Tag Archives: Benicia Industrial Park

Faces of Fracking – Ed Ruszel of Benicia, California

Repost from Faces of Fracking
[Editor – This is much more than a story about our friend Ed Ruszel.  Author Tara Lohan packs background and detail into this piece like a great storyteller.  Another MUST READ, including almost everything you need to know about crude by rail in Benicia….  (This story also appears on Grist and DeSmogBlog.)  – RS]

Faces of Fracking

Stories from the front lines of fracking in California

Ed Ruszel
Ed Ruszel’s family business is in an industrial park in Benicia, CA, where Valero Energy is hoping to build a new rail terminal at its refinery to accept 70,000 barrels of crude oil a day. (Sarah Craig)

“Business by the Rails” by Faces of Fracking, CC BY-NC-ND 4.0

Ed Ruszel

Story by Tara Lohan | Photography by Sarah Craig

Ed Ruszel’s workday is a soundtrack of whirling, banging, screeching — the percussion of wood being cut, sanded, and finished. He’s the facility manager for the family business, Ruszel Woodworks. But one sound each day roars above the cacophony of the woodshop: the blast of the train horn as cars cough down the Union Pacific rail line that runs just a few feet from the front of his shop in an industrial park in Benicia, California.

Most days the train cargo is beer, cars, steel, propane, or petroleum coke. But soon two trains of 50 cars each may pass by every day carrying crude oil to a refinery owned by neighboring Valero Energy. Valero is hoping to build a new rail terminal at the refinery that would bring 70,000 barrels a day by train — or nearly 3 million gallons.

And it’s a sign of the times.

Crude by rail has increased 4,000 percent across the country since 2008 and California is feeling the effects. By 2016 the amount of crude by rail entering the state is expected to increase by a factor of 25. That’s assuming industry gets its way in creating more crude by rail stations at refineries and oil terminals. And that’s no longer looking like a sure thing.

Valero’s proposed project in Benicia is just one of many in the area underway or under consideration. All the projects are now facing public pushback — and not just from individuals in communities, but from a united front spanning hundreds of miles. Benicia sits on the Carquinez Strait, a ribbon of water connecting the San Pablo and Suisun Bays in the northeastern reaches of the San Francisco Bay Area. Here, about 20 miles south of Napa’s wine country and 40 miles north of San Francisco, the oil industry may have found a considerable foe.

The Geography of Oil

The heart of California’s oil industry is the Central Valley — 22,500 square miles that also doubles as the state’s most productive farmland. Oil that’s produced here is delivered to California refineries via pipeline. For decades California and Alaska crude were the main suppliers for the state’s refineries. Crude came by pipeline or by boat. Over the last 20 years imports from places like Saudi Arabia, Ecuador, and Iraq have outpaced domestic production. But a recent boom in “unconventional fuels” has triggered an increase in North American sources in the last few years. This has meant more fracked crude from North Dakota’s Bakken shale and diluted bitumen from Alberta’s tar sands.

A Union Pacific train engine is parked in front of the Valero refinery in Benicia, CA. Union Pacific has the final say over the logistics of trains arriving to the refinery. (Sarah Craig)

            “Union Pacific Train” by Faces of Fracking, CC BY-NC-ND 4.0

Unit trains are becoming a favored way to help move this cargo. These are trains in which the entire cargo — every single car — is one product. And in this case that product happens to be highly flammable.

This is one of the things that has Ed Ruszel concerned. He doesn’t think the tank cars are safe enough to transport crude oil (or ethanol, which is also passing through his neighborhood) in the advent of a serious derailment.

But he’s also concerned not just with the kind of cargo, but the sheer volume of it. If a derailment occurs on a train and every single car (up to 100 cars long) is carrying volatile crude, the dangers increase exponentially. The more trains on the tracks, the more likely something could go wrong. In 2013, more crude was spilled in train derailments than in the prior three decades combined, and there were four fiery explosions in North America in a year’s span.

This risk Marilaine Savard knows well. I met her in February of 2014 when she visited the Bay Area to tell residents about what happened in her town of Lac Megantic, Quebec. The closest word to describe the experience was “apocalypse,” she said, through tears.

Most people by now know of the train derailment that killed 47 people and incinerated half of Lac Megantic’s downtown in the wee hours of the morning on July 7, 2013. The fire was so hot the city burned for 36 hours. Even the lake burned.

We now have term for this: bomb train.

Traffic Jam

Just two days before the disaster in Lac Megantic, Ed joined a community meeting in Benicia about the Valero project. For many residents, it was the first they were learning of it, but Ed had known months before.

In January 2013 a train carrying petroleum coke leaving Valero’s refinery derailed. It was minor — no cargo spilled — but it did rip up a piece of track, and the stalled train blocked the driveway to Ruszel Woodworks for hours. It was one of three minor derailments in the industrial park in the span of 10 months.

Ed came outside to see what the problem was. “The Valero people told me ‘get used to it, because we’re really going to be bringing in a lot of cars soon,’” Ed says. “At that point I really started paying attention and I got really scared.” Ed soon learned about plans for Valero’s new terminal, the 100 train cars that would pass by his business each day, and that it appeared the city was ready to rubber stamp the project — no Environmental Impact Report required.

