Etam: Open letter to Californians: A high-utility-bill explanation, and a path to a smarter energy future

Dear Californians, I just love your state. It has everything.  It is home to Bugs Bunny, sourdough bread, Silicon Valley, Death Valley, the Valley, Redwood forests, deserts, ski resorts, endless […]
Published on February 2, 2023

Dear Californians,

I just love your state. It has everything.  It is home to Bugs Bunny, sourdough bread, Silicon Valley, Death Valley, the Valley, Redwood forests, deserts, ski resorts, endless beaches, the accidental Salton Sea, a vast movie industry, a vast porn industry, vegetable and fruit crops that feed several nations. It has the highest elevation and the lowest in the entire lower 48 states and a stunning array of beautiful geography.

California appears to have at least one of anything you could ever imagine. The state’s astonishing variety and individuality matches well the peculiar mental free-for-all between my ears, and I would love to live there.

Err…well, I would, most of the time, but maybe not this winter. The way your leaders are handling the energy file…I think I’ll just sit here in the heart of natural gas country and count my blessings.

I hear from intelligent friends who live there that a great many are searching for answers as to why utility bills are through the roof. I understand why. A quick bit of news searching showed that the answers being provided to you are pretty dreadful.

Let’s roll up our sleeves and start with what you thought you knew about energy. You would think California is living out their dream of moving away from fossil fuels – natural gas, oil and coal – at a rapid pace. You are being told that that is happening according to some sort of schedule. Dozens of municipalities are acting that way, and have, for example, enacted bans on natural gas in new buildings (as have other jurisdictions on both coasts). The feds are kicking in, with billions in reward money for residents that get rid of gas boilers, stoves and water heaters.

At the same time, the state is going to great lengths to prevent new natural gas from being delivered to California. This is viewed as a way to accelerate an energy transition. In 2022, California joined with two other states to prevent TC Energy from expanding capacity on the GTN pipeline that transmits natural gas from Alberta and BC to Oregon, where it can then flow to California. “Expanding the capacity of this pipeline would have significant environmental and public health impacts and is out of step with state and federal climate goals,” said Rob Bonta, California’s attorney general.

The motion of protest California co-filed went on to say: “This Project [TC Energy gas pipeline expansion] proposes to expand supply of methane gas in a region that is rapidly transitioning off fossil fuels and reducing greenhouse gas emissions. There is insufficient evidence the Project serves a public necessity or the public interest.”

Hey, attorney general, I found your public interest! Where would you like me to start, at the top or the bottom?

Let’s start at the bottom, if for no other reason than inclusivity – people of color are getting absolutely hammered by these fuel policies. Before looking at fuel cost implications, consider the position poor people are starting from. A UCLA paper from November 2021 entitled KEEPING THE STOVE ON: COVID-19 AND UTILITY DEBT analyzed economic hardships caused by Covid-19, which limited employment, which limited poorer citizens’ ability to pay their bills.

From the paper:

  • SoCalGas serves 21.8 million customers in central/southern California
  • More than 90 percent of central/southern California residents use natural gas for heating, hot water, cooking, and other uses
  • In mid 2021, almost 1 in 10 households (9%) in neighbourhoods served by SoCalGas were 90 days or more behind in utility payments – almost two million customers
  • Neighbourhoods with the highest utility debt rates were those with the highest poverty and unemployment rates, and lowest incomes
  • Four of the top five zip codes with the greatest share of burdened households (>90 days in debt) were predominantly Black or Latinx neighborhoods

In 2020, the subject period of the report, California natural gas price delivered to residential customers averaged about $14 per thousand cubic feet (mcf).

Here’s the ugly part: from December 2022 to January 2023, a single month, natural gas prices jumped from $11/mcf to $36/mcf. They more than tripled. Utility bills skyrocketed.

What do you think SoCalGas debt stats will look like now? Even if customers are working again post-pandemic, what are the debt-arrears numbers going to look like at three times the gas price?

What percentage of total household expenditures will go towards an absolutely critical fuel (recall that 90 percent heat/cook/get hot water with natural gas)? Where will that money come from? When you’re, at best, living paycheck to paycheck, where does one squeeze a few hundred extra dollars for the fuel essential to life?

Here’s another relevant statistic: Fifty-seven percent of Americans do not have funds to pay for a $1,000 emergency expense. Assuming Californians are representative (and they might even be worse because of the high cost of living), these lower income people that cannot afford any sort of emergency whatsoever are now facing gas costs triple what they were mere months ago. Poor people of color, predominantly.

What gives? Dental work? Auto repairs? Auto insurance? Safe tires? Clothes for kids? All of the above?

That’s the view from the bottom, now let’s check in way up the socioeconomic ladder and see what the view is from the upper rungs.

