsidies set aside for low-income homes. Currently, a solar panel system costs about $27,000. Under the legislation, a typical home would get about $10,000 in rebates and tax breaks.

Compared to current California Home Prices, that's a drop in the bucket!

UPDATE: Dan Weintraub has more on why solar makes economic sense.

Paper: Pay for your own Security Mitsubishi!

The Long Beach Press Telegram editorializes that the Mitsubishi-Sound Energy Solutions LNG terminal should pay its own security costs:

A new report from Long Beach's fire chief, Dave Ellis, and deputy police chief, Tim Jackman, drives home that point. The two officials visited Boston Harbor earlier this month and observed extensive security precautions, many of which would have to be replicated if an LNG terminal were to be built in Long Beach.

The extra security measures in Boston aren't paid by LNG terminal operators or shippers. The considerable cost of extra police officers, boat escorts, divers, helicopters, and other equipment and labor associated with Boston's LNG transportation are borne by taxpayers.

LNG shipping in Long Beach would be somewhat different than it is on Boston, because there tankers must travel upriver close to the downtown area. Tankers are escorted through a three-mile "safety zone," which is cleared of all ships, and traffic is stopped on overhead bridges.

Tankers in Long Beach wouldn't come as close to homes and offices as they do in Boston. However, as Ellis recently told the Press-Telegram, a Long Beach LNG terminal would be a "high-profile target" for terrorists, probably more so than Boston, because the port is larger. A successful attack would cost untold billions in economic damage nationwide.

A terrorist attack on an LNG tanker is a worst-case scenario, but when it comes to security, police and fire officials must plan for the possible, not just the probable. An LNG terminal would have to be afforded the highest security precautions.

Taxpayers subsidize the goods movement industry enough already. In general, the public and their lawmakers should demand that the industry pay more of its own cost of doing business. And if the Long Beach port does decide to support an LNG terminal, it must ensure that the true costs are paid by the business itself, not shifted to taxpayers.

That's fair enough, since it is the only on-land LNG terminal proposed in California. Others, like the Cabrillo Port, have avoided soaring security costs by locating offshore.

How Low will gas prices go?!?

Gas prices are falling again in Southern California:

California motorists paid an average of $2.565 a gallon for regular self-serve gasoline for the week ended Monday, down nearly 2 cents from the previous week, according to the Energy Information Administration, the statistics arm of the Energy Department. The U.S. average fell one-tenth of a penny to $2.236 a gallon.

Los Angeles motorists paid $2.579 a gallon, down 1.5 cents from a week ago.

After climbing for much of the year, U.S. and state gasoline prices have declined for the last two weeks. But both the California and U.S. averages are still more than 40 cents a gallon higher than a year ago.

But even if crude oil production increases (say, by the Saudis), California still has a limited refining capacity. We can pump all the oil we want, but unless there's the ability to turn it into gas for California motorists, prices can only fall so far.

Sempra signs deal for Russian Natural Gas

Sempra's efforts to bring natural gas into California markets has an even more international flair. The San Diego-based company plans to import liquefied natural gas to Mexican ports from Russia:

U.S. company Sempra Energy said on Monday, April 25, that it has signed a non-binding agreement with Russia’s natural gas monopoly Gazprom to import and market Russian liquefied natural gas (LNG) in North America.

The San Diego-based company said the memorandum of understanding envisages shipments of Russian LNG into Sempra receiving terminals in North America and the sale of the natural gas through trading arm Sempra Commodities. “We are pleased to sign this agreement to help facilitate the movement of Russia’s plentiful natural gas into the North American marketplace, where it is needed,” said Sempra President Donald Felsinger, quoted by Reuters. Felsinger and Gazprom chairman Alexei Miller signed the memorandum in Moscow on April 25.

Khorosho for Sempra, but with President Putin causing concerns about efforts to strengthen the Russian state, does it make sense for California?

California Mexico Engage in Tortise, Hare race for Energy

Last week Ventura County Star writer Tim Herdt wondered whether California should slow down the development of liquefied natural gas terminals to ponder which would be best for the State:

The race in question is the petrochemical free-for-all to see which of several of the world's biggest oil companies will win the right to build California's first liquefied natural gas terminal.

As a gas, the fuel most commonly used to power electricity plants in California must be shipped by pipeline, which limits the available supply. As it now stands, users in California can purchase natural gas only from fields in the West and Southwest.

But when the gas is frozen, it becomes liquefied, meaning it can be loaded onto tankers and shipped across the sea.

What those tankers need when they get to an American shore is a place to unload the liquid, a place to convert it back to gas and a pipeline to connect to the existing network of underground lines.

That's the race. It's for the right to receive those tankers, process their cargo and open California to markets in Asia and the Middle East.

What Herdt misses is that every day California sits on its hands, it is losing the race to Mexico. Because Mexico has less stringent environmental regulations than California, it is approving LNG terminals like they are going out of style:

Mexico's environmental agency has approved another liquefied natural gas receiving terminal for Baja California.

The $55 million floating project would be built about five miles off the coast of Rosarito Beach by Moss Maritime, a global leader in LNG tanker construction, and Mexican partner Terminales y Almacenes Maritimos de Mexico (TAMMSA).

If the market will bear only so many LNG facilities along the West Coast, wouldn't it make more sense to build at least one of them in California where we can have at least a degree of environmental protection?!?

Press goes Ga-Ga over hybrid sales

Over the past few days media outlets around the nation are priasing the 83% increase in hybrid vehicle saled in recent years, but James Joyner points out that the real reason may not be that we've become environmentalists all of a sudden:

More people are buying hybrids because they've finally more-or-less caught up to regular cars as reliable transportation and offer several advantages like lower gasoline bills and the ability to drive in carpool lanes alone.

The fact that these cars are finally catering to the demands of American consumers other than the granola munching, sandal wearing hippy holdover crowd is the key.

Security will be costly for onshore LNG terminal

Proponents of an onshore liquefied natural gas facility in Long Beach have to face yet another hurdle--high security costs:

A report released Friday by Long Beach's fire and police chiefs about the manpower needed to secure a liquefied natural gas terminal in Boston Harbor paints an expensive and labor-intensive picture of security for an LNG terminal proposed here.

In a trip to Boston April 10-11, Long Beach Fire Chief Dave Ellis and Deputy Police Chief Tim Jackman found that state and city police commit officers, divers, boat escorts and a helicopter to ensure the ships move through the harbor without incident.

The arrival of LNG tankers also triggers a 3-mile-long safety zone through which no vessels can pass, and traffic on a major bridge is halted while tankers pass underneath.

The report says the economic impact of an accident or terrorist attack on an LNG tanker would be more significant in the Port of Long Beach, while Boston is more vulnerable to physical damage because of the LNG terminal's proximity to downtown.

"It could be a very high-value target," Ellis said of an LNG terminal in Long Beach. "My concerns are that there were definitely hazards and there are risks we need to identify."

Terrorism threats are less real for offshore facilities since, well, there ain't that much within a three-mile radius, is there?

Electric cars no longer an option for eager Californians

Zipping to work in an electric car may seem attractive with soaring gas prices in California--but unfortunately it is not an option for many:

Pretty nifty cars, if you want to get out from under the thumb of the oil companies. There's only one problem: For the most part, you can't have them.

GM and other manufacturers have recalled most of their cars, leaving some in public agency fleets and others in museums or universities. In fact, GM has been hauling its EV1s out to the Arizona desert and crushing them.