The fire was so hot the city burned for 36 hours. Even the lake burned.

To explain one of the reasons for his concern, Ed shows me around his property where the lands comes to a V and two rails lines intersect. The main line of Union Pacific’s track passes along the back of Ed’s property, about 75 feet from his building. Here trains can get off the main line and switch to the local line that runs inside the industrial park. The local track passes by the front of Ed’s property, about 20 feet from the building.

The tracks into the industrial park were not designed for a crude by rail facility, Ed says. There are no loops. For Valero to get crude tanks into the refinery, the train must pass by the back of Ed’s property on the main line, pull all the way forward (usually about a mile), and then back up onto the local line, past the front of Ed’s property and into the refinery. The process is reversed when the train leaves. The 100 train cars a day that Valero hopes to bring in will come by his business up to four times per day.

That’s a concern not just because of potential dangers from derailments and diesel fumes from idling trains, but also because the industrial park has a rail traffic problem.

“My big concern here is specifically with the rails — I realize there are other huge environmental issues and global issues with the kinds of fossil fuel production we’re dealing with now and where it’s going,” Ed says.

Already trains servicing the Valero refinery and other industry neighbors can cause traffic nightmares. The trains block driveways to businesses and sometimes major roadways.  An off ramp from Interstate 680 empties into the industrial park. Ed has photos of cars trying to exit the highway but are backed up on the interstate because of train traffic.

The reason has to do with the area’s history.

The tracks that come through the industrial park were not built for industry, but for the U.S. Army.

From 1851 to 1964, part of the land now claimed as an industrial park was home to the Benicia Arsenal. Bunker doors in the hillsides and buildings from the 1800s are part of the area’s colorful history. The rail lines moved around troops and armaments from the Civil War through the Korean War, Ed says, but it’s ill-suited to servicing a busy commercial rail terminal.

The Public Comments

Ed’s family moved their woodworking business to the industrial park in 1980. His brother Jack and their father started the company when Jack was still in high school, and it’s grown to over 20 employees. They’ve always played nice with the other businesses, including the refinery, which was built in 1968 and bought by Valero in 2000.

Ed Ruszel drives by the Valero Refinery, which is about a mile from his family’s woodworking business in Benicia, CA. (Sarah Craig)
  “Valero’s Refinery” by Faces of Fracking, CC BY-NC-ND 4.0  

But the Ruszels felt the crude by rail issue demanded they take a stand. While not aligned with any local activist groups, Ed and other members of his family have spoken publicly about their concerns.

“In some ways, getting outspoken we feel like we’re sticking our neck out,” Ed says. “There are four generations of my family here in Benicia — I’ve got my 80 year-old mother, tiny little grandnieces and nephews, and they all have to live with it. But it is important enough.”

Their voices are part of a growing chorus in the area.

On May 31, 2013 the City of Benicia issued a Mitigated Negative Declaration, which means an initial study by the city concluded there were no significant environmental problems with the project that couldn’t be mitigated.

But many residents felt differently and commented on the initial study or voiced concerns at a July 9 city planning department meeting, which occurred just two days after the disaster in Lac Megantic drove home the reality of a catastrophic accident.

By August the city sided with concerned residents and decided that a draft Environmental Impact Report (DEIR) needed to be prepared to further review the project. An outside consultant was hired for the job but paid for by Valero. After much delay, the DEIR was released in June 2014 and promptly slammed by everyone from the state’s Attorney General Kamala Harris to the local group Benicians for a Safe and Healthy Community because it left out crucial information and failed to address the full scope of the project.

Even the Sacramento Area Council of Governments, which represents 22 cities in six counties that are “uprail” from the project, weighed in. It noted the draft EIR doesn’t offer any recommendations for safety measures because it concludes there is no “significant hazard.”

“We believe that conclusion is fundamentally flawed, disregards the recent events demonstrating the very serious risk to life and property that these shipments pose, and contradicts the conclusions of the federal government, which is mobilizing to respond to these risks,” the comment states. It even quotes a U.S. Department of Transportation report from May 2014 that says that Bakken crude by rail shipments pose an “imminent hazard.”

One of the biggest omissions in Valero’s DEIR was Union Pacific not being named as an official partner in the project. With the trains arriving via its rail lines, all logistics will come down to the railroad. Not only that, but the federal power granted to railroad companies preempts local and regional authority.

This preemption is one of the biggest hurdles for communities that don’t want to see crude by rail come through their neighborhoods or want better safeguards. An October 2014 editorial in the San Francisco Chronicle lamented, “What’s really crazy is the federal law that allows preemption of municipal and state law when it comes to critical decisions on rail safety. Affected communities deserve a say over what rolls through their towns.” With preemption, that may be impossible.

The DEIR also doesn’t identify exactly what kind of North American crudes would be arriving and from where, deeming it “confidential business information.” Attorney General Kamala Harris called that omission an “overly broad determination of trade secrets.”

