Tag Archives: Western States Petroleum Association (WSPA)

Sacramento: Oil firms challenge state over clean fuel

Repost from SFGate

Clean fuels shaping up as fight of the year in Sacramento

New battle lines drawn in fight over low-carbon policy
By Laurel Rosenhall, CALmatters, Mar 5, 2016 Updated: 3/6/16 3:33pm
A pending fight over low-carbon fuel standards could hinge on how they affect the state’s cap-and-trade system for carbon emissions. Photo: Ted S. Warren, AP
A pending fight over low-carbon fuel standards could hinge on how they affect the state’s cap-and-trade system for carbon emissions. Photo: Ted S. Warren, AP

A Harvard economist known globally for his work on climate change policy sat in the Sacramento office of the oil industry’s lobbying firm recently, making the case that California is fighting global warming the wrong way.

The state has a good cap and trade system, Robert Stavins said, but some of its other environmental policies are weakening it. He pointed to a rule known as the low carbon fuel standard, which is supposed to increase production of clean fuels.

Environmental advocates consider it a complement to the cap and trade program that makes industry pay for emitting carbon; Stavins had other words.

“It’s contradictory. It’s counter-productive. It’s perverse,” he said. “I would recommend eliminating it.”

California’s low carbon fuel policy is shaping up as a major fight this year for the state’s oil industry, an influential behemoth that spent more than $10.9 million lobbying Sacramento last year, more than any other interest group.

“There’s a storm coming,” biofuels lobbyist Chris Hessler told a roomful of clean energy advocates at a recent conference on low carbon fuels. “If we don’t meet this attack vigorously, we’re all going to be in a lot of trouble.”

NEW BATTLE LINES

The oil industry was front and center in the biggest fight to hit the state Capitol last year: a proposal to cut California’s petroleum consumption in half over the next 15 years to slow the pace of climate change. The industry won its battle when lawmakers stripped the oil provision from Senate Bill 350.

But California’s larger oil war is far from over, and the newest battle lines are beginning to emerge.

Gov. Jerry Brown is plowing ahead with plans to cut vehicle oil use in half through executive orders and regulations like the low carbon fuel standard. The standard requires producers to cut the carbon intensity of their fuels 10 percent by 2020. To reach the standard, refineries will have to make a blend that uses more alternative fuels — like ethanol — and less oil.

The program was adopted in 2009 but was locked in a court battle for years. California regulators prevailed, and took action last year to resume the program. Now producers must start changing the way they formulate their fuel or buy credits if their product is over the limit.

That’s led to higher costs for fuel makers, which they are passing on to consumers at a rate of about 4 cents per gallon, according to the California Energy Commission. But the price is likely to keep increasing, the oil industry warns, as it gets tougher to meet the standard that increases over time.

Which is where Stavins’ argument comes in. It goes like this: the cleaner fuels required by the low carbon fuel standard will emit less greenhouse gas. That will reduce the need for fuel producers to buy permits in the cap and trade system (which makes industry pay for emitting climate-warming pollution) and create additional emissions by allowing other manufacturers to buy the pollution permits.

Less demand will also depress prices on the cap and trade market.

Stavins is the director of Harvard’s Environmental Economics Program and part of the Intergovernmental Panel on Climate Change, a prestigious group of experts who review research for the United Nations.

He’s also an advisor to the Western States Petroleum Association, which paid him to make the trip to Sacramento, where he talked with reporters before a day of meetings with lawmakers and business leaders.

Environmental advocates and California clean air regulators reject his view. They say the fuel standard works in harmony with other carbon-reducing programs and it’s an important piece of California’s effort to achieve its climate change goals.

“One of the major goals of the low carbon fuel standard… is to drive innovation of new and alternative low carbon fuels,” said Stanley Young, spokesman for the California Air Resources Board. “The cap and trade program on its own cannot do that.”

Alternative fuel producers gathered in a ballroom near the Capitol days after Stavins’ visit to Sacramento. During a presentation on the rising price of low carbon fuel credits, Hessler, the biofuels lobbyist, warned that the program is coming under “political attack.”

He defended the fuel standard by saying the regulation limits the price of the credits, and the cost to consumers will be kept down as some fuel producers make money by selling credits to others. He urged conference participants to share his information with California policymakers to counter opposition to the low carbon fuel standard.

“We’ve got to be ready for this,” Hessler said.

HOW THINGS COULD GO DOWN

A fight last year over a low carbon fuel standard in the state of Washington may provide some clues about how things could go down here.

There, Democratic Gov. Jay Inslee proposed a low carbon fuel standard but failed to earn enough support for it in the Legislature. The fuel standard became a bargaining chip for Republicans in negotiations about funding for transportation infrastructure.

Here in California, lawmakers and Gov. Brown are also negotiating a plan to pay for a backlog of repairs to state roads and highways. Brown has pitched spending $36 billion over the next decade with a mix of taxes and other revenue sources.

Republican votes are necessary to reach the two-thirds threshold for approving new taxes. So far, Republicans have balked at the plan, with some suggesting that the fuel standard should be included in the negotiations.