For all intents and purposes, the hugely expensive electric car program - - created in the 1990s by the California Air Resources Board's mandate that the major automakers build a certain number of pollution-free cars -- is just about dead. The law requiring manufacturers to offer those cars for sale has long since been modified -- hybrids, compressed natural gas and "SULEV" cars (super ultra-low-emission vehicles) have taken up the environmental slack.

The automakers, saying all-electric vehicles occupy a tiny and economically worthless niche, simply stopped making, leasing or selling the cars.

And the people who leased the cars and wound up adoring them, only to see them called back in at the end of the lease period, are livid. Many wanted to buy the autos, but all but one manufacturer said no.

Critics balst extended daylight

Congress may be inching closer to extending Daylight Savings Time--yet again--but those with long memories are speaking up against the proposal:

Cranky schoolchildren, electronic chaos and increased sales of double-espressos - those are just some of the effects that would ripple through Americans' lives under a plan moving through Congress to extend daylight-saving time by two months per year.

Under the plan, which was approved by the House of Representatives and sent to the Senate, California and other states would "spring forward" in March rather than April and "fall back" in November rather than October.

"It's gonna be chaos, man," said Viken Fermanian, owner of Salco Services, an electronics repair shop in Granada Hills, predicting there would be no easy fix to the daylight-saving time change hard-wired into everything from wristwatches to VCRs.

While computer software can be reprogrammed to accommodate different dates, hardware presents a trickier problem.

Sempra seeks Coal Generation

For the environmentalists railing against Liquefied Natural Gas as a solution to California and America's growing energy needs, be careful what you wish for!

Sempra and other energy companies are quietly reaching back to a fuel of the past – coal.

With two coal-fired power plants in Texas already in its portfolio, Sempra is seeking a site for a coal plant in Idaho and has plans in place for a $2 billion coal plant in northern Nevada, about 100 miles north of Reno.

California Consumers to get CNG alternative

One of the hardest barriers to introducing alternative-fueled vehicles is that the energy infrastructure in California is build for the internal-cumbustion-engine fueled by gas or diesel. But, thanks to Honda, help is on the way:

...the natural-gas powered Givic GX. According to Honda the cost-per-mile to operate is about 43% lower than the already pretty-frugal gasoline model. The cars have been available to fleet buyers for the past seven years, but the consumer model comes with an added bonus: an in-home refueling station.

Good news for Sempra and PG&E, and possibly a reason for environmentalists to support building some LNG terminals so we can fuel these babys!

Prices ease for L.A. Drivers

Gas prices are slipping for drivers in Los Angeles, and may fall further:

Prices should fall to an average of about $2.40 for a gallon of regular within the next couple of weeks, said Andre van der Valk, president of Auto-Cal, the association of Southern California service stations.

The price for a gallon of regular gasoline in the Los Angeles market hit a record high of $2.63 on April 13. Since then, prices dropped about two cents or three cents but have held steady at virtually the same level.

In contrast, the national average for a gallon of regular dropped from $2.28 on April 11 to $2.22 on Thursday.

One reason California has yet to see similar relief is that prices here peaked later than the national average.

Now prices are poised to start easing statewide within the next several weeks, said Rob Schlichting, spokesman for the California Energy Commission.

Federal bill impacts Locals' input on LNG

The Los Angeles Daily News reports that local governments will not have input on the future of liquefied natural gas terminals in their communities:

Congress on Thursday stripped Oxnard and Long Beach of their authority to decide whether it can approve a proposed liquefied natural gas terminal at the port.
By a 194-237 vote, the House stamped out an effort to assert local control over where new liquefied natural gas, or LNG terminals should be placed as well as whether a potential facility meets a community's safety and environmental standards.

The decision directly affects Long Beach and Oxnard, where officials are considering proposals for new LNG terminals. Things may change when the legislation gets to the U.S. Senate, but for now the word from Congress is that the federal government has near complete say-so over approving sites for the controversial facilities.

While the measure affects the spproval process for the proposed LNG terminal in Long Beach, the paper gets it wrong when it comes to the Oxnard facility, which will continue to be under the oversight of the U.S. Coast Guard and State Lands Commission.

California losing battle in Federal Energy Policy

The Golden State may end up the biggest loser as Congress considers final passage of an energy bill...

California officials -- including top members of Gov. Arnold Schwarzenegger's Cabinet -- are warning that the House energy bill expected to pass today will make it tougher for the state to block offshore oil drilling or the placement of liquefied natural gas terminals.

The energy bill is strongly opposed by many California lawmakers, who claim its provisions to boost domestic energy supplies could threaten the environment and limit states' abilities to object to energy projects.

But proponents of the bill, including House Resources Committee Chairman Richard Pombo, R-Tracy, argue that Democrats have failed to offer a viable alternative to reduce the nation's dependence on foreign oil.

"We are not providing enough energy to meet the demands that we have," Pombo said at the start of Wednesday's debate on the bill. "I ask my colleagues, with oil at $55 a barrel, don't you think it's time we did something? If you don't like this bill, where's your alternative?"

Democrats say the bill, which includes $89 billion in tax breaks and grants to the energy industry and consumers, is too heavily focused on oil, gas, coal and nuclear energy and fails to reduce demand for foreign oil by raising federal fuel economy standards.

Congress Quarrels over MTBE

Environmentalists pushed for gasoline additives in California and now, the additive manufacturers are pushing back in Congress:

The Environmental Working Group, a research and policy organization, thought Rep. John Doolittle, R-Roseville, might want to rethink his support for immunizing MTBE producers now that there are pending lawsuits in the Sacramento area over damage caused by the leaking gasoline additive.

But as the House took up energy legislation Wednesday that includes the controversial MTBE provision, Doolittle made clear that he is not about to hold manufacturers liable for the damage that now may include three wells in his hometown of Roseville.

Instead, Doolittle blasted the Environmental Working Group as a "band of ultra-leftists" and accused environmental organizations more broadly of causing the problem in the first place. He said they pressured Congress in 1990 to require gasoline manufacturers to produce cleaner-burning fuel using the additive.

"I don't deny it's a problem," Doolittle said of MTBE. "But when the government rushes in at the behest of these eco-Marxists, we should send the bill to the Sierra Club and all of them that have done so much to harm the environment."

Virginia turns to off-coast drilling for Natural Gas

I know this is the California Energy Blog, but sometimes what happens in other states should get our attention. For example, Virginia is looking to permit the offshore exploration of Natural Gas:

Of the many bills awaiting Gov. Mark Warner's signature by midnight Tuesday [March 29] is one that would urge a return to offshore natural gas exploration along Virginia's coast.

The bill got scant attention during the General Assembly, but it easily cleared the Senate in a 37-0 vote, and the House of Delegates 54-43. The bill directs state officials to ask Virginia's congressional delegation to push for an exemption to the federal moratorium on offshore natural gas exploration.

It's the first step, some environmentalists and beach town officials argue, toward drilling and possible oil spills that could have devastating economic and environmental consequences.

"Although this bill supports natural gas development, if they drill and find oil, we know the drilling will not be limited to only gas," said Michael Town, director of the Virginia Chapter of the Sierra Club.

Virginia would become the first state to seek an exemption from the federal moratorium, he said. Congress enacted the moratorium on oil and gas exploration and drilling in 1982. It covers both the Atlantic and Pacific coasts and part of the Gulf of Mexico.