Different kinds of crude have different health and safety risks. A pipeline rupture carrying Canadian diluted bitumen in a tributary of the Kalamazoo River in Michigan in 2010 showed that the thick, corrosive crude is much harder (perhaps impossible) to clean up adequately and is different than conventional crude, which sheens on the surface of water. And Bakken crude has proved more explosive than other crudes because of its chemical composition. It’s likely that some of the crude coming to Valero’s refinery would be from either or both sources.

Consider the numbers: In 2013 the total crude by rail brought into California was nearly 6.3 million barrels, and in the first nine months of 2014, the numbers were 4.3 million barrels. The top two sources have been North Dakota and Canada.

Further, the DEIR only examines the risks of a minor derailment along a 69-miles stretch of track between Benicia and Roseville. It doesn’t address the hazards (which could be catastrophic) of the three potential routes that the Union Pacific trains may take entering California, which involve passing over mountains, through tinderbox-dry forests, and along critical water sources.

Just a week ago a train derailed along one such route in the Feather River Canyon. Eleven cars plunged off the track and down the canyon. Had the cargo been crude instead of corn, its contamination could have made its way down the Feather River to Lake Oroville, a reservoir for millions of Californians.

Public comments on the DEIR closed on September 15, and now it’s a waiting game to see what happens next in Benicia. The planning commission will vote on whether to accept or deny the permit for the project. If the commission denies the permit, Valero can appeal to the city council. Either way, it’s likely to end up in court.

Cumulative Impacts

Ed spends his weekdays on land in Benicia and his weekends on the water, sailing out of nearby Richmond. He has shaggy brown hair, a neatly trimmed salt and pepper goatee, and looks every bit the weathered sailor that he is.

Having worked professionally as a boat captain and even as a solo sailor to Hawaii, Ed is a bit overqualified for the nearly windless fall Sunday we set sail with local activist Marilyn Bardet, a member of Benicians for a Safe and Healthy Community.

Ed Ruszel and Marilyn Bardet, an activist with Benicians for a Safe and Healthy Community, sail outside of the Richmond Harbor to investigate the presence of the oil industry along the Bay Area’s shoreline. (Sarah Craig)
  “Richmond Sailing” by Faces of Fracking, CC BY-NC-ND 4.0 

Marilyn has been a refinery watchdog in Benicia for years and worries about more than just the transportation of fossil fuels. “For me it’s not only about whether they were going to bring it by rail, but whether they were going to bring it at all,” she says.

Sailing from Richmond, we get a good perspective of how pervasive the oil industry is in this area. We pass a couple of blue and white docked ships with their decals reading “Marine Spill Response.” Ever since the Exxon Valdez spill in Alaska, Ed explains, the industry pays into a fund that keeps ships at the ready in case of an accident.

No such thing exists for the crude by rail industry. In fact, the National Transportation Safety Board reported in January 2014, “Current regulations do not require railroads transporting crude oil in multiple tank cars to develop comprehensive spill response plans and have resources on standby for response to worst-case discharges.”

Ed points the bow of the boat toward the Long Wharf in Point Richmond where hulking oil tankers sidle up to be unburdened of their cargo.

We also have a clear view of the large terra cotta-colored storage tanks nesting above neighborhoods in the hillsides of Richmond. These are part of the sprawling refinery operations run by Chevron, but first begun by Standard Oil in 1901.

And it’s not the only refinery around here. In the North Bay, there are five along a 20-mile crescent, with Richmond and Benicia being the bookends. In between, Phillips 66 operates a refinery in Rodeo, and two other refineries (Shell and Tesoro) straddle Martinez.

Residents of these towns have joined in the crude-by-rail fights as well — lending their comments to Environmental Impact Reports, attending community meetings, and joining together for “healing walks” between communities.

Oil storage tanks used by the Chevron refinery in Richmond, CA are seen from the water’s edge. A fire at the refinery in 2012 caused thousands of nearby residents to seek medical treatment. (Sarah Craig)
   “Chevron Refinery By the Bay” by Faces of Fracking, CC BY-NC-ND 4.0 

The network of support has even extended hundreds of miles south. The Phillips 66 refinery has two parts — one in Rodeo and the other 200 miles away, just outside the town of Nipomo in San Luis Obispo County. A pipeline joins the operations. The refinery has expansion plans that are currently being reviewed. One part of those plans involves building a new rail unloading facility in Nipomo that would bring in five unit trains of crude a week, with 50,000 barrels per train.

But the crude-by-rail projects in the area don’t end there. In nearby Pittsburgh, 20 miles east of Benicia, residents pushed back against plans from WestPac Energy. The company had planned to lease land from BNSF Railway and build a new terminal to bring in a 100-car unit train each day of crude. But WestPac’s plan has stalled after Attorney General Kamala Harris commented on a recirculated Draft Environmental Impact Report and said the project had “significant legal problems” and “fails to disclose the sources and analyze the environmental impacts of the new crude.”

Further south in Kern County in the heart of oil country, Plains All American just opened a crude-by-rail terminal that is permitted for a 100-car unit train each day. Another nearby project, Alon USA, received permission from the county for twice as much but is being challenged by lawsuits from environmental groups.