“As we’re having the discussions about transportation funding in general in California, and transportation taxes in particular, this ought to be part of the discussion,” said Assemblyman Jay Obernolte, R-Hesperia.

It’s a message echoed by the president of the Western States Petroleum Association, which advocated against the low carbon fuel standard in Washington.

Catherine Reheis-Boyd said she wants California lawmakers to “take a very hard look” at the low carbon fuel standard as they consider the future of climate change policies and the desire to repair the state’s roads.

“All those things interplay,” Reheis-Boyd said. “That’s a big conversation. I think people across the state are willing to have it, and I think we’re at a pivotal point to have it this year.”

CALmatters is a nonprofit journalism venture dedicated to explaining state policies and politics. For more news analysis by Laurel Rosenhall go to https://calmatters.org/newsanalysis/.
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    Oil Industry Spending Millions on California Lobbying

    An email alert from California League of Conservation Voters (EcoVote.org)

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    From: Sarah Rose, Chief Executive Officer,  California League of Conservation Voters
    Sent: Saturday, August 15, 2015 8:01 AM
    Subject: BREAKING: In California, Oil Industry Spends Millions on State-Level Lobbying

    Breaking news:

    In a report just released by the California Secretary of State, we can see for the first time just how far the oil industry is willing to go to influence state lawmakers. Here what we know:

    • Oil industry lobbyists spent $6.2 million − in just the first six months of this year – to push their agenda on state-level issues in California.
    • Oil companies are spending more than $1 million per month to stop Californians like us from cleaning up the air we breathe, protecting our drinking water supplies, shifting to renewable energy, and preventing future oil spills.
    • They’re not slowing down. In fact, this week the oil industry’s main lobbying group WSPA (Western States Petroleum Association) launched an all-out attack on climate change bills in the statehouse right now. Under the mask of their front group “California Driver’s Alliance,” WSPA’s deceptive and manipulative ads are now running on television, internet, and radio in several key legislative districts throughout the state.
    • We can beat them, but we need your help. Right now, we’re fighting to pass a historic package of climate change laws that will thrust California back into the forefront of global climate leadership. Here at CLCV, we’ve faced off against WSPA in countless battles over our 40-year history. We’ve beat them enough times to know what works – and it’s you  (yes, you!) persistently contacting your lawmakers, speaking your mind, and personally insisting that your life and your family’s future are more important than the profit margins at Chevron and Shell. Take action and send your message to lawmakers right now. >>

    Last year, the oil industry spent a record $20 million in lobbying to try to stop the full implementation of California’s first landmark climate and clean energy law, AB 32 – but they failed, because we fought back. Thousands of us in the California League of Conservation Voters stood side-by-side with our allies and fought back against WSPA’s cynical propaganda. Together, we defeated their pro-pollution agenda, and now transportation fuels (which are responsible for 40% of carbon pollution and 80% of smog-causing pollution produced in CA) are included under the “cap” in cap-and-trade.

    I’m proud of our victory last year, but the real story is we won that battle by the skin of our teeth. Things very easily could have gone the other way if we didn’t have so much help from voters like you. Now, the stakes are even higher, and the oil industry is on track to break last year’s spending record to lobby against us. We need your help today: Stand with us now. >>

    Sincerely,

    Sarah Rose Chief Executive Officer California League of Conservation Voters

    P.S. As they attempt to hide from public scrutiny, oil companies funnel most of their California lobbying cash through the industry lobbying group WSPA (Western States Petroleum Association). But one oil company − Chevron – went above and beyond. In addition to their WSPA contributions, Chevron spent $1.5 million lobbying for influence over California laws. That means two spots on California’s top-five list for big-spending lobbyists belong to Big Oil. We can’t let them win. Please, speak out about climate change right now: http://ecovote.org/ActOnClimate >>

    Additional background: CLCV supports Senate Bill 32 (Pavley) and Senate Bill 350 (de León) to combat climate change, reduce pollution, create clean energy jobs, and ensure that all California communities are prepared for the future. Specifically, these important bills call for bold but achievable new climate goals:

    • Increase from one-third to 50 percent our electricity derived from renewable sources
    • Reduce today’s petroleum use in cars and trucks by up to 50 percent
    • Double the energy efficiency of existing buildings
    • Reduce greenhouse gas emissions to 80 percent below 1990 levels by 2050

    With help from thousands of CLCV supporters like you, these important bills have already passed the State Senate. Now both bills are facing critical votes in the Assembly. Make sure your Assemblymember hears from you: Speak out now!

    We need to keep making progress to address the challenges presented by climate change, especially in our hardest-hit communities. Senate pro Tem Kevin de León put it best: “For too long, poor and working class families in California’s most polluted communities do not have the opportunity to invest in clean, efficient transportation … We need to move the state away from fossil fuels, away from the grip of oil … This is common sense climate policy.”

    Since 1972, the California League of Conservation Voters (CLCV) has protected our land, air, water, and public health as the non-partisan political arm of the environmental movement. CLCV’s mission is to protect and enhance the environment and the health of all California communities by electing environmental champions, advancing critical priorities, and holding policymakers accountable. You can unsubscribe at any time, but we hope you’ll stay. You make a big difference with CLCV, because our political strength comes from members like you. Thanks for reading, and thank you for everything you do to make California a cleaner, safer, and healthier place to call home.