"We're the first one," Town said. "We wouldn't be surprised if another state tries the same thing."

Opponents of building liquefied natural gas receiving terminals in California claim that there is enough supply to meet demand. If so, why are so many clamoring for Natural Gas around the nation?!?

I would think OFFSHORE DRILLING is a greater political football than liquefied natural gas, and if the coastal communities were forced to choose...well.

Feds eye higher taxes in light of Hybrids

California has flirted with taxing motorists by the mile as gas tax revenues dwindle with increased fuel efficiency. Now the Federal Government is looking for solutions to the same problem:

The idea is simple but technologically daunting -- base gas taxes on miles driven instead of on gallons of fuel bought. And advocates say the reason for such a change is also simple -- although such fuel-efficient vehicles as hot-selling hybrids pay less in gas taxes, they're still out on the nation's roads contributing to congestion and wear and tear on an aging infrastructure.

A switch in the way the 18.4-cent-a-gallon federal gas tax is levied could be in the offing, making it more of a user fee than a tax. By unanimous voice vote, the Senate Finance Committee approved legislation Tuesday to establish a 15-member commission to report back within two years on ways to ensure enough tax revenue to pay for the nation's highway, bridge and public transit programs.

High on the list the panel will consider is the per-mile fee that is already the subject of a $1.25 million pilot project in Oregon that will use a special "smart'' odometer coupled with a global positioning system in every vehicle, a system invented at Oregon State University.

When the project begins later this year or early next year, every time a volunteer motorist fills up, the odometer's information will be electronically downloaded and the fee automatically added to the gas purchase price at the pump, just like today's per-gallon gas taxes. The GPS equipment tells the state when a vehicle has left Oregon, so motorists won't be charged for those miles. Oregon figures it will charge the volunteers 1.25 cents per mile in taxes.

Energy Bill may become too costly

The Federal Energy Bill is becoming so overburdened with tax breaks that it may collapse under its own largesse:

The growing price tag of tax breaks to oil, gas, nuclear, coal and other energy producers in a new House energy bill is raising concerns among White House officials and some conservatives, who say the costly subsidies aren't needed at a time of sky-high energy prices.

Republican leaders had promised a slimmer version of the energy bill the House has passed the last few years to avoid worsening the federal deficit. But a new analysis by a watchdog group showed that lawmakers added $35 billion in the last three weeks since the bill was introduced -- a total of $88.9 billion in subsidies to industry over 10 years in the bill.

Analysts said the extra spending was tacked on to win over wavering lawmakers or to placate parts of the energy industry. The House is scheduled to begin debating the bill today.

"It becomes a lot less about a national energy policy and more about a strategic divvying up of regional perks to secure not just enough votes to win, but to win by a landslide," said Keith Ashdown, vice president of Taxpayers for Common Sense, a nonpartisan group that analyzed the bill's costs.

Sempra to charge more for gas on West Coast

Sempra, the parent company of San Diego Gas and Electric, will charge customers on the West Coast more than in the East:

Natural-gas prices in the West will be higher than those in the Southeast producing region because of waning Western production and the construction of terminals to import liquefied natural gas on the Gulf of Mexico, Sempra Energy's LNG chief said Thursday.

Declining production from the San Juan Basin in Colorado and New Mexico will help boost higher Western prices during the next several years, Sempra LNG President Darcel Hulse told a CWC Group conference on LNG on Wednesday.

San Diego-based Sempra owns the largest U.S. natural- gas utility.

"The West Coast will be a premium to Henry" Hub, Hulse said. "When you lose the San Juan basin, then you shift."

Spot prices at the benchmark Henry Hub in Erath, La., have averaged $6.56 per million Btu this year – 4.1 percent higher than the $6.29 index price tied to five California border sites, according to Bloomberg data. Wholesale Henry Hub gas last year averaged 5.4 percent higher than the California index.

Sempra's answer is, of course, to build its own LNG receiving terminal and sell the natural gas back to itself. A better idea may be to consider supporting other companies' efforts to bring natural gas into California markets and prevent such price manipulation!

Energy suit denied by SCOTUS

Californians hoping to get some of the money the state alleges was "over-billed" will be disappointed by yesterday's Supreme Court decision:

In a setback for California officials pursuing claims over the energy crisis, the U.S. Supreme Court on Monday tossed out a state lawsuit alleging big power companies double-billed California by more than $100 million.

The court declined to hear California's appeal of a ruling last summer. In that ruling, the 9th U.S. Circuit Court of Appeals said California's claim should be heard by the Federal Energy Regulatory Commission, not the courts.

The case involves one of the smaller claims spilling out of the energy crisis, the era in which costs skyrocketed and blackouts occurred as a result of the state's disastrous deregulation plan. All told, the state said it was overcharged by about $9 billion by wholesale energy merchants; it has collected refunds totaling about half that amount and is continuing to seek refunds for the rest.

Monday's decision involved a series of lawsuits California filed in late 2002 against wholesale power generators such as Mirant Corp., Dynegy Inc., Reliant Energy Inc. and others.

Gas Prices high, but no conspiracy

Too often Californians' reactions to high energy prices is to expect a conspiracy, but the Daily Bulletin reports that none exists:

What's the truth of the matter? Are we hapless dupes, victims of circumstance or simply paying the price for our own choices?

Any search for answers begins with one indisputable fact. Data compiled daily by AAA shows Californians pay 30 to 40 cents a gallon more for fuel than the average American motorist outside the state.

As of Monday, that translated to an average price of $2.748 for a gallon of self-serve regular unleaded in San Francisco, an average of $2.622 in Los Angeles and San Diego, and an average of $2.647 in the Riverside-San Bernardino area. Those figures compare to a national average of $2.27 a gallon.

Is that too much?

"That's a question that is impossible to answer," said Carol Thorp, spokeswoman for the Automobile Club of Southern California. "The oil companies don't share their books with us and show us their profit margins."

Thorp admits that there are problems - some of them unique to California - that drive up prices. First and foremost is the fact that the gasoline pumped in this state is different than the mixture used anywhere else in the world.

"What's basically true is that year-round, we have the cleanest gasoline on the planet here," said Anita Mangels, a spokeswoman for the Western States Petroleum Association. "That's mandated by law, and the environmental benefits are tremendous.

"It's the equivalent of taking a billion pounds of pollution out of the air every year."

But it's expensive. Twice a year, refineries must shut down and adjust their equipment for the different seasonal blends used.

"When you're essentially brewing your own gas, it causes a couple of difficulties," said Brad Proctor of Ohio-based Gaspricewatch.com, which tracks prices and trends around the country. "First, if demand is high and you run short, you can't buy from anywhere else. Second, you are totally dependent on your own refineries."

Bills would block LNG: Oppose SB 1003 and SB 426

One of the common themes of this blog is that an energy crisis IS coming again, and California needs to do something about it. One element of having enough electricity is having the natural gas to fuel our power plants--and the only way to being new supplies online is by siting liquefied natural gas facilities in California.

Two pieces of legislation will be considered up in Sacramento tomorrow that get in the way of this. SB 426 creates a process by which the California Energy Commission would rank the various LNG projects--in late 2006. Problem is, many will have gone through their regular approval process, so this just delays it. In addition, the CEC has already established the "need" for LNG, and creates a competitive regulatory environment with winners and losers, rather than a free-market solution, where each company makes decisions on what best serves its interests.

