Local energy and transportation companies are fighting a bill that would limit oil consumption in the state, saying it would devastate their businesses.
Senate Bill 350 would, for the first time, call for a limit on the amount of petroleum used by vehicles, requiring a 50 percent cut in usage from current levels by 2030. The bill doesn’t detail how to meet that goal, leaving that up to state agencies.
The bill passed the Senate in May and last week cleared a key state Assembly committee on its way to an expected floor vote next month. The bill’s author, state Sen. President Kevin de Leon, D-Los Angeles, says the cut is necessary to step up the fight against climate change.
“The goals set forth in SB 350 are ambitious, and they will test our ingenuity and resolve, but we can, and must, accomplish them,” de Leon said last week in testimony on behalf of his bill. “We have the know-how, we have the means and we have broad public support – the only remaining question is: Do we have the will and the courage to act?”
But business owners and trade groups in the oil and transportation industries say the proposed cut in petroleum use will not only mean fewer oil industry jobs but also markedly higher fuel prices that will slam trucking companies and other heavy fuel users.
They are especially concerned that the key decisions on how to implement the mandate will be left to state agencies not directly accountable to the public, such as the California Air Resources Board.
One local oil producer said that he’s concerned state regulators will try to take some of the cuts out of his business, if for no reason other than that it will be easier to target local firms.
“We’re concerned that in-state companies like ours will take the brunt of this cutback because we’re the easiest to track,” said Jeff Cooper, vice president and co-owner of Cooper & Brain, a small oil company in Wilmington.
Cooper said that if production limits were placed on in-state oil firms to meet the proposed cuts, it could mean job losses.
But the concern has spread far beyond local oil producers. Transporters and distributors of fuel say they, too, would be hit hard.
“This bill is the top concern among my member companies,” said Jay McKeeman, vice president of government relations for the California Independent Oil Marketers Association, a trade group representing service stations, fuel wholesalers and distributors.
McKeeman said the bill would in effect force people to shift from petroleum use to electric power or other alternative fuels. That, in turn, would sharply cut back the amount of oil and gas that his members can sell.
“If this passes, many of my members may not be able to survive,” he said.
Heavy fuel users, especially trucking companies, are also concerned that limits on petroleum use would create scarcity and push up fuel prices.
One trucking industry representative said higher fuel costs would devastate family-owned small trucking firms.
“We are hopeful that the senator is willing to be flexible and mindful of the costs and impacts to end users, including the tens of thousands of small family-run trucking companies operating in Los Angeles,” said Chris Shimoda, policy director for the California Trucking Association.
Shimoda noted that the state trucking industry already spends $1 billion a year to upgrade to trucks that use cleaner fuels.
The bill has support from an array of environmental, health and labor groups, as well as a few businesses and industry groups, including Ben & Jerry’s Ice Cream of Burlington, Vt., and Calstart, a Pasadena clean transportation consortium.
Along with energy and transportation trade groups, the bill has generated opposition from broader business groups, including the California Chamber of Commerce – which put the bill on its job-killer list – the California Manufacturers and Technology Association and the Los Angeles County Business Federation.
The Western States Petroleum Association, which represents large oil producers, is so concerned about the legislation’s impact that it commissioned a study from the Los Angeles County Economic Development Corp. outlining the economic impact of reducing oil supply from the state’s refineries to meet the 50 percent reduction mandate.
The LAEDC study said refinery output cutbacks would directly impact nearly 12,000 workers and result in a loss of $33 billion. But the indirect impacts on industries that are heavy fuel users would be far greater: 11 percent of the state’s employment base – roughly 2.4 million people – would be negatively impacted and more than $300 billion in economic activity would be at risk.
De Leon, the bill’s author, said such figures and claims of job losses amount to scare tactics. His office put out a “myth buster” release, which notes that California’s economy has continued to expand and add jobs in key industries even while implementing cutbacks in greenhouse gas emissions under AB 32.
Besides the 50 percent cut in petroleum use in vehicles, SB 350 also calls for an increase in the amount of energy that utilities must generate from renewable sources and for commercial buildings to on average double their energy efficiency.
