Gov. Schwarzenegger links GHG proposition, baseball

An Oil & Gas Journal blogger usually cannot find a legitimate way to write about baseball, but California Gov. Arnold Schwarzenegger opened the door with his celebratory comments regarding state election results, specifically the overwhelming defeat of Proposition 23.

That proposition would have suspended the scheduled 2012 implementation of California’s law calling for reduced greenhouse gas emissions. Had California voters approved Proposition 23, they would have stalled Assembly Bill 32 from becoming effective until the state’s current 12.4% unemployment rate falls to 5.5% for 1 year.

"Today, we have beaten Texas again," Schwarzenegger said. "Speaking to No on 23…World Series or an election, I'll always take California over Texas.”

Valero Energy Corp., and Tesoro Corp., both based in San Antonio, Tex., along with Flint Hills Resources of Wichita, Kan., contributed heavily in support of Proposition 23. Valero and Tesoro, which both have multimillion-dollar payrolls in California, argue AB 32 threatens jobs and will trigger higher electric and natural gas rates for California residents.

It’s possible the governor spoke too soon. Although the San Francisco Giants won the World Series by defeating the Texas Rangers, the story might not be over just yet on the fate of AB 32. Texas Atty. Gen. Greg Abbott and others might try to stop AB 32 from being implemented.

California Watch, a project of the nonprofit Independent Center for Investigative Reporting, says that Abbott and his counterparts in Alabama, Nebraska, and North Dakota are contemplating a legal challenge against AB 32 by claiming that it interferes with the right to freely conduct interstate commerce.

Ballot initiative targets California climate-change law

Independent producers are watching California Republican Assemblyman Dan Logue’s efforts toward a ballot initiative to suspend California's “Global Warming Solutions Act.” Logue hopes to get the initiative on the November ballot.

Gov. Arnold Schwarzenegger signed Assembly Bill 32 in 2006 amid fanfare about what Schwarzenegger calls California’s leadership role in fighting climate change. AB 32 requires that, starting in 2012, the state of California must reduce its carbon emissions to 1990 levels by 2020.

The California Independent Petroleum Association says Logue currently has a bill, AB 118, to repeat AB 32 through the state legislative process, but AB 118 is not expected to get approval by lawmakers.

“Debate of the merits of the science used to attribute climate change to carbon sources, delay in congressional action in DC, and continued poor economic conditions in California have brought uncertainty to the future of a California only stand-alone program,” CIPA said in its Feb. 1 Monday Morning Report email.

A ballot initiative, once approved by the Secretary of State, has 85 days to collect 433,000 valid signatures of registered voters to reach the November ballot. The proposed initiative calls for suspension of AB 32 until the unemployment rate falls below 5.5%. California’s unemployment rate was about 12% in early February.

This issue of state vs. federal government issuing climate-change law goes beyond California, and it’s one that much of the US oil and gas industry will be watching closely.

Chinese vs. US gasoline consumption

When it comes to anticipated oil demand, Amy Myers Jaffe of Rice University’s James Baker Institute for Public Policy likes to point out what she calls a big myth.

The myth is the notion that China has replaced the US as a driving force in world gasoline consumption, Jaffe says. The US has 250 million vehicles compared with China’s 13 million vehicles on the road, she said, citing statistics from various agencies.

Gasoline use contributes about a third of all emissions stemming from fossil fuel combustion, she said.

“A vast pent-up demand for automobiles and electricity exists in the developing world,” said Jaffe. One of the biggest questions is the potential fuel efficiency of future automobiles. Climate and energy security policy are expected to focus heavily on automobile efficiency.

“Most forecasts indicate that future growth in global oil demand will come almost entirely in the transportation sector,” Jaffe said. “Technology and policy, therefore, will be vital to determining the pace of oil demand growth.”

Emerging policy is apt to get complex. California developed a very detailed Low Carbon Standard aimed at driving innovations in vehicle efficiency and alternative transportation fuel.

Jaffe spent three hours discussing the California Low Carbon Standard with someone who was very familiar with it. Everything could not be covered in that period, she said. California hopes that its standard could serve as a model for US national policy.