SB 1003, which is linked to SB 426, creates a permitting process for LNG facilities and interlinked pipelines. But for each LNG facility, there already is a permitting process! Regulating LNG makes sense where regulated utilities are involved, to prevent monopoly power over the marketplace...but when independent energy companies want to build energy infrastructure in California, we should be tearing down barriers, not putting them up!

Refiners seek mega tax breaks

Officials in Northern California must choose--lower gas prices or money for schools?

Even as gas prices creep past $3 a gallon in California and the petroleum industry reaps billions in profits, four of the Bay Area's five refineries want property tax breaks totaling $44 million.

Chevron in Richmond, Shell in Martinez, ConocoPhillips in Rodeo and Valero in Benicia argue they should pay millions less in taxes because county officials have overestimated the value of their sprawling refineries, artificially inflating their property taxes. They want appeals boards in Contra Costa and Solano counties to cut their tax burden, with Chevron seeking the largest reduction -- $21 million.

While refinery executives say they simply want a reasonable and fair assessment of their land, local governments and school districts that stand to loose millions of dollars mince no words in their criticism.

Exactly how much schools and cities could lose is unknown, but those directly in the shadows of the refineries are already preparing for delayed construction projects, from new roofs for schools to postponed upkeep for athletic fields

Fuel costs squeeze small businesses

As newspaper editors get tired of writing the same story-- "GAS PRICES SOAR!!!" --they begin to look for fresh angles on the issue. Today, it's the impacts on small businesses:

The bills haven't gone up for most of Rafael Garcia's customers, and he's paying the price.

The gardener shells out $450 for fuel each month, which is $250 more than it was costing him last year to fill up his lawnmower, weed trimmer and 1989 Ford F-150 pickup truck.

"It's awful," Garcia said as he picked up huge palm fronds that had fallen on the forest green lawn at a Beverly Hills home. He asked his customers to give him an extra $25 a week. Two offered $10, the Inglewood resident said, and the rest declined to pay anything additional.

"You explain the gas is expensive, but they say they can't give you more money."

Higher energy costs are causing financial distress across the economy. But for the smallest businesses and independent contractors — such as the people who mow lawns or deliver pizzas or travel across town to translate court proceedings — the pain is particularly sharp because they have trouble demanding more to cover the bigger tab.

Surprisingly, the issue has not made it into an episode of Desperate Housewives...yet...but I imagine the gardener has other things on his mind!

Pombo Pounded for offshore proposal

You'd think that any politician in California would have the smarts to stay away from suggesting offshore drilling...but apparently Congressman Richard Pombo didn't get the memo:

Proposals to lift the decades-old national ban on new offshore oil and gas drilling are yielding a gusher of political heat for U.S. Rep. Richard Pombo, R-Tracy.

Environmentalists have unleashed a media campaign painting Pombo as part of a conspiracy to overturn the drilling ban.

Pombo himself isn’t saying what his stand is on offshore drilling or whether he is part of the efforts to lift the ban. Staff members for Pombo’s House Resources Committee insist that neither they nor the chairman is behind the recent push.

Still, the proposal for lifting the ban that Pombo’s staff originally developed several years ago was showcased at an American Gas Association conference in March and in state legislation the governor of Virginia vetoed last month.

Regulations boost California Power prices 31%!

Via PasadenaPundit, we learn that California ratepayers pay a premium on their electricity because of the state's tangled regulatory web:

While the market hub known as Mid-C or Mid-Columbia is only seconds away from Southern California on the DC Intertie, Platt's reports that traders require a 31% risk margin for transactions in California's administered markets versus transactions in the Pacific Northwest's open markets.

Energy Bill seen as catharsis for gas prices

Lawmakers on both sides of the aisle are using soaring gas prices to push their own agendas as part of the federal Energy Bill:

With the national average well over $2 a gallon, Republicans and Democrats are eager to show constituents that they are doing something in response — even though they acknowledge limits to what they can do to provide immediate relief.

They are introducing bills, such as the OPEC Accountability Act, staging press conferences at gas stations and calling for federal investigations into alleged price gouging by oil companies.

President Bush, worried that high gas prices could become a drag on the economy, is expected to make passage of an energy bill the subject of his radio address today, foreshadowing a higher presidential profile on the issue.

An ABC News/Washington Post poll conducted last month found that more Americans were blaming Bush for rising oil and gas prices — 34%, up from 27% in May. Some political analysts speculate that the high gas prices are contributing to declines in Bush's overall approval rating.

In a CNN/Gallup/USA Today survey this month, 44% of respondents called it extremely important for Congress and the president to address gas prices. In contrast, 37% described it as extremely important for Congress and the president to overhaul Social Security — Bush's main domestic priority.

"If prices continue going up," said Stuart Roy, a Republican strategist and former aide to House Majority Leader Tom DeLay (R-Texas), "everyone will want to be positioned as having tried to bring them down. If prices drop, everyone will want to be there to take the credit."

Antonia Ferrier, a spokeswoman for Sen. Olympia J. Snowe (R-Maine), added: "When we're talking about prices of gasoline that are over $2 a gallon … there's no question that there's a sense that we have to do something."

UC gets settlement from Energy Company over stock fall

The University of California will get a half-billion dollar settlement from Dynegy over the company's precipitous stock drop:

The University of California, acting on behalf of scores of investors, announced a $468 million settlement Friday with Texas energy merchant Dynegy Inc. over the company's stock plunge.

The settlement represents the latest agreement between UC and various corporations, executives, accountants and investment bankers that the university has sued since the era of corporate scandals began in late 2001. UC has been designated as lead plaintiff in several high-profile cases, including a suit against Enron Corp., giving it broad authority to negotiate settlements. UC has obtained nearly a half-billion dollars in settlements with Enron defendants.

UC lost $112 million investing in Dynegy, a once-mighty energy firm whose stock went south after the revelation in spring 2002 of a questionable scheme to inflate the company's cash flow via a natural gas deal called Project Alpha. Since then Dynegy's shares have fallen from around $30 to less than $4. Dynegy stock closed Friday at $3.56, down 14 cents for the day.

Trey Davis, a spokesman for UC, said it isn't yet known how much of the $468 million will go to UC and how much will go to other investors.

What doesn't make sense, however, is that investing in stock represents taking a risk. While UC will see its losses covered, current investors will pay the price to reimburse them. Small investors seem particularly vulnerable to scenarios where institutional investors sue in cases like this.

Ethanol prices may come down thanks to innovation

Those worried about high gas prices should also be celebrating this news: a new innovation may lower the cost of ethanol.

Novozymes Biotech Inc. said it found a way of drastically reducing the cost of enzymes needed to create ethanol out of rice straw and other agricultural waste, also known as biomass.

For now, almost all commercial ethanol is made out of corn.
Experts say it will be about five years before it's commercially viable to use alternative materials like rice straw. Novozymes President Glenn Nedwin said Thursday's breakthrough will probably shorten that timetable.

Corn-based ethanol is blended into the gas sold throughout most of California, but it remains controversial. State officials say ethanol can increase air pollution in hot weather; they want to eliminate a federal government rule that makes ethanol use mandatory. But ethanol advocates say the additive makes gas burn more cleanly and argue that increased ethanol use would reduce California's dependence on petroleum and make for cheaper gasoline.

Although the short-term impacts on gas prices are non-existent in several years, this could make the additive cheaper.

