How California Can Reduce its Dependence on Oil

Forty years ago, California was totally self-sufficient in energy production, but now it imports half its oil from sources outside North America. Seymour Alpert, a former fellow at the Electric Power Research Institute (EPRI), described the situation in a talk Monday at the Avenidas Senior Center in Palo Alto.

Alpert retired from EPRI 10 years ago and recently revisited his colleagues and sources in preparation for his talk, “What Happened to the U.S. Energy Crisis?” He said he was surprised to learn how much had changed since his arrival in California 40 years ago, when the Golden State produced all the oil, gas and electricity it required. He asserted that “a lot of work has to be done by the next generation.”

Among the major issues are greenhouse gases, oil prices and our balance of payments. An October 2010 CNN public opinion poll indicated that only 4 percent of the respondents regarded energy as their main concern; the economy was the choice of 52 percent of those polled.

Exxon/Mobil has suggested that the U.S. will continue to be dependent on gas, oil and coal out to 2030 to meet 80 percent of the world’s demand. “There’s no plan or policy to deal with the problem on a global basis,” Alpert said.

He said the price of oil is rigged by those who produce the commodity. While production costs only $5 per barrel and shipping adds another $2, we are now paying more than $100 per barrel. Fortunately, this is down from a peak of $140 in 2008.

At 21 million barrels per day, the United States is the world’s largest oil consumer. China is second, at 7.6 million barrels per day. We’re spending about $400 billion per year to import oil, mostly from Canada, Mexico and Saudi Arabia.

Much of the Canadian oil is from the tar sands of British Columbia and Alberta. But California’s refineries and anti-pollution regulations require use of “sweet” (low sulfur) crude oil, so our state’s imports are coming from Saudi Arabia and Ecuador.

The good news in our energy picture is natural gas. Alpert described it as “cheap, available and found in the U.S.A.” Its cost is only one-quarter that of oil, and it produces only half the greenhouse gases of coal.

A member of the audience asked, “Why don’t they liquefy natural gas?" Alpert replied that safety is the issue. More transmission lines would be needed, and getting permits to install them takes more time than getting a permit for building a nuclear power plant. 

Another audience member said, “Buses run on natural gas, so why can’t cars?” Alpert answered that the large tanks that are required are all right for a bus, but not for cars.

Alpert said he thinks the electric car is an interesting development, but it will take awhile to wash out all the gas-powered cars. “I’m all for subsidies for electric cars,” he said, pointing out, however, that “if we replace all of today’s cars with electric cars, we’ll need to double our electric power capacity.”

On nuclear power, Alpert said that in the long term, perhaps 50 years from now, we’ll need it. In fact, he would go with it now. “But you can’t sell it to California,” he said.

A member of the audience asked about the value of a carbon tax. Alpert said he felt it should be enacted and earmarked to help develop solutions for meeting our demands for clean energy.

Former Secretary of State George Shultz, described by Alpert as an “eloquent speaker” on energy policy, was recently interviewed by a San Jose Mercury News reporter and said, “If I was the energy czar and I could have what I wanted, I would want two things. First, a revenue-neutral carbon tax. It collects money that is then redistributed. It's not a revenue-raising device; it's a tax on carbon. That creates a level playing field (for renewable energy).

"A carbon tax is much better than cap-and-trade. Politicians like cap-and-trade, because they are afraid to say the word tax, but cap-and-trade is a tax; it just doesn't sound like it. Second, I'd also support sustained and significant support for energy-oriented R&D. Then I'd go away and let the marketplace sort out the results.”