Closer to home, though, unit trains are already arriving. In March, an investigation by local TV station KPIX revealed that Kinder Morgan, a “midstream” company which is in the business of transporting crude (usually by pipeline or rail), received a change of use permit for a rail terminal in Richmond. Kinder Morgan had been transporting ethanol, but the Bay Area Air Quality Management District OK’d Kinder Morgan to offload unit trains of Bakken crude into tanker trucks. KPIX journalists followed the trucks to the Tesoro refinery in Martinez, just across the Carquinez Strait from Benicia.

Aimee Durfee is part of the Martinez Environmental Group. Not only is Martinez flanked by two refineries, but it’s also bisected by Union Pacific rail lines. Now, the residents also know that crude is arriving by truck. “We came to understand that we are collateral damage,” she said. “We get it coming and going.”

Aimee says her group’s biggest fear is the threat of derailment and explosion. The same is true for many Richmond residents near Kinder Morgan’s rail terminal.

“The permit was given illegally by the air district, without concern for the health and safety of the community,” says Andres Soto, an organizer with Communities for a Better Environment. “Should there be a catastrophic explosion — there are residences and two elementary schools across the street from the railyard.” He also says that the blast zone in Richmond contains a total of 27 schools. The blast zone is defined as a half mile away for evacuations if there is a derailment and one mile away if there is an explosion and fire.

Train cars are parked at the Kinder Morgan rail facility in Richmond, CA. The facility is currently permitted to offload Bakken crude from unit trains. (Sarah Craig)
  “Rail Terminal” by Faces of Fracking, CC BY-NC-ND 4.0 

Earthjustice, a nonprofit that litigates on behalf of environmental causes, has led legal efforts trying to block the permit for Kinder Morgan, but in September, Judge James Bush threw out the suit because it was not filed within 180 days of the permit issuance. (The catch-22 of course being that it hadn’t been filed in the proper window of time because no one knew it had even happened, since public notice was not given.)

Earthjustice has appealed Judge Bush’s decision, but residents are continuing to fight the permit in other ways. On October 28, the Richmond City Council unanimously passed a resolution calling on the Bay Area Air Quality Management District to review and “if feasible, revoke the permit and subject the project to a complete CEQA process,” which would be a full environmental review.

The Big Picture

With all this crude by rail activity, some big picture thinking would be helpful. As Attorney General Kamala Harris wrote about the Benicia project, “There’s no consideration of cumulative impacts that could affect public safety and the environment by the proliferation of crude-by-rail projects proposed in California.”

Ed has come to a similar understanding. He is focused on the trains passing by his shop, but the process has opened his eyes to a lot more. He’d heard about the impacts of tar sands and Bakken crude but didn’t have a personal connection to it until unit trains began arriving in California.

“Just focusing on what’s happening in my little neck of the woods has led me to spend more time really looking at the big picture,” he said. “The climate is rapidly changing for one reason or another and probably a good portion of it is what we’re doing with the burning of fossil fuels and so forth, especially this rapid extraction.

“I can’t go to New York and demonstrate or deal with the Keystone XL pipeline, but we can look around here, keep our eyes open, and try to articulate what we’re seeing locally,” says Ed.

Martinez City Council approves ‘weak’ hazardous-rail-related resolution

Repost from The Martinez News-Gazette

City approves hazardous-rail-related resolution

Rick Jones | October 21, 2014
Citizens voice concern about ‘weak’ resolution
Council meeting concerning crude by rail
The Martinez Environmental Group and other concerned citizens attend the Oct. 15, 2014, meeting of the Martinez City Council, where council members approved a resolution calling for safer transportation of hazardous materials through the city. The sign in the background reads: “Stop crude by rail.” (RICK JONES / Martinez News-Gazette)

MARTINEZ, Calif. – The Martinez City Council approved a resolution calling for safer transportation of hazardous materials through the city Wednesday.

While the resolution passed 5-0, many in attendance felt the measure fell far short of where they hoped the city would go. Several members of the council agreed the resolution was weak and in places poorly written.

Councilwoman Lara DeLaney said the resolution was vague, and it didn’t demand enough from state and federal authorities.

“It doesn’t say what Martinez wants from this,” DeLaney said.

She didn’t vote “no” because anything that encourages any kind of safety is better than nothing, she said.

Mayor Rob Schroder supported the resolution, summing up the tone of the council that the resolution does at least make a first step.

“At least it makes a public statement that the City Council is concerned about the public safety of its citizens,” said Schroder, noting the city is also concerned about rail shipments of other hazardous materials. “It’s a broader issue than just crude oil.

“This is just the beginning; as we go on in time, we will be taking more actions with respect to this issue.”

Before the council voted, 14 speakers voiced concerns, most urging the city to take a tougher, more aggressive stance on the issue.

Amy Durfee, who said she lives on E Street about eight blocks away from the Alhambra trestle, is a member of the Martinez Environmental Group (MEG). She spoke forcefully to the council.