Gas Prices appear to plateau

After rising for days on end, it looks like prices at the pump are finally leveling off:

Even if you didn't notice, it was a big deal: Thursday's average price for self-serve regular — $2.623 a gallon — marked the first time in 14 days that the average in the county hadn't broken records, said Jeff Spring of the Automobile Club of Southern California.

The price decrease in the Inland Empire was even tinier, one-tenth of a penny off a record to $2.648. In Orange County, there was a slight increase of two-tenths of a penny, landing at a fresh high of $2.602 a gallon.

"We're seeing microscopic increases and microscopic decreases, so I'd say overall, we're flat," Spring said. "Compared to what we were seeing last week, it's encouraging."

New York, Florida join Golden State Push for Hydrogen Cars

While BMW is brining Diesel back to the States, New York and Florida are joining California in a push for Hydrogen-fueled automobiles:

"Our goal is to establish Florida as one of the leading centers for the commercialization of hydrogen technology," says Allan Bedwell, deputy secretary for the state Department of Environmental Protection. Florida Gov. Jeb Bush's administration is supporting state legislation to commit $15 million for hydrogen fuel projects.

The push comes amid high gas prices — the nationwide average was $2.26 a gallon for regular unleaded, AAA said this week — and as states struggle to meet federal clean-air requirements. Failing to curb pollution can be costly, says Bedwell, who estimates businesses in the Tampa area alone could incur added pollution-control costs of $40 million a year if the region no longer meets air standards.

In California, Gov. Arnold Schwarzenegger has vowed to build "a hydrogen highway to take us to the environmental future" and is using $90 million in state and private funds to build 200 hydrogen fueling stations by 2010.

And in New York, Gov. George Pataki has said his state would lease two hydrogen fuel-cell cars made by Honda. Pataki, who cites hydrogen vehicles' potential "to revolutionize the transportation and energy industries," has committed $1.4 million to fund the use of fuel-cell cars, construct a hydrogen fueling station and convert some state vehicles to burn hydrogen as fuel.

Gas Tax not keeping up with infrastructure needs

California's gas tax is failing to meet it stated goals, according to SacBee columnist Daniel Weintraub:

The state's gasoline tax, the primary source of funding for road construction and maintenance, has been eroded by inflation and increased fuel efficiency. Since 1998, vehicle miles traveled on California roads have increased an estimated 16 percent, while the gas tax, adjusted for inflation, has declined by 8 percent.

A stop-gap attempt to shift the sales tax on gas to road construction, passed in 2002, hasn't worked either, because the state's other programs, from education to health care and social services, can't afford to give up the money.

What's needed is an increase in the gas tax. Currently set at 18 cents per gallon, the tax ought to rise by at least a dime, and perhaps be indexed to inflation. The gas tax is a user fee, requiring those who use the roads most to pay more for their construction and upkeep. There's no shame in acknowledging that the revenue it's now generating is falling short of the need.

Another alternative would be to do away with fuel efficiency standards, but I'd doubt that'd get very far!

California set to get energy refund

Five years after the energy crisis, California looks like it will finally be getting some money back:

California will collect a $750 million refund for energy-crisis overcharges under a settlement approved Wednesday by federal regulators, state officials said.

The deal with Atlanta-based power generator Mirant Corp. was first announced in January but was not approved until Wednesday by the Federal Energy Regulatory Commission.

The $750 million will be split among California's three investor-owned utilities and the state Department of Water Resources, which bought power for the utilities in 2001, and will ultimately go to customers as rate relief.

CA Energy Commission: LNG is Safe

Confirming what advocates for liquefied natural gas have said all along, the California Energy Commission has declared LNG to be safe:

According to the report, equipment and procedures -- as well as potential safety risks -- are constantly being evaluated and updated. In fact, the safety of LNG ports is enhanced by nearly 100 local, state and federal safety and environmental agencies -- including the U.S. Coast Guard, the Department of Energy, the Environmental Protection Agency and the Department of Transportation, and a host of local governments, all of which have rigorous and exacting standards.

And there's more. Since Sept. 11, 2001, ``recently developed maritime security laws and regulations now join the many rules, regulations, and guidelines put forth by the International Maritime Organization, the U.S. Department of Homeland Security, the U.S. Coast Guard and ship-classification societies to regulate LNG shipping facilities,'' the report states.

The report provides more than just knowledge about the regulatory oversight of liquefied natural gas facilities: It is a scrupulously documented resource that presents all the facts about LNG's safety. Great attention is given to every single facet of the design, construction and operation of LNG carriers and import terminals. As a result, Californians can now be confident that hosting LNG facilities is the safest and cleanest way to meet our energy needs and environmental goals.

The report also shows that we can meet the state's energy needs without compromising public health, security or, most important, safety. And while the compendium explores only the physical safety and security of facilities, in fact many Californians' job and economic security is also tied to the future of LNG.

Energy Bill gives Federal authority over LNG

It looks like the final version of the federal Energy Bill will give federal regulators authority over the development of new liquefied natural gas facilities:

Rep. Joe Barton, R-Texas, the committee chairman, said it was "imperative" that the authority of the Federal Energy Regulatory Commission over approval of LNG import sites be clarified.

FERC regulates natural gas transmission and maintains it has the final say over LNG terminals as well. But California in a lawsuit has challenged the agency's authority in connection with a proposed LNG import facility in Long Beach.

Markey, sponsor of the amendment that would have stripped the LNG provision from the bill, said the legislation will essentially block California's court challenge and reduce the ability of other states to be involved in LNG siting decisions.

"It's going to pre-empt the states for the purpose of taking care of the natural gas industry," said Markey, warning that the provision will increase the likelihood that an LNG facility will be put in a populated areas over the objections of local residents.

The full House was expected to take up the energy bill — now being crafted by three committees — possibly as early as next week. The Senate is expected to begin considered of an energy package later this year.

Politicians seek to demogogue Gas Prices

Sacramento Bee columnist Dan Walters laments politicians' attempts to score points over rising gas prices:

A prominently displayed article, entitled "Giving it up for gasoline," was published Tuesday in the Orange County Register, describing the angst among local drivers over gasoline prices and focusing on Steven and Erin Pierce, who had canceled a seventh wedding anniversary trip to Carmel because, they said, driving would be too costly.

"It's ridiculous," the Register quoted Steven Pierce as saying. "Prices sometimes jump 4 or 5 cents overnight. ... We just can't afford the trip."


Pierce is correct in terming the situation "ridiculous," but not for the reasons he cites. It's ridiculous that the media and politicians are making such a big thing out of what is, at worst, a minor economic blip.

Transit Ridership increases with Gas Prices

In what may be an irrational economic decision, people are getting out of their cars and on to the bus:

Soaring gasoline prices are pushing more commuters to use public transportation, say officials at L.A. County's two biggest rail and bus operators.

Ridership on the Red Line subway jumped nearly 12% in the first quarter of this year compared to the same period last year. Boardings increased about 8% on the Green Line and 3% on the Blue Line, said Marc Littman, spokesman for the Metropolitan Transportation Authority, which runs the rail services.

Ridership on the three lines rose along with gas prices this winter, increasing 9% each month from January through March. "It's a pretty big jump," Littman said. "We attribute it to the surge in gas prices."

Bus boardings also rose 9% each month over the quarter, an increase that Littman said was particularly dramatic in light of the season's rainy weather, which typically keeps riders away.

The cost of a round trip Metro fare is equivalent to a gallon of gas--$2.50. So at 20 miles per gallon, someone would have to be taking a Metro trip of 10 miles or more each way to justify the economic expense of riding public transportation... So when exactly does it make sense to take the bus?