Actually, it’s about the same – they’re mad as hell also, but come at it a different way. Their anger isn’t over an inability to buy a new coat for the kid, it’s because, according to what they hear from the intelligentsia, this isn’t supposed to be happening at all.

A confidential source, a good friend that winters in the Golden State, tells how, even in a well-heeled neighborhood,  “everyone is talking about the gas bills.” A quizzical but enlightening footnote was the observation that in trying to explain high utility bills to some people, “even the part about the price of the gas going up seems to be lost on them.”

Now we’re getting to the heart of the matter.

If there is one universal truth about energy, it’s that no one understands it. Fair enough, it is very complicated. But the problem of understanding energy is bifurcated, sort of. The lower economic class understands energy largely in one way: Can I afford it, or not? Can I pay the utility bills? Can I fill the car up with gas? When you see someone at the pumps putting in five dollars worth, it’s not because they are in too much of a hurry to put in ten. Energy costs are not funny, and the are often unavoidable. When poor, the fight against climate change takes a back seat to…pretty much everything. Tell a single parent making fifteen bucks an hour and trying to cover rent and food and child costs that they should put up solar panels or drive electric and you’ll get a calloused fist up up a lot closer than you’d like.

At the other end of the socioeconomic spectrum, where people ponder…Solar panels or no solar panels? Tesla or Lexus? – the annoyance at high utility bills is also real, but from a different perspective. Aren’t we done with fossil fuels? What’s this all about? I drive past four thousand wind turbines on the way to LA, isn’t California past all this? We are closing our nuclear plants, for crying out loud! We are banning oil and gas activity. What’s with these ridiculous bills? And didn’t our attorney general tell us, from above, “This Project [TC Energy gas pipeline expansion] proposes to expand supply of methane gas in a region that is rapidly transitioning off fossil fuels and reducing greenhouse gas emissions. There is insufficient evidence the Project serves a public necessity or the public interest.”

Poor people worry about feeding the kids and filling the car with gas, rich people worry about what Gavin Newsom is saying about climate change, and that is pretty much all he wants to talk about, and according to the AG we have moved past fossil fuels and don’t need any more supply thank you.

So what’s going on?

Let’s break down the situation into bite sized pieces that the media doesn’t want to talk about too much, and please pass this on to anyone who might be curious/furious about high natural gas bills.

The answer to why your utility bills are so high is not just a single event; it is more of a chain reaction that culminates in a real problem.

First off, know that your utility bill woes are not shared across the country, it is a coastal problem. Natural gas shortages and price spikes are localized; there is plenty in the US. The US is home to three of the largest natural gas fields in the world – the Appalachia field in Pennsylvania/Ohio/West Virginia, and the Haynesville/Permian fields in Texas/New Mexico. These three fields produce about 18 percent of total global production. The interior of the US produces far more natural gas than it uses, creating a surplus, which pushes prices down. That is good news for manufacturers and users in the center of the country, and it should be for the whole country. But gas is not allowed to move freely to where it is needed, because of pipeline obstruction such as documented above. But the surplus gas doesn’t go to waste; it finds a home by getting onto boats and sailing off into the world as LNG.

Perhaps you’ve heard, but in case not, there is a global natural gas shortage, exacerbated by Putin’s war. The world is short of natural gas, and is bidding the price into the stratosphere. Believe it or not, that is part of your pain – US coastal regions are facing global natural gas prices, which are incredibly high, because producers in the center of the country cannot get you the gas you need, because activists are blocking any natural gas infrastructure development. Voila, California (and the east coast) are now part of the global community that is short of natural gas.

Next, it is important to realize that you have been comprehensively lied to for a decade about fossil fuels. The lies have been lies of omission. You have been told that “fossil fuels are killing the planet” and that you are done with them, they are no longer needed. You have been told that fossil fuels cause fires and floods and droughts and rain bombs and cyclones.

I won’t even get into the ludicrous hyperbole of those weather statements (there has always been extreme weather, and if it two percent worse now, that two percent is not your biggest problem), but will focus on the lie of omission: currently, and for the foreseeable future, fossil fuels mean life. That might be hard to swallow, but it’s true. There is no substitute, and there won’t be for decades. Elon Musk even acknowledges this, as does any sane person. The wheels simply come off if fossil fuels are unavailable. There is no fuel, no heat, nothing gets made, nothing moves.

One reason this all gets complicated and confusing is that the narratives, even from authorities, all point the other way, that fossil fuels are no longer necessary. Have a look at the subtle way in which fossil fuels like natural gas are marginalized.