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      California oil: Refinery profit margins rise during price spikes

      Repost from The San Francisco Chronicle
      [Editor:  Significant quote: “A new report from the nonprofit group Consumer Watchdog argues that refinery profit margins in the state rise during price spikes — even when a company has to buy extra wholesale gasoline to make up for refinery downtime.”  – RS]

      Refinery ills push price of gasoline up sharply

      Higher crude costs add to spike at pump
      By David R. Baker, 4 May 2015, 7:23 pm
      The ExxonMobil refinery is seen after an explosion in a gasoline processing unit at the facility, in Torrance, Calif., on Wednesday, Feb. 18, 2015. Two workers suffered minor injuries and a small fire at the unit was quickly put out. The incident triggered a safety flare to burn off flammable substances. The facility about 20 miles south of downtown Los Angeles covers 750 acres, employs over a thousand people, and processes an average of 155,000 barrels of crude oil per day, according to the company. (AP Photo/Nick Ut) Photo: Nick Ut, Associated Press
      The ExxonMobil refinery is seen after an explosion in a gasoline processing unit at the facility, in Torrance, Calif., on Wednesday, Feb. 18, 2015. Two workers suffered minor injuries and a small fire at the unit was quickly put out. The incident triggered a safety flare to burn off flammable substances. The facility about 20 miles south of downtown Los Angeles covers 750 acres, employs over a thousand people, and processes an average of 155,000 barrels of crude oil per day, according to the company. (AP Photo/Nick Ut) Photo: Nick Ut, Associated Press

      California’s gasoline prices jumped 31 cents in the last week, pushed higher by rising crude oil costs and problems at several state refineries.

      It’s the second time this year that California drivers have faced such a steep price spike. And it has some oil company critics livid at a state gasoline market they say is designed to fail.

      “This is a problem that only benefits them, to the expense of California consumers,” said Tom Steyer, the billionaire environmental activist who has pushed to raise the oil industry’s taxes in the state. “When you look at an oligopoly, is there anyone there with an incentive to solve this problem? I would say no.”

      The average cost of a gallon of regular in California hit $ 3.71 on Monday, according to GasBuddy.com. Less than a month ago, in mid- April, regular was selling for less than $ 3.10.

      And while gas prices have been moving higher nationwide, California has by far the nation’s priciest fuel. Even Hawaii currently pays less, with an average of $ 3.20. The national average stands at $ 2.63, according to GasBuddy.com.

      Part of the problem lies in crude oil prices, which have risen 34 percent since mid-March. But California’s sudden price surge also reflects unique aspects of the state’s gasoline market that have frustrated drivers for more than a decade.

      California uses its own pollution-fighting fuel blends not found in other states. As a result, most of California’s gasoline is made by 14 refineries located within the state’s borders. The state also has some of the country’s highest gasoline taxes — almost 66 cents per gallon. And starting in January, California’s cap-and-trade system for reining in greenhouse gas emissions added 10 cents to the overall cost, according to estimates.

      Since only a limited number of refineries make California grade gasoline, any hiccup in production can move prices. In February, Tesoro temporarily shut down its Martinez refinery in response to a labor strike, and an explosion hobbled Exxon Mobil’s refinery in Torrance ( Los Angeles County). Prices soared for four weeks.

      Analysts blame the current spike on production glitches at the Tesoro refinery in Martinez and the Chevron refinery in Richmond, which suffered a flaring incident on April 21.

      In addition, the Oil Price Information Service reported last week that Chevron took down a key unit at its El Segundo ( Los Angeles County) refinery for maintenance, prompting the company to buy up extra gasoline supplies on the wholesale “spot” market to fulfill its contracts to fuel distributors. A Chevron spokesman declined to comment on the El Segundo refinery.

      The price spike may be easing, with the statewide average rising just 1 cent overnight from Sunday to Monday. Wholesale prices are already started to fall.

      Consumer advocates have long argued that the oil companies benefit from keeping gasoline supplies tight in California, with too little fuel held in storage for when the next refinery breakdown strikes.

      A new report from the nonprofit group Consumer Watchdog argues that refinery profit margins in the state rise during price spikes — even when a company has to buy extra wholesale gasoline to make up for refinery downtime. Soaring retail prices more than make up for the added expense of buying extra supplies, said Jamie Court, the group’s president.

      “The oil companies know that even if it’s their refinery that’s knocked out, the higher prices will more than compensate them,” he said.

      Court wants the state to require oil companies to maintain a specific amount of fuel in storage, to prevent or at least lessen future price spikes.

      The U. S. Department of Energy is studying the idea of a fuel “reserve” on the West Coast — similar to the nation’s Strategic Petroleum Reserve — but has framed it as a way to prevent supply disruptions after natural disasters, such as earthquakes or tsunamis. Tupper Hull, spokesman for the Western States Petroleum Association, said California officials have considered the idea before — and rejected it as unworkable.

      “Intuitively, setting aside large volumes of fuel from the market is not going to help,” Hull said.

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