Category Archives: California

California, Climate Change, Oil industry lobby, Western States Petroleum Association (WSPA)

Oil Industry Spending Millions on California Lobbying

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

Home
EcoVote.org

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.

Bakken Crude, California, Crude By Rail, Derailment, Explosion, Phillips 66, San Luis Obispo County, Tar sands crude

Video: Stop Oil Trains in California

Repost from email by Ethan Buckner, Forest Ethics

For the past few years, momentum is building all along communities throughout California concerned about the growing threat of oil trains. ForestEthics, in partnership with filmmaker Bunker Seyfert, is excited to share this new short piece highlighting the campaign to stop the proposed Phillips 66 oil train terminal in San Luis Obispo County.
Please watch and share!  – Ethan Buckner, US Organizer, ForestEthics

Stop #OilTrains in California

California could be the site of the next oil train disaster, unless we take action now at ProtectSLO.org.

Multinational oil company Phillips 66 is proposing to expand its San Luis Obispo County refinery to receive oil trains carrying explosive, toxic, and carbon-intensive tar sands oil. If approved, more of these oil trains will begin rolling through California’s communities, threatening schools, homes, community centers, and parks. Over 5 million California residents live in the oil train blast zone.

The San Luis Obispo County Planning Commission and Board of Supervisors will make the final decision on this project, and they need to hear from us – residents of SLO County and other impacted California communities. Take action now and tell SLO County decision makers to reject this dangerous project.

Take action now at ProctetSLO.org.

California, Cap-and-trade, Climate Change, Fossil fuels, Greenhouse gas emissions, Ontario CA, Quebec

Ontario confirms it will join Quebec, California in carbon market

Repost from San Francisco Chronicle, SFGate

Ontario backs California’s carbon market

By David R. Baker, April 13, 2015 3:59 pm

Ontario plans to join California’s cap-and-trade market for reining in greenhouse gases and fighting climate change, the Canadian province’s premier, Kathleen Wynne, said Monday.

If the country’s most populous province follows through, it would greatly expand the size of the market, which California launched on its own in 2012. Quebec joined last year.

“Climate change needs to be fought around the globe, and it needs to be fought here in Canada and Ontario,” Wynne said.

Cap and trade puts a price on the greenhouse gas emissions that the vast majority of climate scientists agree are raising temperatures worldwide.

Companies in participating states and provinces must buy permits, called allowances, to pump carbon dioxide and other heat-trapping gases into the air. The number of permits available shrinks over time, reducing emissions. Companies that make deep cuts in their emissions can sell spare allowances to other businesses.        California officials always wanted other states and provinces to join the market. In 2008, six other states and four Canadian provinces (including Ontario and Quebec) agreed in principle to create a carbon market, one that could possibly expand to cover all of North America.

But one by one, California’s potential partners dropped out, and congressional efforts to create a national cap-and-trade system collapsed in 2010. California officials decided to go it alone.

Wynne gave few details Monday about Ontario’s effort. Instead, she signed an agreement with Quebec Premier Philippe Couillard to   collaborate on crafting Ontario’s cap-and-trade regulations. For Ontario to join the market, officials with the California Air Resources Board would need to certify that the province’s cap-and-trade rules mesh with California’s. Gov. Jerry Brown would also have to approve.

Brown on Monday welcomed Wynne’s announcement.

“This is a bold move from the province of Ontario — and the challenge we face demands further action from other states and provinces around the world,” Brown said. “There’s a human cost to the billions of tons of carbon spewing into our atmosphere, and there must be a price on it.”

Much like California, Ontario has a significant clean-tech industry, estimated   to employ about 65,000 people.

While Quebec and now Ontario have pursued cap and trade, British Columbia chose another route to pricing greenhouse gas emissions. The province in 2008 established a carbon tax on fuels, using the revenue to cut other taxes.

Alberta, home to Canada’s controversial oil sands, also has a carbon   tax on large emitters, although critics consider it too limited and low to be effective. Washington Gov. Jay Inslee last year proposed a carbon tax on heavy emitters, only to meet with resistance from both political parties.

Bakken Crude, California, Crude By Rail, Massive increase in crude-by-rail, Oil prices

California Crude Trains: How Much Oil Is Actually Coming In and Where Is It Coming From?

Repost from North American Shale Blog
[Editor: Notwithstanding the disparaging remarks about crude-by-rail opponents and politics in California, this is an interesting report by a pro-industry analyst.  – RS]

California Crude Trains: How Much Oil Is Actually Coming In and Where Is It Coming From?

By Gabriel Collins
California has become ground zero for legal opposition to crude-by-rail projects. Opponents decry derailments, toxic vapors, and other ills.[i]  Yet despite the dire images painted by crude-by-rail’s opponents, the reality on the ground in California has been quite mundane thus far. The high-water mark to date for California railborne crude supplies was approximately 39 thousand barrels of oil per day (kbd) in December 2013 (Exhibit 1).

