Benicia is a “mini-petrostate” — What’s Next?

I recently warned that Benicia faces a self-induced calamity. If the town doesn’t come to grips with the reality that it’s game over for the oil industry and that the tax revenue from Valero will end, the town’s future will be grim.

I suggested that by mid-century most, of it not, all Bay Area refineries—Valero included—would be shut. It may be sooner, as recently, Governor Gavin Newsom announced an executive order that would phase out gasoline-powered cars and pickups by 2035.

Most likely the big oil companies will do their best to delay this, but the direction is clear, California is turning away from fossil-powered vehicular transportation. Electric and hydrogen powered vehicles will be the norm sooner, instead of later.

The impact on Benicia and the other towns—Martinez, Rodeo, Richmond—will be significant. Unless those towns plan ahead—a troublesome chore for municipal governments—services will be drastically cut.

Secondly, if the refineries lock the gates and walk away, the cities will be stuck with the bill for cleaning up the hazardous waste that has accumulated for decades on the refinery property.

A couple of other points to consider. The first is the horrendous conflagrations that are besetting our state. Anyone who lives in California and doesn’t accept that climate change is real and life-threatening needs to talk to some of the state’s farmers who live that reality daily. Farmers know the weather and they know the ravages they are facing as the climate changes.

Climate change is not complex. It is caused by excess greenhouse gases caused by excess fossil fuel use. School kids can explain it.

The second is further from Benicia, but relevant. Over the last few weeks, a peace accord has been struck between Israel and the United Arab Emirates. Now Bahrain has joined and eventually Saudi Arabia and Iraq will also.

This is something I never dreamed I would see—peace in the Middle East. After all the trillions of dollars spent, the tragic deaths and wounded US soldiers, the horrific dismemberments by ISIS, and the millions of civilians who lost their homes, villages or lives; the wars are ending.

The stated reason for the accord is that the moderate nations are sick and tired of the Sunni and Shia extremists and decided that working with Israel with its military might and US backing is the lesser of two evils. These guys are ever pragmatists.

On the other hand, the unstated, but probably more significant reason, is the moderate nations, particularly UAE and Bahrain, have leaders who understand that they have to move away from oil-dependent economies. With a growing population of well-educated, underemployed and potentially restless citizens, change has to happen. The Middle East needs economic diversification with renewable energy, science, modern Western technology, risk capital and innovative thinkers, or the moderate nations are doomed.

This too is Benicia’s dilemma. Basically, the city is a mini petrostate with 45 percent of its tax revenue coming from Valero or related businesses. The city’s problem of dependency on oil tax revenue is the same as the Middle East nations, or Louisiana, or any other municipality that fails to plan for a non-carbon world. At least UAE and Bahrain have come to that realization.

If UAE and Bahrain can think this through, maybe Benicia can. The first step is to resist Valero’s and the union’s PAC to take over the city government in the November election. If the town’s oil interests and supporters control the city, planning for a diversified tax base won’t happen.

Vote for Steve Young and anyone else who is willing to refuse campaign contributions from Valero and the union PAC. That’s a simple step.

The next steps are going to be harder. The first is to bring the problem out in open. Ask Valero for their plans as the oil refinery winds down. What will be the decline in tax revenue? How much have they put aside for environmental cleanup? How many of their folks live in Benicia and what will be the job losses?

Supposedly, Valero says that it will be the “last man standing” or the final oil refinery left in the Bay Area. I doubt it. My bet is that Chevron in Richmond will hold out the longest because their corporate headquarters are in the Bay Area. Valero is a Texas company, which probably means they will be one of the first to shut.

The second step is that Benicia has to do what Bahrain is doing, namely diversify the tax revenue by moving from a fossil fuel to a knowledge-based economy. The world is full of examples of cities—Bristol, Vancouver, Melbourne, Singapore, come to mind—that have remade their economies.

There are several examples in the Bay Area—San Francisco, Walnut Creek, Livermore and Pleasanton.

The third step is probably the hardest still. The move to a robust knowledge-based economy with science, technology and innovation to produce wealth should be sub-regional—along the Straits. Benicia is going to have to cooperate with Vallejo.

Wealth is being generated all along 680 and both cities have to adapt quickly, or they will be left behind as Fairfield and Vacaville prosper by growing their knowledge and service-based economies.

Unfortunately, Benicia and Vallejo have flaws and neither has the ability to generate significant change. They do, however, have exceptional geography with beautiful waterfronts and spectacular views. They have more potential than other underdeveloped Bay Area cities, except maybe Richmond.

But neither can develop a robust new economy by themselves. They don’t have the resources or the willingness to overcome the differences that serious change requires.

There are no easy answers for remaking a city’s economy. It takes vision, hard work and a united citizenry with common goals and a willingness to change. Cities are like alcoholics; they usually don’t change their behavior until they reach rock bottom, or their livers give out.

The cities I mentioned that were able to remake their economies had remarkable good luck when a new company suddenly boomed—like Pleasanton with People Soft—or a brilliant and powerful leader like Willie Brown in San Francisco, who could wrench the existing power structure into action.

It is particularly hard for a small town like Benicia that has prospered along with a single industry and has a city council with decent folks but split agendas. Heaven knows there are small company towns—like Benicia—throughout the Rust Belt that are dead or dying because they waited until the gates were locked and the pink slips issued. Look what happened to Detroit.

The Bay Area is maybe the world’s center for science, technology, innovation and risk capital. It is an unparalleled combination that is being copied in China and on a smaller scale in Boston and Copenhagen. The mixture creates wealth like mountain snow creates mighty rivers. Despite the trillion-dollar successes of Apple, Google, Facebook and Sales Force, this era of magnificent knowledge-based companies is just starting. There are untold new wonders to be developed and decades to run.

It would be a pity if Benicia fails to participate.

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