http://enn.com/news/enn-stories/2001/07/07272001/gas_44443.asp NewsBytes: - 7/27/2001 - ENN.com
California's impending gasoline crisis Friday, July 27, 2001 By Stacey L. Fowler Graph from Union of Concerned Scientists and Surface Transportation Policy Project report titled "Over a Barrel: How to Avoid California's Second Energy Crisis" Gas Crisis California's energy woes are far from over, according to a new report released this week by the Union of Concerned Scientists and Surface Transportation Policy Project. The report, titled "Over a Barrel: How to Avoid California's Second Energy Crisis," predicts that unless action is taken, Californians' demand for gasoline will soon outstrip supply. "Because gasoline consumption is increasing so rapidly in California and we're very near the limits of our supply, we're likely to see price hikes, supply disruptions, and shortages by the end of next year," said Julia Levin, an author of the report and California policy coordinator for the Union of Concerned Scientists. In addition to increased demand, the report attributes the impending crisis to several other factors. These include California's forthcoming phase out of the additive MTBE from its gasoline and subsequent changeover to ethanol, a proliferation of energy-inefficient vehicles such as SUVs and light trucks, and increased driving due to urban sprawl and lack of reliable public transportation. Levin said that control of refineries and ethanol suppliers by a small number of companies further complicates matters. "We're looking at a situation very similar to the electricity crisis, where we have growing demand, finite supply, a small number of market players, and a situation that is very ripe for market manipulation," she said. MTBE must be replaced by ethanol in California gasoline by the close of 2002. According to Levin, MTBE has contaminated more than 1,000 sources of drinking water throughout the state. Ethanol, which is made primarily from corn in the Midwest, will have to be shipped to California via trucks or ships, as pipelines are not an option. This method of shipping makes the transition highly complex and expensive. Californians have already been paying exorbitant rates for gasoline. But recently consumers have seen drops in prices at the pump. "It's a short-term trend - probably the quiet before the storm," said Levin. "The long-term trend for gasoline prices has been on the increase, and we expect it to continue to increase as does the California Energy Commission." Levin cited the California Energy Commission's prediction that if Californians continue driving extended distances in fuel-inefficient vehicles, California gasoline consumption could rise by as much as 43 percent over the next 20 years. "That's just a mind-boggling amount," said Levin. "That means that we will go from 14 billion gallons a year to more than 20 billion gallons a year of gasoline consumption in California, and the extra cost to drivers will be more than $8 billion a year." Levin warned that California must address its consumption issues sooner rather than later. She said the state is predicting that gas prices could inflate by anywhere from 6 to 50 cents a gallon by the end of next year, while other energy experts warned that prices could rise by as much as a dollar per gallon. Levin emphasized that the big difference between the electricity crisis and the looming gasoline crisis is that the state has an opportunity prevent the gas crisis. "The two most important steps are increasing the fuel-efficiency of our motor vehicles and reducing the need for driving in California," she said. There are several steps that California drivers can take now to increase the fuel efficiency of their vehicles by 10 percent or more and help thwart the crisis. Levin said these include putting more fuel-efficient tires on their cars, keeping tires properly inflated, servicing their vehicles regularly, and driving within the speed limit. In terms of reducing driving overall, the report recommends that the state develop tax incentives that encourage businesses and residents to increase use of public transportation, car-pooling and car-sharing programs, and telecommuting. "Simply by increasing the frequency and availability of public transportation, more Californians would take it," said Levin. "In fact, as a whole, Californians use public transportation more than Americans as a whole, so I don't think that Californians are averse to doing it. It's just not a viable alternative yet, but it could be." As was evident with the electricity crisis, California's problems can quickly become the nation's problems. "California is now the fifth-largest economy in the world, and it's the engine that drives the whole U.S. economy in many ways," said Levin. "If Californians face a second energy crisis that could potentially take billions of dollars out of California pocketbooks, that will certainly spill over into the rest of the U.S. economy and affect consumers around the country." Levin added that increased demand in California is likely to directly affect prices of gas and ethanol for the rest of the country. "This is a crisis that we can prevent, but the state needs to take steps now. The state needs to let consumers know that they need to begin conserving so that prices don't ever reach those phenomenal levels," Levin said. The report outlines a series of feasible steps the state can take that "would save consumers money in the long-run and would improve our quality of life and protect our public health." ------------------------ Yahoo! Groups Sponsor ---------------------~--> Small business owners... 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