Posted on 04/15/2005 8:43:26 AM PDT by calcowgirl
It's a pure travesty for a state agency to lock in a future of high prices for millions of California consumers when its specific mission is to protect those consumers.
Yet, that is just what a recent natural gas decision by the California Public Utilities Commission would do.
Besotted by the idea of high-tech foreign liquefied natural gas entering California via a group of coastal receiving terminals, the commission has authorized the state's largest gas companies to give up their rights to a huge amount of reserved space on two of the three largest pipelines now bringing gas into the state.
If the companies follow up this summer, as expected, natural gas prices will likely stay sky-high in California forever, exceeding even today's levels.
The wintertime PUC order allows the Southern California Gas Co., San Diego Gas & Electric and Pacific Gas and Electric to terminate their right to the pipeline capacity needed to ship 1.4 billion cubic feet per day of gas to California. That's equivalent to almost one-fourth of the state's entire daily consumption of natural gas.
It was no accident this ruling came at a time when Sempra Energy, parent company of both SoCal Gas and SDG&E, was finalizing plans to build an LNG terminal on the Baja California coast just north of Ensenada. Most of the more than 750 million cubic feet per day of gas from that plant would be "sold" by Sempra to its own subsidiaries for use in California, driving up the cost of natural gas everywhere in the state.
Also benefiting could be San Francisco-based Chevron Texaco, now seeking to build another LNG terminal in Baja, with the bulk of its gas to be sold in California. Some consumer groups are already charging that Chevron Texaco, a $200,000-plus contributor to Gov. Arnold Schwarzenegger, would not have bought Unocal Corp. and its massive Far Eastern natural gas properties this month if there were any doubt the governor and his aides would approve selling that gas in California.
The LNG, arriving in subfreezing liquid form aboard tankers loaded at Far Eastern plants, would cost more than $4 per thousand cubic feet to produce and deliver. Current domestic prices top even that near-record level, but the federal Department of Energy has said today's price is a rare spike, and forecasts that prices will drop back to about $3.40 per thousand cubic feet or lower. An average home might burn about 8,500 cubic feet of gas per month.
For California, giving up pipeline capacity means that prices would stay high here even if they drop everywhere else. For the pipeline companies have said that if domestic gas prices drop, they won't automatically give California back the gas it gets now, if California companies don't maintain their capacity reservations.
"If utilities decline to hold capacity now, it may be unavailable to California in the future," an official of the pipeline-operating El Paso Co. told the PUC before the commission decision. "The commission should consider requiring utilities to continue to hold this capacity as a prudent hedge against an uncertain future."
Added a statement from Transwestern Pipeline Co., "It is important that utilities not sacrifice long-term supply reliability." El Paso and Transwestern operate two of the three largest gas pipelines serving California.
The PUC decision amounted to commission acceptance of self-serving Sempra predictions for large drops in domestic production of natural gas and large increases in California's consumption.
The company forecasts contrast sharply with government projections. The U.S. Energy Department, for instance, estimates that by 2025, domestic American gas production will have increased about 20 percent over 2001 levels. At the same time, the agency says California consumption will remain about constant.
Those numbers reflect a large-scale emphasis on conservation that began in California with the energy crunch of 2000-2001.
What's more, several independent analysts maintain there is little justification for current high gas prices. With the cost of production about $2.25 to $3 per thousand cubic feet for gas from Canada, the Rocky Mountains, the Gulf of Mexico and the Permian Basin of Texas and Oklahoma, for consumers to pay anything more than about $3.50 amounts to price gouging.
Which means that by allowing California utilities to give up reserved capacity on domestic pipelines, consumers here will be deprived of cheaply produced gas and tied forever to LNG, whose cost of production far exceeds that of domestic gas.
The PUC took its action without holding even a single evidentiary hearing, relying strictly on energy company pleadings. The only ones to benefit from its decision will be companies wanting to build LNG plants on or near the California coast.
If the PUC won't reopen the case that led to this misguided decision and hear evidence from consumer groups and others independent of the big energy companies, it will be incumbent on state legislators or Attorney General Bill Lockyer to act somehow to protect the public.
-- Thomas D. Elias, of Santa Monica, is a columnist and author. His e-mail address is tdelias@aol.com.
ping
Aren't there large oil deposits off of California's coast?
Yet, that is just what a recent natural gas decision by the California Public Utilities Commission would do.
It's my understanding from watching a bit of t.v. last night that the whole of the gas industry is going to peg it's prices to that of oil.
It is easier to understand, when you realize this state was converted to a leftist-run and destroyed financial disaster zone (just for openers). The state legislature is still a leftist mess, so money that belongs to citizens is considered theirs, and what happens to it is really of no concern. This was proven and exacerbated by the free-to-walk-the-streets Gray Davis, a criminal in his own right, who set this state up for financial catastrope, which he sucsessfully did to the tune of over $30 BILLION.
Per the script book, libs don't care about your money. In their warped, Marxist minds, it is only there for their purposes anyway.
Apparently, yes. But... CA: Governor opposes any new offshore oil drilling
.
Where do you get the $30 billion figure?
The deficit as of July 2003 was $8 billion. Davis left office November 2003.
Where do you get the $30 billion figure?
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Do a little research and see what Gray Davis left the state with in terms of deficit. Then you will know. It has been in the news for ages and is common knowledge. Actually the figure is higher.
Yeah calcowgirl... do a little research, will ya? (smirk)
Have ya pung tubebender yet? He's interested in this since Calpine lost their effort to get this energy source off loaded up there in Eureka, right tube?
Get utilities to give up rights to import natural gas to California via pipelines in the hope that LNG ports and facilties will get permitted.
Obviously a Green "win-win" situation. Enviro-wacko's (a technical regulatory permitting term) oppose LNG ports and infrastructure to get huge concessions, while holding hostage state natural gas customers who have no alternatives because natural gas pipeline capacity now belongs to others.
Obviously somebody who politically approved this plan is counting on some serious green from the Greens in the next election cycle.
Yeah calcowgirl... do a little research, will ya? (smirk)
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Even the Left Angeles Times could not hide this one!! :-)
I have done the research. And it wasn't any $30 Billion. As I said: $8 billion as of year end (June 2003) according to the final State financials.
I rely on primary sources, not the propaganda machines.
Hey SW... whatcha mean? LOL.
Oops... I am on the run, and missed some folks. (I sure do miss FF and that ol' ping list of hers!) Maybe Ernest has some CalPowerCrisis names to ping.
I have done the research. And it wasn't any $30 Billion.
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http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/09/05/ED54015.DTL
Nothing personal, but you are most likely looking at some other number....try again. Frankly, I wish you were right, but you are not.
That was a projection, assuming continued deficit spending.
We ousted Davis so that a new Governor could use the veto pen.
Arnold hasn't.
The number I quoted was the actual deficit as of July 1, 2003.
First of all, the LNG is not coming from foreign ports, it's coming from Alaska. CONOCO Phillips has been building the ships to carry it for some time. They want to build a pipeline along the current Alaskan pipeline to carry the gas to Valdez and load it. Of course the ships could be used in other areas. The Alaskan pipeline is in competition with the one that BP wants to build through Canada, though. So who knows what will happen.
Frankly, I don't care whether CA has any gas or oil. A month without might change their voting habits.
Cut down on gas comsumption.
Share hot showers and sleep closer together in the winter!
:-]
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