Dueling Energy Proposals Spar in Nevada

Coal power or green power? With only so much transmission between California and Nevada, decisionmakers must choose between two deuling proposals:

Near the site of the annual Burning Man festival, a subsidiary of San Diego-based Sempra Energy is proposing to build a coal-fired power plant that could supply enough electricity to California and the Pacific Northwest to light up 1.5 million homes.

Nearby, green-power advocates are pushing an equally ambitious proposal to harness the force of the wind, as well as the heat of the sun and the Earth's core, to create enough electricity to power 1.2 million homes.

Both proposals would connect to the same high-voltage transmission line in order to move electricity to consumers. But there is only enough space left on the electrical freeway for one of the two — at least at the current sizes. So government regulators and politicians must make a choice.

That choice is between coal-fired power — a heavily polluting form of fossil fuel energy that could be counted on to help curtail the West's chronic electricity shortages — and renewable power. The latter is a less-proven option that promises a future free of the emissions that cause smog and acid rain and that contribute to global warming.

Los Angeles, which recently had its own debate over investing in coal or renewable energy, may wind up resolving the dispute, because the city Department of Water and Power runs and partly owns the transmission line that passes through northern Nevada.

The Los Angeles City Council would have to agree to allow one of the projects to connect to the line, which moves megawatts between Sylmar and Oregon. So would the other owners: Pasadena, Glendale, Burbank and Southern California Edison. Decisions are not expected for months.

PasadenaPundit has more.

Energy Prices hit Cities' Bottom Line

While each of us pay more for gas and energy on a regular basis, we may be hit with the sticker shock twice--as government agencies are spending more on their energy needs as well:

The prices for unleaded, diesel and natural gas have soared the last three months, well beyond what finance directors expected last summer when they were compiling the budgets for fiscal 2004-05.

"It's a problem for everybody," said Megan Taylor, spokeswoman for the League of California Cities.

"Local governments are hit by this just as are other consumers of gas. You can't stop picking up the garbage. You can't stop sending the police cars out. What it can mean is that the services that you and I depend upon are cut back in certain areas."

In Los Angeles, which is desperate to hire more police officers, the high price for fuel is costing the city the equivalent of 75 cops' salaries. Its main fuel budget is expected to go from $12.6 million to $18.7 million by the end of the fiscal year on June 30. In addition, the Los Angeles Police Department has already surpassed its $4.7 million fuel budget for police cruisers and other vehicles by $100,000 - with three months still to go in the fiscal year.

Los Angeles County's fuel costs are about 15 percent higher, a spokeswoman said. The Metropolitan Transportation Authority is paying twice as much as it budgeted for diesel, and 45 percent more for compressed natural gas to run its 2,490-bus fleet.

And Metrolink officials said they will consider raising fares by 1.5 percent - on top of a previously announced hike - partly because of the soaring price of diesel for its commuter trains.

Activists deal setback to Long Beach LNG project

Opponents of a proposed Liquefied Natural Gas terminal in the port of Long Beach have dealt a setback to the cause at the latest City Council meeting:

100 activists showed up at a special Long Beach City Council hearing on April 2nd to oppose a liquid natural gas (LNG) terminal in the Port of Long Beach. The meeting sparked hot debate as both opponents gave compelling testimony on this controversial issue.

All the other side could muster were paid union members. Not one local resident showed up to support the project on its merits.

"Of course, those guys are going to support an LNG terminal. They see it as job security. It won't be in the heart of their city and it won't affect their families, businesses, or quality of life. So why would union workers who don't live in Long Beach have a problem with an LNG terminal here?" said Bob Hattoy, California State and Fish and Game Commission.

LNG Cited as strategic benefit of ChevronTexaco/Unocal Merger

Just days after being accusedof trying to corner the liquefied natural gas market in California, the geniuses in the PR department at ChevronTexaco are citing it as one of the "strategic benefits" of their Unocal acquisition:

ChevronTexaco indicated the Unocal assets would provide an enhanced presence in several of the company's core areas of operations, including:

Asia Pacific - The combination of the two companies will place ChevronTexaco in the top tier of natural gas producers and marketers in this expanding and strategically important region. ChevronTexaco would become the top oil and gas producer in Thailand. In Indonesia, extensive oil and gas producing operations offshore in both the shelf and deepwater areas will augment ChevronTexaco's significant oil production, principally onshore. Unocal also markets through the Bontang LNG plant in Indonesia, complementing ChevronTexaco's current LNG production in Australia, as well as ChevronTexaco's planned development of natural gas fields in the greater Gorgon area of Australia and the shipment of LNG to markets in Asia and North America.

Someone alter the FTCR!

Higher gas prices lead to conservation

The flip-side of higher gas prices may be that a lofty goal--conservation of natural resources--may be achieved:

With a gallon of regular up 30 cents from a month ago, to $2.541 on average in the Los Angeles area, and no relief in sight this year, drivers have started to make painful choices in how they adapt to this economic punch to the wallet.

"I've got a daughter who's about to drive, and with the price of insurance and now gas, I'm gonna think twice about buying her a car," said Larry Hoffman, a 60-year-old from Toluca Lake. "Too bad, let the rich kids' parents pay for gas."

Fifteen-year-old Liana Hoffman won't be cut off from transportation -- after all, her dad owns The Pedal Shop, a bike store on Lankershim Boulevard. Her wheels could come in a set of two, rather than four, however, unless prices head south soon.

With the U.S. Energy Information Administration predicting that prices will continue above $2 nationwide for the rest of the year, even gasoline experts are wondering how consumers can cope with the steep hikes.

"That sank my heart," said Jeff Spring, spokesman for the Automobile Club of Southern California, which tracks gas-price movements locally. "It's a paradigm shift if this comes to be. Typically we'd expect prices to spike in California, but if what the EIA says plays through, we're in a new era."

The Auto Club has been advocating increased telecommuting and car-pooling -- suggestions that are likely to take on new meaning for many commuters as they face the prospect of high gas prices over the long term.

Wind Farm may blow over Congressman

A California Congressman pushing wind-farm energy failed to disclose his ties to the industry:

Aides to California Rep. Richard W. Pombo pressed officials of the U.S. Department of the Interior last year to suspend environmental guidelines opposed by the wind-power industry without disclosing that Pombo's family had a substantial financial stake in wind energy.

The guidelines, issued in 2003, seek to reduce the number of birds killed by the spinning blades of wind turbines, such as those that flank the Altamont Pass east of Oakland.

Pombo (R-Tracy), heads the House committee that oversees the Interior Department. His parents own a 300-acre ranch in the Altamont Pass and have received hundreds of thousands of dollars in royalties from wind-power turbines on their land over the last 17 years — much more than the family gets from cattle on that land.

"I signed a confidentiality agreement so I can't tell you exactly" how much, said Ralph Pombo, the congressman's father, "but there is no comparison. I get a lot more from wind."

Congress to push LNG authority to FERC

In a move angering State and Local Governments--and perhaps throwing into peril several liquefied natural gas projects already in the approval pipeline--Congress is pushing the Federal Energy Regulatory Commissin to rule on LNG siting:

As California officials assert their authority in court over liquefied natural gas terminals, Congress is moving to make it clear that federal regulators have the final word on where the sometimes-controversial facilities are located.