To put this number in perspective, California refineries typically process an average of around 1.7 million barrels per day of crude – meaning that at the crude-by-rail peak, only about one barrel in 50 of the state’s crude supply came in by rail.[ii]  Presently, the number is closer to one barrel in 100 – certainly not the overwhelming flood of trains opponents fear. And to that point, even supplying one-quarter of California’s total crude oil needs would only require about six to seven crude oil unit trains per day. To put this in context, the Colton Crossing east of Los Angeles by itself can see more than 100 freight trains per day.[iii]

Exhibit 1: California Crude by Rail Sources

exhibit 1
Source: California Energy Commission, Alberta Office of Statistics and Information

Where California’s Railborne Oil Imports Come From

For much of the past six years, light, low-sulfur Bakken crude and heavier, higher-sulfur Western Canadian Select (“WCS”) dominated rail imports into California. Canadian supplies show a clear correlation with how cheap WCS is relative to Maya, a heavy crude oil from Mexico that is shipped by tanker and offers a proxy for what heavy, sour, waterborne crude oil imports into California will cost. The spread between WCS and Maya prices matters because it only makes sense for refiners to purchase WCS barrels if they are sufficiently discounted that the buyer still comes out ahead after adjusting for rail transport costs, which can amount to approximately $20/barrel for manifest trains and $15/barrel for oil moved on unit trains.[iv]

For reference, “manifest trains” are mixed cargo trains where a 100-car freight train might include 20 or 30 tanker cars carrying oil. Unit trains, on the other hand, carry only one type of freight, meaning that all 100 to 120 cars carry crude oil. This maximizes economies of scale and significantly reduces transportation costs. Shipments of Canadian crude oil into California traditionally rode on manifest trains, but in November 2014, Union Pacific brought its first unit train of crude oil from Western Canada into California, to a terminal near Bakersfield.[v] The route is currently dormant as WCS crude’s discount to Maya was less than $10 per barrel in January 2015, according to official price data, making it uneconomical to import the Canadian oil by rail.[vi] Unit trains’ lower costs relative to the previously used manifest trains will likely have oil trains rolling from Alberta to California once again if the WCS discount widens to around $15 per barrel.

California has also seen increased supplies of light, low-sulfur crude oil from New Mexico in recent months. The most likely explanation for this is that continued strong oil production in Texas, New Mexico, and the Midcontinent are inundating the Gulf Coast with light, sweet barrels. Indeed, this author’s models using official Energy Information Administration data strongly suggest that Gulf Coast refineries have hit a physical “wall” where they are not able to sustainably use more than 65 percent domestic crude oil to supply their plants, because facilities designed for heavier, higher-sulfur oils cannot run at maximal efficiency with light, low-sulfur crude feedstocks.[vii] This crowded market reduces the potential realized value of crude to certain Permian Basin producers and makes California attractive as a clearing destination because crude can be railed from the Permian Basin to California for as little as $7-8/bbl, according to Tesoro.[viii]

What the Future May Hold

The bottom line is that California’s existing crude-by-rail terminal capacity is massively underutilized at present. The state’s two largest facilities alone – Kinder Morgan’s terminal at Richmond and new terminal near Bakersfield – can offload more than 140 kbd at full capacity. In comparison, crude-by-rail import volumes were less than 20 kbd in December 2014, the last month for which data are available (Exhibit 2). 

Exhibit 2: California Crude by Rail Capacity vs. Actual Import Volumes

exhibit 2
Source: California Energy Commission, Company Reports

Current terminal capacity is sufficient for approximately two unit trains per day of crude – 140 to 150 kbd – to enter the state. California’s fickle politics make forecasting crude-by-rail volumes a tough exercise. That said, this author believes that if oil prices recover to at least $75/bbl, California’s railborne crude imports will likely exceed 200 kbd by early 2016. Under those conditions, existing terminals would increase their capacity utilization and larger price differentials would attract additional Canadian heavy crude, as well as Bakken and other light, sweet grades from the Rocky Mountain states and the Permian.

[i] “GROUPS SUE TO STOP DAILY 100-CAR TRAIN DELIVERIES OF TOXIC CRUDE OIL TO BAKERSFIELD TERMINAL,” Earthjustice, January 29, 2015, http://earthjustice.org/news/press/2015/groups-sue-to-stop-daily-100-car-train-deliveries-of-toxic-crude-oil-to-bakersfield-terminal; See also Alexander Obrecht, “Environmental Groups Ramp Up the Crude-by-Rail Fight in the Courtroom,” BakerHostetler North America Shale Blog, October 6, 2014, http://www.northamericashaleblog.com/2014/10/06/environmental-groups-ramp-up-the-crude-by-rail-fight-in-the-courtroom/
[ii] “FACTBOX – California crude sources and oil-by-rail projects,” Reuters, July 21, 2014, http://af.reuters.com/article/energyOilNews/idAFL2N0PM26S20140721
[iii] “Colton Flyover Supports L.A.-Area Business,” Union Pacific Railroad, September 5, 2013, http://www.uprr.com/newsinfo/community_ties/2013/september/0905_colton.shtml
[iv]Yadullah Hussein, “Oil-by-rail economics suffers amid narrowing spreads,” Financial Post, February 9, 2015, http://business.financialpost.com/2015/02/09/oil-by-rail-economics-suffers-amid-narrowing-spreads/?__lsa=c711-5acd
[v] Bruce Kelly, “UP begins Canada-to-California CBR service,” Railway Age, November 25, 2014, http://www.railwayage.com/index.php/tag/CBR/feed.html
[vi] “Heavy Crude Oil Reference Prices, Monthly,” Alberta Office of Statistics and Information, https://osi.alberta.ca/osi-content/Pages/OfficialStatistic.aspx?ipid=941 (last accessed March 18, 2015)
[vii] Detailed explanation of models available; please contact author at gcollins @ bakerlaw.com.
[viii] Company investor presentation, September 2014, “Rail Costs to Clear Bakken,” slide 11, http://phx.corporate-ir.net/phoenix.zhtml?c=79122&p=irol-presentations

For safe and healthy communities…