“The resolution before you makes absolutely no concrete action to address the issue of the highly explosive trains that are coming across that trestle every 7-10 days and the tanker trucks that are coming back on Highway 4 to Tesoro,” Durfee said

Durfee stated there are currently three crude by rail projects that directly affect Martinez – in Sacramento, Benicia, and Kinder Morgan in Richmond.

“By not directing staff to monitor the situation in nearby cities you are putting the city’s head in the sand and putting us all in danger. [It] feels like voters are talking into a black hole. MEG has been telling you about this since May, and for you to pass this flimsy resolution is not going to fool Martinez voters.”

Bill Nichols told the council that the residents of Martinez have come to just accept the dangers of hazardous materials in the community.

“We have become inured to living with a refinery that puts out 4 million tons of greenhouse gasses every year. All the ice cream socials in the world won’t change that fact,” Nichols said. “We ignore the explosions, the stench, the flames; it’s just part of life here in Martinez. You, however, cannot become inured. You are charged with the public safety. The mayor has said that’s his highest priority. We are asking you to stand up and pass a strong resolution.”

Jan Cox Golovich, former city councilmember from Benicia, told the council of three derailments in the last year at the Benicia Industrial Park involving petroleum coke.

Golovich urged the Martinez council to take a much stronger stance against crude-by-rail. Golovich praised the council for being the first city with a refinery to take any action.

Julian Frazer urged the council to adopt the stronger MEG resolution that was presented to the council.

Councilmember Anamarie Avila Farias said “we all take this very seriously. This is a first step of many more to come. Not a perfect one, but it’s a start.”

Farias said other cities who have passed safety resolutions are now complaining.

“All these other cities have passed these resolutions taking a stance, but the trains keep coming,” Farias said. “The League (of Cities) and the cities we are working with are trying to stop it at a legislative level.”

Interim City Manager Jim Jakel said the city is limited due to a lack of jurisdiction over the railways.

“We don’t really have any power (over the railways),” Councilmember Mark Ross said. “To some, this is nothing more than a political selfie thrown out weeks before the campaign. To others it’s, ‘Hey, at least you are saying something.’”

The resolution “doesn’t really do anything more than express our concern,” Ross said.


Grant Cooke: Big Oil’s endgame: What it all means for Benicia

Repost from The Benicia Herald
[Editor: Benicia’s own Grant Cooke has written a highly significant three-part series for The Benicia Herald, outlining the impending fall of the fossil fuel industry and concluding with good advice for the City of Benicia and other cities dependent on refineries for a major portion of their local revenue stream.  This is the last of three parts.  Read part one by CLICKING HERE and part two by CLICKING HERE.  – RS]

Big Oil’s endgame: What it all means for Benicia

October 12, 2014, by Grant Cooke

P1010301IN APRIL 2014, THE HIGHLY RESPECTED Paris-based financial company Kepler Chevreux released a research report that has rippled through the fossil fuel industries. In it, Kepler Chevreux describes what is at stake for the fossil fuel industry as world governments’ push for cleaner fuels and reduced greenhouse gas emissions gathers momentum.

The firm argues that the global oil, gas and coal industries are set to lose a combined $28 trillion in revenues over the next two decades as governments take action to address climate change, clean up pollution and move to decarbonize the global energy system. The report helps to explain the enormous pressure that the industries are exerting on governments not to regulate GHGs.

Kepler Chevreux used International Energy Agency forecasts for global energy trends to 2035 as the basis for its research, and it concluded that as carbonless energy becomes more available, and as government policies make steep cuts in carbon emissions, demand for oil, natural gas and coal will fall, which will lower prices.

The report said oil industry revenues could fall by $19.3 trillion over the period 2013-35, coal industry revenues could fall by $4.9 trillion and gas revenues could be $4 trillion lower. High-production-cost extraction such as deep-water wells, oil sands and shale oil will be most affected.

Even under business-as-usual conditions, however, the oil industry will still face risks from increasing costs and more capital-intensive projects, fewer exports, political risks and the declining costs of renewable energy.

The report continues: “The oil industry’s increasingly unsustainable dynamics … mean that stranded asset risk exists even under business-as-usual conditions. High oil prices will encourage the shift away from oil towards renewables (whose costs are falling) while also incentivizing greater energy efficiency.” Eventually, fossil fuel assets will be too expensive to extract, and the oil will be left in the ground.

As far as renewables are concerned, Kepler Chevreux says tremendous cost reductions are occurring and will continue as the upward trajectory of oil costs becomes steeper.

Kepler Chevreux’s report is consistent with others released in 2014. One report from U.S.’s Citigroup, titled “Age of Renewables is Beginning — A Levelized Cost of Energy (LCOE)” and released in March 2014, argues that there will be significant price decreases in solar and wind power that will add to the renewable energy generation boom. Citigroup projects price declines based on Moore’s Law, the same dynamic that drove the boom in information technology.

In brief, Citigroup is looking for cost reductions of as much as 11 percent per year in all phases of photovoltaic development and installation. At the same time, they say the cost of producing wind energy also will significantly decline. During this period, Citigroup says, the price of natural gas will continue to go up and the cost of running coal and nuclear plants will gradually become prohibitive.