An energy bill being crafted by a House committee would solidify the Federal Energy Regulatory Commission's role in approving the growing number of proposed LNG facilities nationwide, proponents say. Some of the terminals, including several proposed for California, have encountered strong opposition from residents worried about accidents or terrorist attacks involving the highly explosive fuel.

Senate energy subcommittee Chairman Lamar Alexander, R-Tenn., introduced similar legislation yesterday.

First of all, let's set the record staright. In liquefied form, natural gas is not explosive.

Second, this bill seems to benefit those projects which have not begun the approval process. Those which are already undergoing public scrutiny would be at a comparative disadvantage if yet another regulatory body were added to the mix.

Poizner to eye Insurance Commissioner, not PUC

San Jose businessman Steve Poizner is poised for a run at statewid office and will pass on an appointment to the California Public Utilities Commission:

Silicon Valley entrepreneur Steve Poizner said Wednesday he will run for California insurance commissioner next year and forgo his pending appointment to the state Public Utilities Commission due to conflicts of interest.

Poizner, 48, was selected in December by Gov. Arnold Schwarzenegger for a coveted appointment to the PUC. But Poizner's private investments containing telecommunications stocks raised concerns among consumer groups.

The PUC has been operating short-handed with four members while Poizner attempted to eliminate his financial conflicts of interest. The Governor's Office is considering potential replacements.

Before his PUC consideration, Poizner was best known in political circles for having spent $6.2 million of his own money last year in a losing Assembly race as the Republican candidate in a Democratic Bay Area district.

Gas Guzzlers a Gamble for Economy

On a day when filling up my hatchback cost $33, I can agree with this...Gas guzzling cars are eating into the nation's Economy.

Take record high gasoline prices, add in fears of terrorist strikes against Middle East oil fields and a growing financial drain on the country, and you produce a band of national security conservatives who sound like environmentalists in urging President Bush and Congress to push for U.S. energy independence by weaning Americans from oil use.

The conservatives, including some top national security figures from the administrations of Presidents Ronald Reagan and George H.W. Bush, recently sent the White House a letter saying it is time to raise the mandated fuel efficiency on autos and turn away from petroleum-fueled vehicles in favor of such alternative fuels as ethanol, bio-diesel or electricity and more hybrid cars and trucks.

Congress may change clock to save power

Picking up on an idea floated by Brad Sherman during the California Energy Crisis, members of the House are considering extending Daylight Savings Time:

Lawmakers crafting energy legislation approved an amendment Wednesday to extend daylight-saving time by two months, having it start on the first Sunday in March and end on the last Sunday in November.

"Extending daylight-saving time makes sense, especially with skyrocketing energy costs," said Rep. Fred Upton, R-Michigan, who along with Rep. Ed Markey, D-Massachusetts, co-sponsored the measure.

The amendment was approved by the House Energy and Commerce Committee that is putting together major parts of energy legislation likely to come up for a vote in the full House in the coming weeks.

"The more daylight we have, the less electricity we use," said Markey, who cited Transportation Department estimates that showed the two-month extension would save the equivalent of 10,000 barrels of oil a day.

European nations already have two more weeks of Daylight savings than Americans--so in the rush to label them "Old Europe" Congress apparently is trying to one-up them.

Rolls Royce goes Hydro

In the battle between Hybrid or Hydrogen, Rolls Royce is siding with its European counterparts and going with the Hydrogen Highway...

Ultra-luxury buyers may soon find themselves avoiding the hoard of plebes in cars that sup on only the finest hydrogen. Rolls-Royce is investing $100 million in developing a power system based on fuel cell technology.

Finally an alternative-fueled vehicle you can drive to the Oscars!

State Democrats seize Political Ground on Gas Tax Cut

Sacramento Democrats are looking to score political points by reducing the State's gas tax. SacBee writer Dan Walters does not approve.

Democrats believe that they can do the sales tax shift with "revenue-neutral" legislation that would require just a simple majority vote, thus bypassing the constitutional requirement for a two-thirds vote on tax increases. By eliminating a need for Republican votes, Democrats could, they believe, enact a bill that cuts pump prices for gasoline by about $2 per fill-up and dare Schwarzenegger to veto it and thus alienate motorists as popular hysteria about gas prices intensifies.

Ultimately, of course, there is no free lunch. If transportation spending is to be increased by $60 billion - a mere fraction of the true need, incidentally - it will be coming from higher taxes, mostly fuel taxes. The promise of a cut in the pump price, then, is something of an illusion - not unlike what the Legislature did in 1996 by passing its ill-starred and misnamed "deregulation" of electric power. To make it palatable to the public, the Legislature cut utility rates immediately by issuing bonds that were then repaid through surcharges on future utility bills.

There is also an intriguing socioeconomic aspect. The chief beneficiaries of eliminating sales taxes on gasoline would be those who drive gas-guzzling vehicles, such as Schwarzenegger's Hummer. But raising general sales taxes would have its greatest impact on the poor, who spend relatively more of their incomes on taxable goods, and are less likely to drive - an interesting posture for those who profess to protect those on the bottom rungs of the economic ladder.

The plan is also bad for the environment, as blogger Boi from Troi notes, "Democrats should be happy that gas prices are so high and ought to consider raising them further, if anything. Market forces are driving ths shift to hybrid and hydrogen vehicles and away from SUVs. Lowering the gas tax will reverse the gains made for the environment by market forces (which, many Sacramento Democrats likely refuse to believe exist)."

Sempra Dodges Shareholder Questions in London

Rather than hold its meeting in California, where it might face protests from ratepayers and environmentalists, San Diego-based Utility Sempra went to London, where it avoided the scrutiny of shareholders and local activists:

Sempra Energy traveled 6,000 miles for an annual meeting that included one shareholder question, not many more actual shareholders and a total elapsed time of 30 minutes.

Shifting from its customary meeting sites in Southern California to the tony Mandarin Oriental Hyde Park Hotel in London, Sempra – the parent company of San Diego Gas & Electric – said it hoped to raise its profile in Europe.

In fact, a spokesman for the San Diego company noted that two of Sempra's largest shareholders are based in this financial capital.

But Barclays Global Investors, one of the company's large London-based shareholders, did not attend yesterday's session. And UBS Asset Management, Sempra's other large London-based shareholder, also seemed to be absent, although a spokesman said the company wouldn't comment on whether it attended.

The Union-Trib writers must have gotten a 500-mile minimum segment connecting in LAX, because according to WebFlyer, SAN-LHR is only 5470 miles.

Canada follows California on Emissions Standards

Gas Prices are up and air quality standards reduce gas mileage, but that is not stopping the Canadian Government from pursuing emissions standards similar to those used in California:

Faced with the threat that Canada would adopt tough, California- style rules on auto emissions, major automakers agreed Tuesday to voluntarily reduce the global-warming emissions of cars and light trucks sold north of the border.

Auto industry watchdogs said the deal, signed Tuesday in Windsor, Ontario, by officials of the Canadian government and the nation's automobile industry, could force automakers to adopt similar stringent emissions rules for vehicles sold throughout the United States.

The agreement follows the lead of regulations adopted last November in California, which U.S. automakers -- the same multinational giants that dominate Canada's auto industry -- are seeking to overturn in court.

Tuesday's pact commits the manufacturers to reduce overall greenhouse gas emissions of their vehicles sold in Canada by 5.3 million metric tons -- about 25 percent -- by the end of 2010. In comparison, rules adopted in California oblige automakers to reduce their global-warming emissions by 30 percent, starting in 2009 and culminating in 2016.

