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For immediate release: July 24, 2003
Media Contact: Claudia Chandler - 916-654-4989

Energy Commission Adopts Report on Reducing State's Petroleum Dependence


Sacramento - Improving the energy efficiency of new cars, pickups and sports utility vehicles (SUVs) stands as the most cost-effective way to reduce California's reliance on petroleum, says a dual-agency report adopted Wednesday by the California Energy Commission.

Staffs of the Commission and the California Air Resources Board (CARB) prepared the report on Reducing California's Petroleum Dependence. Mandated by law in 2000 (AB 2076, Shelley), the report outlines several strategies for holding the line on the State's ever increasing consumption of gasoline.

The ARB is scheduled to consider the report at its board meeting on July 24-25.

Expounding on the theme of energy efficiency, the report enjoins the State's top government officials to work with other states in prompting the Federal government to double the on-road fuel economy of new light-duty vehicles. The average fuel economy of cars and light trucks has declined from about 26 mpg in 1988 to 24 mpg in 2000 because of increasing vehicle size and power, the rising market share of light trucks, and the lack of tougher corporate average fuel economy (CAFE) standards.

Californians also should have the opportunity to use more energy efficient replacement tires, should improve vehicle maintenance to gain energy efficiency benefits, and should encourage governments to buy more fuel-efficient vehicles.

The report also said sustained reductions in petroleum demand would depend on greater use of non-petroleum transportation fuels. Synthetic diesel, bio-diesel, ethanol blends, liquefied petroleum gas, natural gas, and electricity could play a greater role in California's transportation fuel market. Price and fueling facilities currently limit their availability to consumers. Long-term options such as hydrogen fuel cells appear to be promising, and will require significant further development to achieve widespread consumer acceptance, according to the report.

All these reduction strategies are necessary because California faces a future of increasing petroleum dependence, possible supply disruptions and accompanying price spikes, the report acknowledged.

"The California refining capacity has not been able to keep up with the growing demand for transportation fuels," the report stresses.

In 2000, California had a population of 33.8 million driving 24 million registered vehicles and consuming 16.4 billion gallons of gasoline a year. By 2020, the report said it is possible that 45.5 million Californians will have 31.5 million registered vehicles consuming 24.2 billion gallons of gasoline annually.

"Whether it is five years or 50 years, it isn't crude oil production that is of the most concern to California, it is the challenge we face from increased gasoline demand on the fuel infrastructure," explained Commissioner James Boyd, chair of the Energy Commission's Transportation Committee.

Boyd also explained: "Refineries in California are some of the cleanest and most advanced in the world, producing the cleanest-burning fuels in the world. They operate continually at near capacity. Any upset in the system immediately affects supply and the price paid by consumers at the pump. Since there's not been a new refinery built in the state since 1968, we need to import more and more finished product to meet our growing demand."

"In every other energy arena we put energy efficiency first, we should do the same for transportation," Commissioner Boyd stressed. "Our message to federal policy-makers should be clear. Significant improvements in vehicle fuel economy are possible without sacrificing consumer choice or public safety. By adopting this report, we hope to re-engage in a fair and open national debate on the benefits of improvements to vehicle efficiency. The arguments are compelling greater efficiency saves consumers money."

"The goals in our report for reducing petroleum consumption are aggressive," Commissioner Boyd added. "We need a continuing dialog with the refining industry in our state if we are going to reduce petroleum consumption while ensuring that adequate investments are made to upgrade the infrastructure. We have invited the industry to help us lay out this strategy in our Integrated Energy Policy Report, which we will be releasing this fall."

Also at Wednesday's business meeting, the Energy Commission adopted the report on the feasibility of a strategic fuel reserve for the State. The report also mandated by AB 2076, recommends that the State not build the reserve. The report said a public fuel reserve may have unintended consequences that could reduce private fuel storage in the state and limit the availability of transportation fuels. Instead, the report emphasizes the need to work with the industry to ensure that California's marine and port facilities are adequate to handle greater imports of transportation fuels and establish a statewide authority to streamline the licensing processes for petroleum facilities.

The Petroleum Dependence Report is on line at:

www.energy.ca.gov/reports

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