Back in 2008 Californians saw the price of oil soar to record levels, topping out here in Monterey at $4.50 a gallon for the lowest grade of gasoline. This wasn’t anything new; gas prices had steadily been rising for about 5 years, breaking $3/gal in 2006 and bursting the housing bubble as a result.
The underlying cause was the impact of peak oil, which depending on who you talk to has already arrived or is just around the corner. As oil field production tops out and new discoveries tail off, combined with increased global demand, the price of oil will steadily increase. That’s what happened from 2003 to 2008. The gas price spike of 2008 wasn’t a random event that is past – it was a first glimpse of our future.
After all, even in the midst of the worst recession in 60 years, prices at the pump in California are hovering around $3/gal, suggesting that the days of cheap oil are indeed over. Wall Street recognizes this too, with Deutsche Bank projecting oil will hit $175/bbl in about 5 years, translating into pump prices of around $5/gal, only declining if there is enough alternative fuel and transportation options available to produce “demand destruction.”
The end of cheap oil played a major role in our economic crash, and will throttle any efforts at economic recovery – unless we start innovating our way out by providing affordable alternatives. AB 32 will help us do just that, by funding the growth of renewable power that can insulate California from the oil price shocks that are certain to happen, and helping provide economic recovery at the same time. And therefore, Prop 23 risks leaving California vulnerable to the economic damage that those future price shocks will produce.
That’s the conclusion of a new study from the Center for Resource Solution titled “Shock Proofing Society: How California’s Global Warming Solutions Act (AB 32) Reduces the Economic Pain of Energy Price Shocks. It makes very clear that AB 32 is essential to providing economic security and stability for California – and that repealing it, as Prop 23 would effectively do, would leave us defenseless against oil price shocks. Their core conclusion:
Under energy price shock conditions, this avoided energy demand due to AB 32 measures would save people and businesses buying gasoline, diesel, jet fuel, propane, natural gas, and industrial oil between $4.8-$9.6 billion beyond the savings already reflected in other macroeconomic studies. This range amounts to $332-$670 in savings for the average California household in 2020 taking into account population growth.
That savings is a massive economic stimulus to California, and that’s even before we start considering the green jobs that AB 32 has already created and will continue to create.
No wonder the Texas oil companies are spending millions of dollars to stop this. Their ability to gouge Californians during the inevitable future price spikes is directly threatened by AB 32, which represents a threat to the oil companies’ dominance of our energy system. They would prefer to keep making money at the expense of the greater economy, like a leech that will happily bloodsuck its host dry without regard to the consequences.
For the sake of California’s future economic prosperity and security, Prop 23 has to be defeated. The age of oil is over. Any effort to deny that reality will just cause more pain.