I Googled the phrase ‘California residential natural gas usage’ and came upon what appeared to be a useful page by the California Energy Commission:

Looks great! But it hasn’t been updated since 2012, as evidenced by this table at the bottom of the page:

OK, well, you might say, that is still pretty useful information! And it is! Sort of! But check out the sleight of hand. Here is the current page:

The new landing page has been scrubbed of any constructive comments about natural gas. The old page remains – the one that came up in my original Google search – but it is buried lower down the page in another folder, and the energy commission has not even bothered to update it for more than ten years.

For the record, and in case you are curious, California’s natural gas consumption has hardly changed at all in the intervening decade, as can be seen at the federal government’s excellent data site US Energy Information Administration: consumption has remained at just over two trillion cubic feet per year from 2010 through 2022. Despite many tens of billions spent on renewable energy, California consumes about the same level of gas as it did in 2010.

A myth has been thrust upon you that fossil fuels are no longer required and can be phased out because alternative sources of power are available. This is categorically untrue, particularly from a global perspective, but even for your state, which requires vast quantities of natural gas and other hydrocarbons and will for decades.

You have been trained to despise and attack the very fuel that keeps all of you alive, and that training has worked, because few understand how significant natural gas is. That might make a good move script but it sucks as reality.

It should go without saying that environmental protection is of paramount importance, protection from both emissions and habitat destruction. But it is important to differentiate between those that simply want to kill an industry (well funded groups like the Sierra Club, Just Stop Oil, etc.) and those that want to actually help the environment and reduce emissions.

The most efficient way for the world to reduce emissions in a meaningful way is to develop a strong global natural gas industry to replace coal, which would get us a long way to meeting anyone’s emissions targets. You read that right: If global emissions reduction is your goal, you would be fighting for more natural gas usage to replace coal.

The US has proven this; it is the largest industrialized country to record a significant drop in CO2 emissions, and that was accomplished by replacing coal-fired power with natural gas. Imagine if the rest of the world did the same.

The second way is to build more nuclear power in the interim. Wind and solar will find a place in such a system but won’t form the system – their intermittency is unavoidable. Solar and wind and batteries are valuable bolt-ons that change the energy mix somewhat, but have no hope whatsoever of replacing fossil fuels completely, not unless some unforeseen technological breakthrough happens. The main overarching argument should be for an immediate replacement of coal with natural gas, and for more nuclear; anyone else promoting renewable schemes at the expense of these two strategies is in the game for political reasons and not environmental ones.

An inconvenient truth: As Mark Twain stated long ago, picking a cat up by the tail will teach a lesson that can be taught in no other way. Tripled natural gas prices are the same. Few would listen to anyone defending fossil fuels; they were marginalized and cancelled as ‘fossil fuel shills’. Now you have picked the cat up by the tail. Get it? Don’t pick a cat up by the tail, and don’t support those that drive up prices by restricting fuel supplies.

Don’t let natural gas opponents hide behind ‘science’. Science legitimately speculates on what global temperatures might be in fifty years; science does not tell you to destroy your fuel system that everyone relies on for existence before a replacement is tested, ready, and affordable.

A global rollout of natural gas to the billions living in poverty would lift their lives enormously, not destroy them. A global rollout of natural gas would clean their air, not dirty it.

But back to California.

Understand this clearly: Your state is being purposefully starved of a fuel that is plentiful within your own country, that is much cleaner than coal. Your elected officials and minions are physically and actively blocking your access to it. The motion of intervention/protest noted above is crystal clear evidence that your elected officials are thwarting efforts to increase natural gas availability, and are therefore directly responsible for increased natural gas prices.

More natural gas supply would bring your utility bills down. More natural gas supply would make life easier for the millions of Californians that are behind on their utility bills, a burden that will haunt them for years.

The consequences are huge. Some of you in California will find higher natural gas bills an annoyance. But many of you are going to have to decide: Pay the utility bill, or buy food? Literally, that is what it comes down to for low income households. High utility bills have devastating consequences for millions of people who absolutely cannot afford it.

Energy is not all that interesting, until it is, and then it is very interesting, right? No need to learn it all; the important takeaway from all of this is that your vote counts. Please demand better. Demand energy security, demand affordable energy, and focus on emissions reduction schemes where the lives of the poor are not at stake.

Who you elect is of course up to you entirely. But California has been leading the charge on decimating the fossil fuel industry, and is now facing the consequences.

Maybe this quote from C.S. Lewis is a good way to wrap it up:
“Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”

You do need to understand how you got here, and how to get out. Hope you have a great sunny day.

 

Terry Etam is a columnist with the BOE Report, a leading energy industry newsletter based in Calgary.  He is the author of The End of Fossil Fuel Insanity.   You can watch his Policy on the Frontier session from May 5, 2022 here.

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