When the world’s major financial institutions start to do serious research and quantify the declining costs of renewable energy versus the rising costs of fossil fuels, it becomes easier to understand the monumental impact that the Green Industrial Revolution is having.

Zero marginal cost

Marginal cost, to an economist or businessperson, is the cost of producing one more unit of a good or service after fixed costs have been paid. For example, let’s take a shovel manufacturer. It costs the shovel company $10,000 to create the process and buy the equipment to make a shovel that sells for $15. So the company has recovered its fixed or original costs after 800 to 1,000 are sold. Thereafter, each shovel has a marginal cost of $3, consisting mostly of supplies, labor and distribution.

Companies have used technology to increase the productivity, reduce marginal costs and increase profits from the beginning. However, as Jeremy Rifkin points out in “Zero Marginal Cost Society,” we have entered an era where technology has unleashed “extreme productivity,” driving marginal costs on some items and services to near zero. File sharing technology and subsequent zero marginal cost almost ruined the record business and shook the movie business. The newspaper and magazine industries have been pushed to the wall and are being replaced by the blogosphere and YouTube. The book industry struggles with the e-book phenomenon.

An equally revolutionary change will soon overtake the higher education industry. Much to the annoyance of the universities — and for the first time in world history — knowledge is becoming free. At last count, the free Massive Open Online Courses (MOOCs) had enrolled about six million students. The courses, many of which are for credit and taught by distinguished faculty, operate at almost zero marginal cost. Why pay $10,000 at a private university for the same course that is free over the Internet? The traditional brick-and-mortar, football-driven, ivy-covered universities will soon be scrambling for a new business model.

Airbnb, a room-sharing Internet operation with close to zero marginal cost, is a threat to change the hotel industry in the same way that file sharing changed the record business, especially in the world’s expensive cities. Young out-of-town high-tech workers coming to San Francisco from Europe use Airbnb to rent a condo or an empty room in a house instead of staying at a hotel. They do this because they cannot find a room with the location they need, or because their expense reimbursement cap won’t cover one of the city’s high-end hotel rooms. Industry analysts estimate that Airbnb and similar operations took away more than a million rooms from New York City’s hotels last year.

A powerful technology revolution is evolving that will change all aspects of our lives, including how we access renewable energy. An “Energy Internet” is coming that will seamlessly tie together how we share and interact with electricity. It will greatly increase productivity and drive down the marginal cost of producing and distributing electricity, possibly to nothing beyond our fixed costs.

This is almost the case with the early adopters of solar and wind energy. As they pay off these systems and their fixed costs are covered, additional units of energy are basically free, since we don’t pay the sun to shine or the wind to sweep around our back wall. This is the concept that IKEA, the Swedish furniture manufacturer, is exploiting. IKEA is test marketing residential solar systems in Europe that cost about $11,000 with a payback of three to five years. Eventually, we’ll be able to buy a home solar system at IKEA, Costco or Home Depot, have it installed and recover our costs in less than two years.

All three elements — carbon mitigation costs, grid parity and zero marginal costs — and others like additive manufacturing and nanotechnology are part of the coming Green Industrial Revolution. It will be an era of momentous change in the way we live our lives. It will shake up many familiar and accepted processes like 20th-century capitalism and free-market economics, reductive manufacturing, higher education and health care. More to the point, it will see the passing of the carbon-intensive industries.

Like the centralized utility industry, the fossil fuel industries and the large centralized utilities have business models predicated on continued growth in consumption. Once that nexus of declining prices for renewables and rising costs of extraction and distribution is crossed — and we are already there in several regions of the world — demand will rapidly shift and propel us into “global energy deflation.”

Think about it: No more air pollution strangling our cities, no more coal ash spills in rivers that our kids swim in, no more water tables being poisoned by fracking toxics. Better yet, think of no more utility bills and electricity that is almost free. These are among the unlimited opportunities that extreme productivity can provide.

* * *

SO WHAT DOES ALL THIS MEAN FOR BENICIA? Our lovely town, along with some of our neighbors, has enjoyed a stream of tax revenue from the fossil fuel industries for several decades. This will end as these industries lose the ability to compete in price with renewable energy. After all, if my energy costs drop to near zero, I’m not going to pay $5 for a gallon for gas or 20 cents per kilowatt hour. If Kepler Chevreux, Citigroup and the prescient investment bankers are right — and they usually are — oil company profits will begin a death spiral accompanied by industry constriction and refinery closings. Losing $19.3 trillion over two decades is a staggering amount even for the richest industry in world history.

Benicia should begin a long-range plan to replace Valero’s current tax revenues. Two decades from now this town will be very different — we are headed toward a city of gray-haired pensioners and retired folks too contented with perfect weather and amenities to sell homes to wage earners who, in fact, may not be able to afford big suburban houses and garages full of cars.

Instead, the Millennials are choosing dense urban living that’s close to work, and they prefer getting around by foot or bicycle, with some public transportation and the occasional Zipcar to visit the old folks in ‘burbs. The last thing pensioners want to do is pay extra taxes for schools and services they aren’t using, so raising taxes to meet the tax revenue shortfall is probably out of the question.