Acquisition road to expansion in Energy markets

With the world's energy resources being tapped out, and regulation preventing the expansion of many energy infrastructure projects, acquisition is becoming the road to expansion, as the ChevronTexacoUnocal deal shows us:

ChevronTexaco's planned acquisition of Unocal reflects the tougher times companies face in discovering new oil and natural gas fields. Redoubling exploration isn't enough. If a company wants to grow, it must usually buy a rival.

Analysts said that reality was a major factor behind ChevronTexaco's agreement Monday to buy Unocal, a company that has a portfolio of oil and natural gas fields concentrated in Asia and the Gulf of Mexico. Those resources will add substantially to ChevronTexaco's proven reserves, a key industry yardstick that measures how much energy lies underground waiting to be tapped.

"The company has to have reserve growth," said John Kingston, global director of oil for Platt's, an energy information service in New York. "Wall Street considers it to be very important."

"The concern here is that overall, we're not replacing reserves at a sufficient level," Kingston added. "Or we are replacing them in places where there is a state-dominated oil company."

Foundation for Taxpayer and Consumer Rights alleges LNG-Gate for Governor

The Foundation for Taxpayer and Consumer Rights is taking on Governor Schwarzenegger over his cozy relations with Chevron Texaco and his oversight of the approval process for Liquefied Natural Gas terminals in the State.

"Today's announcement of Chevron-Texaco's purchase of Unocal has a back story that could be the biggest scandal of California Governor Arnold Schwarzenegger's Administration. In July 2004, some of Schwarzenegger's top brass were treated by Chevron-Texaco to an overseas trip -- it included luxury accommodations at the Four Seasons Hotel in Sydney, Australia -- to sell the Governor's people on why Liquefied Natural Gas (LNG) should be California's new source of electricity. Today's announced merger indicates Chevron-Texaco's desire to corner the market on LNG, of which Unocal controls significant supplies in the Far East. It's a $16 billion bet that California will open the door to coastal LNG terminals and make the long-term commitment to gas-produced electricity.

"What kind of insider information could that type of bet hinge on? Schwarzenegger's campaign committees have accepted $222,200 from Chevron-Texaco. Chevron-Texaco's former lobbyist, Patricia Clarey, is now Schwarzenegger's chief of staff. There is no energy company in the state that Arnold's Administration is closer to.

"But if Chevron-Texaco corners the international market on LNG, it will be in the same position to withhold electricity supply and drive up electric prices that Enron and other energy firms like Reliant and Dynegy were in five years ago. (Don't forget Chevron owned about 27 percent of Dynegy when the market was manipulated last time.) And reporting by the Orange County Register-(1) last year showed that Chevron-Texaco shipped three tankers full of California gasoline out of state just as California drivers were paying record prices at the pump.

Of course, a much simpler solution would be to approve an LNG project which does not involve either company--and there are plenty being proposed across the state!

Sempra's Baja LNG Plans may get Frozen

Sempra may have thought that going to Mexico to build its Liquefied Natural Gas receiving terminal would spare it the time-consuming regulatory processes of California. What it lost, along the way, was the certainty of the process:

As Sempra Energy broke ground on its $800 million liquefied natural gas receiving terminal in Baja California this week, the state's legislature launched an official inquiry into the project.

The investigation, which began yesterday, is led by Guillermo Aldrete Hass, the leader of the legislature's foreign affairs committee. He said he will ask federal officials to suspend the permits for the project while the investigation continues and legal challenges remain unresolved.

"There hasn't been transparency from the beginning to the end," Aldrete said. "We want to know the economic and environmental impacts – both negative and positive."

Of particular concern, Aldrete said, are investigative findings and legal cases in California alleging that Sempra Energy manipulated the natural gas market during the state's 2000-2001 power crisis, causing higher prices for consumers.

"We can't trust Sempra Energy if they have these problems in California," Aldrete said.

Federal and legal challenges also have been filed in Mexico to forestall the LNG project, which is about 14 miles north of Ensenada on the Costa Azul plateau adjacent to the Bajamar golf resort.

Transmission plan would power California

Four Western States have agreed on a plan to ease the aging energy transportation infrastructure--and help California weather any future power crises:

A plan to build a $3 billion transmission line to transport electricity to power-hungry California from other Western states is to be announced today by Gov. Arnold Schwarzenegger.

The line would serve as a highway to shuttle power around California, Utah, Nevada and Wyoming, providing up to 12,000 megawatts of electricity, power for as many as 12 million homes.

California officials said the project, called the Frontier Line, would ease transmission bottlenecks that contributed to the crippling state power crisis in 2000 and 2001, which regulators now say also included widespread market rigging.

The state needs to add the equivalent of two modern power plants each year, or roughly 1,000 megawatts of new capacity, at its current rate of growth and the Frontier Line will help meet that need, said Joe Desmond, deputy secretary of energy for the state Resources Agency.

Businesses Suffer from High Energy Prices

As energy prices creep skyward, California businesses are again feeling the pinch:

Truckers pay more for diesel, often out of their own pockets. So do farmers, who tend their crops with fleets of tractors and tillers. Shuttle bus companies whisking travelers to the airport can't stop driving just because they're spending more at the pump.

Most companies have a hard time passing higher fuel costs on to consumers, at least in the short term.

They may be hemmed in by competition, afraid they'll lose business to their rivals if they raise their prices. Or they may be locked into contracts their customers signed before fuel costs started soaring.

The price of crude set another record Friday, closing at $57.27 per barrel.

If oil prices remain high, however, consumers eventually will bear the burden.

In a Chronicle survey of business owners and mangers, most said they will, sooner or later, work higher oil costs into their own prices and fees. Food, clothes, appliances -- in short, anything that needs to be shipped -- may cost more as a result. So may services that depend on driving.

NorCal Wind Turbines Getting Slowly Upgraded

Wind Turbine technology has advanced, but due to costs and California's regulatory environment, the more efficient clean energy is slow to come to the Golden State:

Using technology imported from Denmark, a new wind farm in the Altamont Pass could generate more electricity at a lower price than its predecessors while killing fewer birds of prey.

But because of regulatory and economic hurdles, wind-farm operators aren't rushing to modernize all 5,200 aging wind turbines in the hills between Livermore and Tracy.

Obstacles to "repowering" — replacing wind turbines installed in the 1980s with more modern machines — include concerns about bird deaths. To claim lucrative federal tax credits, companies seeking to modernize their wind farms also must negotiate new agreements to sell their power to Pacific Gas & Electric Co.

The first wind-farm operator to move forward with a repowering project in the Altamont Pass is Altamont Power LLC, a partnership between Florida-based FPL Energy and Global Renewable Energy Partners. GREP is a subsidiary of wind-turbine manufacturer Vestas Wind Systems of Denmark.

Summer Power Supply projections rely on conservation

Power supplies will be sufficient in Southern California, but only if consumers cooperate:

Southern California may have to take aggressive conservation steps to avoid electricity shortages should the coming summer be unusually hot, the operator of the state's power grid said Thursday.

The California Independent System Operator, which runs most of the transmission system, reviewed its "summer assessment," which showed that the state as a whole probably has enough electricity supplies for a typical summer.

But a summer heat wave — affecting all parts of the West from Phoenix to Los Angeles, through the Bay Area and Portland, Ore. — could leave Southern California with "critically thin operating margins" and a shortfall of as many as 1,700 megawatts, Cal-ISO said.