Rather than reducing demand, the state imposes more costs on the supply
By Ronald Stein
Ambassador for Energy & Infrastructure, Irvine, California
The 9th Circuit Court of Appeals decided on May 28th that climate lawsuits filed by San Mateo County and the cities of San Francisco and Oakland asserting a California public nuisance claim against five energy companies arising from the role of fossil fuel products in global warming can proceed in state court. The lawsuits utilize an obscure area of the law called “public nuisance” to place the blame for global climate change on a few energy companies that develop and sell the energy used by consumers and businesses.
What San Francisco, Oakland, and Governor Newsom fail to understand is that the oil and gas industry is not just a California business with its few refineries, but an international industry with more than 700 refineries worldwide that manufacture the derivatives from oil that are needed to make more than 6,000 products, as well as the various fuels to the world to operate planes, trucks, construction equipment, merchant ships, cruise ships, and automobiles.
Without the California energy suppliers operating in the 5th largest economy in the world, the state would become a national security risk for the entire country being dependent on foreign countries for our existence.
If the GND ever gets fully implemented in California, we’ll have no refineries manufacturing in -state. We would be getting all those thousands of products from the derivatives from oil, and our fuels from foreign refineries via ships to our ports. Newsom may have difficulty suing offshore refineries for their nuisance to society!
When placed in the context of more onerous regulations during a global pandemic ravaging the American and California economy, this environmental crusading is particularly concerning. Despite this fact, certain voices in the environmental movement have continued to leverage the pandemic to attack the suppliers that only exist to meet the demands of society.
California has methodically driven most manufacturing out of the state, as it’s been more cost effective to import much of the demands of our society from locations outside the state that can manufacture our needs and transport them to the state.
This “outsourcing” concept has yet to be realistic for the daily demands of jet fuel, diesel fuel, gasoline, and for all those derivatives from crude oil that are needed by thousands of products in our daily lives. If it were more cost effective to import those energy needs from foreign locations, it would already be in place.
The COVID-19 induced impacts on our social lifestyles, was a virtual shutdown of airports, cruise ships, most forms of transportation, restaurants, and the leisure and entertainment industry. The resultant reduction in demand dramatically impacted the supply chain for all the energy needed to meet the social needs of society.
The pandemic gave us a preview of what weaning our economies off fossil fuel-addiction that our social lifestyles have become, as we try to accelerate the transition to greener alternatives of intermittent electricity from wind and solar.
During the quarantine, it was almost like living in the 1800’s with virtually no transportation systems, but and that’s a BIG BUT, we were able to survive the quarantine as we benefited from all those products derived from the derivatives from oil that produced all the critical medical equipment like ultrasound systems, ventilators, CT systems, and X-ray, medicines, masks, gloves, soap and hand sanitizers for hospitals, and protective gear for doctors and nurses, and all the electronics and communications equipment that allowed us to work virtually.
Yes, we may be using fossil fuels too extensively for leisure, entertainment, and travel but the developed world is where it is today, healthier, and wealthier, because of all those products we get from those oil derivatives. As we weed ourselves from oil, we will need to lower our demands for leisure, entertainment, and transportation infrastructures that COVID-19 has shown us the way.
The same politicians that are thrashing on in-state energy suppliers, and seeking their demise, are the same ones reaping the benefits of the medications, medical equipment, communication networks, and the thousands of other products from that industry that have contributed to their lifestyles, and their ability to live beyond 80 years of age.
All the lawsuits and bizarre laws and regulations against the local energy suppliers will most likely result in a hodgepodge of lawsuits across the nation that burden our court system, create uncertainty and fail to create any real solutions. They will continue to invoke more self-inflicted costs on the suppliers to be paid by the users. In the meantime, those 700 foreign suppliers remain ready to meet the demands of society.
The costs to import the energy into California from those foreign suppliers to meet local demands are currently more expensive than we are now paying, which is already the most expensive in the country. The emissions from those foreign refineries will be greater than those in California as foreign environmental regulations are significantly less stringent than those locally.
Until the voters say enough-is-enough, the infliction of more costs by our elected officials and environmentalists onto the suppliers, that are paid by the users, will continue into perpetuity.