A similar revenue shortfall is probably facing the thousands of fossil fuel and utility industry employees who are thinking of retiring in the East Bay. Many plan to live on their stock dividends and pass the stock along to their heirs. This will be difficult as the industry begins the attrition phase of its cycle. They should see a financial planner and diversify.

To gamble Benicia’s safety and expand GHG emissions by approving Valero’s crude-by-rail proposal is illogical given that the oil industry is winding down and fossil-fuel will soon not be competitive with renewables. It would better for the Bay Area if we start to help Valero and the other refineries begin the long slow wind-down process, and gradually close them while the companies are still profitable. If we leave the shutdown process to when the companies start to struggle financially, they will just lock the gates and walk away, leaving the huge environmental cleanup costs to the local communities much the way the military does when they close bases.

There’s no good reason why Benicia residents should be saddled with the burden of a shuttered and vacant Valero refinery. We should begin the process as soon as possible and work with the refinery to not only find a way to replace the lost tax revenue, but to identify who will pay for the hazard waste and environmental cleanup.

At the very least, Benicia City Council should understand the move to a carbonless economy, read the Citigroup and Kepler Chevreux reports and the other emerging research, and accept the fact that Big Oil has begun its endgame. Leadership is about looking forward, not back, and identifying and solving problems at the most opportune time.

Grant Cooke is a long-time Benicia resident and CEO of Sustainable Energy Associates. He is co-author, with Nobel Peace Prize winner Woodrow Clark, of “The Green Industrial Revolution: Energy, Engineering and Economics,” set to be released in October by Elsevier.

Benicia Herald Op Ed: My Dream for Benicia, by Sue Kibbe

Repost from The Benicia Herald
[Editor: Sue Kibbe also submitted her “Dream for Benicia” to the Benicia Planning Commission as a comment for the record on Valero Crude By Rail.  – RS]

My dream for Benicia

I HAVE A DREAM THAT ONE DAY BENICIA WILL RISE UP and be known across the nation as the Little City that said “No” to Big Oil, putting human life and environmental stewardship above human greed and the insatiable quest for increased profits. What a proud day it would be if Benicia said the risk to the thousands living up-rail is too high a price to pay.

Because it is too high a price to pay. The effect on the environment from a spill or explosion would be an unmitigated disaster, a fire that cannot be extinguished, a toxic slick destroying every living thing.

Crude-by-rail has been called “a disaster in the making” by more than one expert. A railway safety consultant has warned, “We’ve got all kinds of failings on all sides, inadequacies that are coming to light because trains are blowing up all over the place.” The Federal Railroad Administration is able to inspect only two-tenths of 1 percent of railroad operations each year. With 140,000 rail miles across the nation, regular inspection of the tracks is impossible.

The Department of Transportation has yet to provide regulations for crude-by-rail transport. Expect pushback from the rail industry. Safety measures such as “positive train control” (PTC) were recommended 45 years ago, yet the technology operates on only a tiny slice of America’s rail network. The railroads have preempted local control and can make routing decisions without public disclosure.

Meanwhile, aging rail trestles and lines such as the one through Feather River Canyon — lines that were never constructed for such heavy traffic — continue to be used with greater frequency. The New York Times reported last month that “400,000 carloads of crude oil traveled by rail last year . . . up from 9,500 in 2008. . . . From 1975 to 2012, federal records show, (railroads) spilled 800,000 gallons of crude oil. Last year alone, they spilled more the 1.15 million gallons.”

Scott Smith, a scientist whose work has focused on oil spills, has studied samples of the Bakken crude oil from three accident sites. He may be the only expert outside the oil industry to have analyzed this crude. All the samples he studied share the same high levels of volatile organic compounds (VOC) and alkane gases in exceptional combinations. Smith says 30 percent to 40 percent of Bakken crude is made up of toxic and explosive gases. “Any form of static electricity will ignite this stuff and blow it up,” he said.

The Wall Street Journal, based on its own analysis, reported that Bakken has significantly more combustible gases and a higher vapor pressure than oil from other formations. Basically, its flash point is dangerously low, and a chain reaction from tank car to tank car is inevitable.

Examining the draft environmental impact report (DEIR)

Pay attention to the wording in Valero’s proposal: “The Project would not increase the amount of crude oil that can be processed at the refinery . . .” It never says the amount of crude oil that “is being processed” at the refinery. In the DEIR, page 3-2, it says: “The Refinery’s crude oil processing rate is limited to an annual average of 165,000 barrels per day (daily maximum of 180,000 barrels) by its operating permit.” That is a huge increase from the 70,000 barrels per day that it says are processed now. With the 70,000 by rail per day, add 18 vessels shipping 350,000 barrels per vessel — that equals 6,300,000 barrels, a total of 31,850,000 barrels per year — thus an increase in processing, and hence in emissions.

We have read in a Bay Area newspaper that “Valero was named by the U.S. Environmental Protection Agency this year as one of California’s top distributors of dangerous substances. It was second to the ConocoPhillips refinery in Rodeo as the most profligate disseminator of poisons in the Bay Area, releasing 504,472 pounds of toxic substances into the air, water or ground. It was the 10th biggest source of chemicals and pollutants in the state, according to (a) report released in January.

