As summer transitions into fall, it won’t be long until we switch the bulk
of our energy demand from air conditioners to heaters. While air
conditioners are fueled by electricity, almost 70 percent of Californians
depend on natural gas for heating in the winter. With the devastation to our
energy infrastructure caused by Hurricane Katrina, Californians will be in
for some "sticker shock" when they open those first winter heating bills.
Prices of natural gas have doubled since this time last year and the
Department of Energy has said that because of Katrina, they expect natural
gas prices to rise as much as 71 percent over the next few months.
To understand California’s natural gas problems one only has to remember a
few numbers and a few key facts. First the numbers: 10, 85, 15, and 42.California ranks 10th in the world in natural gas consumption
California produces only 15 percent of its natural gas needs
California imports 85 percent of its natural gas from the Southwest,
Canada and the Rockies
California depends on natural gas to fuel 42 percent of its
Some simple facts to consider. California is at the "end of the pipe." This
means that as the product travels through a series of pipelines from the
source to the end user, we pay extra for transportation and congestion
costs. The pipeline system is like the electricity grid and there are
charges for using the system. To make it simple, if the wholesale price at
the source is $10 per million British thermal units, or MBTU, by the time it
gets to us we could pay as much as $13 per MBTU in additional transportation
and congestion costs. Those costs will borne by, you guessed it, the
But before the inevitable consumer grumblings begin, there is a solution on
the horizon. That solution is Liquefied Natural Gas (LNG). LNG has the
potential to create more supply, ease price spikes and act as the "bridge"
technology while alternative energy solutions are perfected and made
economically feasible. LNG is basically natural gas that is liquefied,
placed in special ships, sent to an LNG terminal, gasified and put into
pipes for delivery. This technology has been used safely around the world
for over 25 years.
Into this debate steps Senator Joe Simitian and his bill, SB 426. Once you
cut through the legislative language, it has two provisions that are meant
to cripple California’s efforts to have LNG terminals built.
First, the legislation requires that the state perform an LNG Needs
Assessment Study to determine "the number of liquefied natural gas
terminals, if any, needed to meet the state’s natural gas demand and whether
it is economically feasible to meet the state’s future natural gas needs
without constructing an LNG terminal".
Needs Assessment Study? We are paying more than any other state for natural
gas and are importing 85% of our need! Needs assessment completed.
The second part of the legislation that is troubling is the part that says
that California has the lead role in determining siting for any LNG
terminals. Never mind that the Energy Policy Act of 2005 recently signed by
President Bush says that the Federal government will determine siting. This
sets up what has become a California legislative specialty. Pass legislation
that is contrary to federal law and then go to court, tying it up for years
in legal proceedings, even though eventually the courts will rule that the
supremacy clause of the U.S. Constitution trumps state law. No matter, if it
meets the demands of their activist environmental allies.
We are all concerned about our environment, but with the abundance of this
clean burning fuel around the world, shouldn’t we be looking beyond our
parochial interests? After all, LNG will not just benefit California, but
If Katrina has taught us anything it is that having so much of our energy
supply concentrated in one region can have devastating affects on the entire
country. Building a more robust energy infrastructure is not an option, it
is an imperative.