Rushing into lower gasoline use will hurt California businesses

Sen. Kevin de León announces legislation last week to cut California’s gasoline consumption in half by 2030 and expand use of alternative fuels.
Sen. Kevin de León announces legislation last week to cut California’s gasoline consumption in half by 2030 and expand use of alternative fuels. Vida en el Valle

State Senate President Pro Tem Kevin de León’s proposal to slash gasoline and diesel use in California by 50 percent is a bad idea that couldn’t come at a worse time.

This kind of corrosive legislation is intended to persuade Californians that oil companies and petroleum fuel providers are the cause of climate change, and that making their products more expensive and difficult to get will somehow slow global warming.

The truth is far different.

The fuel providers I represent – mostly independent gasoline and diesel wholesalers and retailers – are playing and will continue to play a pivotal role in reducing California’s carbon footprint. We call ourselves “local oil.”

These businessmen and women are the intersection between Big Oil and consumers. They purchase products from refiners and other bulk sources and make them available to customers. They might have gas stations of their own. Many of them now offer alternative fuels, such as fuel made with 85 percent ethanol or biodiesel blends. Some offer natural gas or propane fueling options and some are looking into making hydrogen available. And still others are looking at ways to offer quick charge or battery swapping services for electric vehicles.

These local, family-owned businesses are the critical link between climate change policies and the practical applications of alternative fuels and technologies. They are the risk takers who do not depend on government subsidies. They will decide when these alternatives are ready for prime time, eyeing demand to justify the investments needed to replace traditional fuels.

Unfortunately, Sen. de León’s legislation, which would enact Gov. Jerry Brown’s greenhouse gas reduction goals, replaces consumer choice with government mandate. In the wake of forced choices, businesses – especially small ones such as independent fuel marketers – will be collateral damage.

The big question is whether there will be enough alternative fuel to meet California’s large appetite.

A major problem – indeed the fatal flaw – in petroleum reduction proposals like de León’s is that they fail to guarantee replacement fuels. Mandates replace choice, forcing reductions in the supply of gasoline and diesel before sufficient volumes of affordable alternatives or technologies are available to replace them.

The senator’s proposal simply isn’t realistic. Here’s why: Ninety-two percent of all California’s transportation fuels today are based on petroleum – gasoline and diesel. The remaining 8 percent is made up of biofuels, propane, natural gas and electricity. Californians use about 13 billion gallons of gasoline and 3.3 billion gallons of diesel fuel in a year.

Cutting petroleum consumption in half in just 15 years means we need to take 8 billion gallons of gasoline and diesel out of our available supplies every year. And what will replace it?

According to the U.S. Energy Information Administration, U.S. ethanol production averaged 41 million gallons a day in 2014 – or about 15 billion gallons for the year. Replacing half of California’s gasoline supply with ethanol would consume almost half the entire U.S. production.

And that assumes millions of residents will buy expensive new vehicles capable of running on high volumes of biofuel, that businesses invest billions in the infrastructure needed to deliver unprecedented volumes of biofuels to the marketplace and that motorists adjust to the inconvenience of more frequent fill-ups.

In the absence of those alternatives, my members will have little choice but to dramatically reduce their business activities. Many of them will be forced to shutter their operations, with additional ripple effects to consumers, farmers, emergency services, school districts and, yes, neighborhood convenience stores.

It is misguided to force this proposal when alternative fuel markets are beginning to mature and fuel options diversify. Providers are on the leading edge of a technology revolution that offers the best hope we have of reducing our collective carbon footprint.

None of this will happen for them if Sen. de León’s plan to force unrealistic cuts in gasoline and diesel use becomes law. His proposal is a death sentence for a critical piece of the transportation fuel supply chain. Without it, the customer suffers the final impact of replacing choice with mandate.

Jay McKeeman is vice president of government relations and communications for the California Independent Oil Marketers Association.