“Almost half of the violations cited by the (Bay Area Air Quality Management District) between 2011 and 2012 involved excessive short-term emissions and valve leaks on tanks.”

According to the DEIR, Section 4.1-23: An unmitigated, significant and unavoidable air quality violation, with a net increase in Nitrogen oxides and ozone precursor emissions would result from transporting crude by rail through the communities up-rail within the Sacramento Basin: in the Yolo-Solano, Sacramento Metropolitan and Placer County Air Quality Management Districts.

How can we, in good conscience — or even legally — violate the air quality of our neighbors to the north by authorizing these shipments? And not only would we affect their air quality, we also would authorize the transport of a highly toxic, corrosive, flammable material in 36, 500 tank cars, each weighing 143 tons when loaded with crude oil — an annual total of 1,460 locomotives weighing more than 7,150 tons when loaded — through these communities, over rails that were never built for and have never carried such heavy traffic, all for the sole purpose of satisfying human greed?

Valero’s net income rose 28 percent in the first quarter of 2014; net income to shareholders jumped to $828 million, while revenues rose to $33.6 billion. If you are telling me that Valero needs this project to stay competitive, you haven’t looked at the facts.

A closer look at ‘job creation,’ one of the claimed benefits to the community from crude-by-rail

The addition of 20 full-time jobs at the refinery will be the result of switching from crude by vessel to rail delivery. There will be 72 fewer vessel deliveries, in which crude is pumped directly from a ship at the dock into pipes and storage tanks in one operation. Instead, there will be 36,500 tank cars per year to be emptied at the refinery, coupling and uncoupling 100 tank cars per day.

Let’s be clear, these are HAZMAT jobs. Not only would you be unloading one of the most toxic substances on the planet, breathing in toxic “fugitive emissions” from the tank cars, you also would be in direct contact with the toxic emissions from 730 locomotives per year. The only thing appealing about these new jobs will be the “good pay” (they are never described as “good jobs”), because they are hazardous, arduous, truly nasty jobs.

Section 4.6.5 Impacts and Mitigation Measures: Greenhouse Gas Emissions

Another one of the project’s “benefits” much proclaimed by Valero is the reduction of greenhouse gas emissions. Valero states that crude by rail would “improve air quality in the Bay Area.” They are not lying — this is a carefully worded deception. The Bay Area Air Quality Management District is a huge area encompassing every county that touches the Bay, the entirety of every county except for Sonoma and Solano counties. This is the area in which they can legally claim to improve air quality.

The mitigating factor here is the reduced number of oil tankers traversing the Bay. What they calculated were the emissions from 72 ships that will no longer be sailing across 49.5 miles — from the sea buoy outside the Golden Gate to the Valero dock in Benicia and back out again. (That’s 99 miles total for each of the 72 tankers.) They were allowed to subtract those Bay Area emissions from the direct emissions that will be generated right here from construction of the rail terminal, the unloading of crude oil and the 730 locomotive engines moving through the Industrial Park.

This, then, gives Valero a “less than significant” increase in emissions (DEIR Table 4.1-5) — but in reality, while reducing emissions out in the Bay they will be increasing them right here where we live and breathe by 18,433 metric tons per year (DEIR Table 4.6-5). This may be legal in terms of the permitting process, and good news for sailboats on the Bay, but for the people of Benicia and especially for any businesses located in the Industrial Park, it is a terrible deal.

What people need to understand is that this “mitigation” in the “Bay Area” has been used to offset the very real pollution that will happen right here in our city. That pollution is not reduced by one particle, except on paper. To tell us that this is a “benefit” to Benicia is hugely hypocritical and a manipulation of the facts. Do not be deceived. Know that the pollution in this city will increase as a result of crude by rail, and the “mitigation” out in the Bay actually works against us. And if you have a business in the Industrial Park, you will be in the thick of it.

Further emissions and omissions

The DEIR, page 4.1-21, states: “. . . locomotives generate more emissions than marine vessels per mile, per 1,000,000 barrels of crude oil delivered each year, of ROG (reactive organic gas), NOx, (nitrogen oxide), CO (carbon monoxide), PM10 and PM25 (particulate matter of differing micron size).” Estimates are vague regarding all this pollution. We are supposed to take comfort, however, in the decrease in marine emissions from fewer oil tankers traveling from Alaska, South America and the Middle East, which according to this document is supposed to offset all but the lethal NOx from the trains. It’s fancy figuring, subtracting what is happening on the ocean blue from the reality of emissions from 1,460 locomotives, each traveling more than 1,500 miles, that would be added to the terrestrial U.S., directly to hundreds of communities, farms and forests along the railways. The impact would, in fact, be “significant and unavoidable.”

But all this is avoidable — if Benicia declares a moratorium on crude by rail.

I have a dream today . . . that could all too easily become tomorrow’s nightmare.

Sue Kibbe is a longtime resident of Benicia’s Highlands district.