How The Oil Spill Will Affect You
Thursday, June 24, 2010
The oil spill in the Gulf of Mexico is the worst spill in U.S. history. We'll examine the economic and environmental impact for California and San Diego, and whether the disaster is big enough to force a change in consumer behavior.
MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh, and you're listening to These Days on KPBS. Officials estimate that about two million gallons of oil per day have been spilling into the Gulf of Mexico since the blowout of BP's Deepwater Horizon well on April 20. Various containment attempts have been largely unsuccessful. Hopes now lie with a relief well that is not expected to be ready until August. This largest oil spill in U.S. history has fouled wetlands, beaches, fisheries, marine and wildlife from Louisiana to Florida, and now east coast governors are voicing concern about the potential of oil washing up along the Atlantic coast. The facts of the BP oil spill are well known, but this hour we'll be talking about what the spill might mean to the future of energy use in the United States. Some say this environmental disaster may be the starting point for a new energy future for America, one that relies on alternative and renewable forms of energy. Others say the U.S. need for oil will continue with no significant change in sight. Before we start speaking with a variety of experts in the field here in San Diego and taking your calls, I’d like to welcome my first guest, NPR White House Correspondent Scott Horsley. Good morning, Scott.
SCOTT HORSLEY (NPR White House Correspondent): Good to be with you, Maureen.
CAVANAUGH: Scott, just last week President Obama addressed the nation from the Oval Office about the BP oil spill. What has been the general reaction to the president’s speech?
HORSLEY: Well, the reaction from pundits was pretty negative. They didn’t feel as if he had really told us anything new in that speech. I think the reaction from the general public was kinder but I don’t think it really moved the needle very much one way or another in terms of the way the public views the president’s handling of the BP oil spill or longterm energy policy.
CAVANAUGH: Now the president talked about jumpstarting America’s clean energy industry. He’s talked about that before and he talked about it in his overall Oval Office address. How is he trying to do that?
HORSLEY: You’re right, he has talked about that a lot. That’s been one of his priorities, not quite as high on his agenda as healthcare overhaul or financial reform but it’s high on his list of things that he wants to accomplish as president. And, of course, Rahm Emanuel’s adage, you don’t want to let a crisis go to waste, he has tried to capitalize on the BP oil spill and use that as a wakeup call for people to revitalize the legislation in the Senate where it had been pretty moribund. But in his Oval Office address, he stopped short of endorsing a price tag on carbon, which is something he has said he supports in the past and that’s kind of the dealbreaker in the Senate, or at least the potential dealbreaker in the Senate. There are those on the left who say that unless you put a price on carbon, you’re not really going to have the kinds of incentives you need to encourage clean energy. There are those on the right who say putting a price tag on carbon emissions is just a nonstarter and it will kill any chance that the legislation has. And so in his Oval Office speech, he sort of – he sort of punted on that question. He didn’t take a stand one way or another. It’s not unlike what he did during the healthcare debate where he said he supported a government option, a public option, but he wasn’t really willing to go to the mat for it.
CAVANAUGH: And you mentioned the legislation stuck in the Senate, that’s the climate change legislation. Did the president’s speech gain him any support in that effort to break that deadlock in the Senate?
HORSLEY: Well, there’s actually several pieces of legislation in the Senate. Some deal with climate and some do not.
HORSLEY: The most aggressive, the ones being pushed by Senators Kerry and Lieberman does deal with climate change but there are other senators who want to take a softer approach. They want to have some incentives for alternative forms of energy. They maybe want to take some steps to deal with the Gulf crisis directly but stopping short of putting any sort of ceiling on carbon emissions or really putting a price tag on those emissions and addressing it from a climate point of view. You know, we’ll see how that plays out. I think the betting in Washington is that it’s unlikely that a really aggressive climate bill will clear the Senate but who knows? The president was supposed to have a sit-down yesterday with senators to sort of talk through that strategy and, unfortunately, that meeting was postponed because of the dustup over General McChrystal. So the energy issue has sort of been pushed off the front burner for the moment.
CAVANAUGH: Changing the subject just a little bit, really just angling it a bit, it seems that it’s come to a – as a shock to a lot of people, including people in the administration, that this week a federal judge struck down the government’s moratorium on offshore drilling. Tell us a little bit about that.
HORSLEY: That’s right. The president had, in the wake of the BP oil spill, said that new exploratory wells in deep water should be put on hold until they could figure out exactly what it was that went wrong with the BP well and make sure that they don’t have a repeat. And I think to a lot of folks outside Louisiana that seemed like a prudent course. The federal judge in New Orleans said that the Interior Department had failed to establish that that kind of precaution was a reasonable response to the oil spill. He said he – they failed to establish a foundation for the threat posed by deep water drilling. Now to a lot of folks, you know, in California and maybe here in Washington, D.C., they say, well, what more proof do you need than all that oil that’s now floating in the Gulf and washing up on beaches? But to the people of Louisiana, who depend very heavily on revenue from the oil industry, this was, as the judge said, akin to putting a moratorium on oil tankers after the Exxon Valdez. We didn’t do that. Of course, we did put in some new restrictions on, you know, double hulling and that sort of thing but I think there are a lot of folks in Louisiana who did see even a temporary moratorium as an overreaction to the BP spill. And there was a telling statistic in the Wall Street Journal this week. Oil and gas exploration contributes five times as much to the Louisiana economy as fishing does. So for all the coverage that we’ve given to the out-of-work shrimpers, there are five times as many folks who – whose paychecks depend on continued offshore oil and gas exploration. And so that’s really where you’ve seen the backlash in Louisiana. A very different story in Florida where, of course, they don’t depend on oil exploration, what they depend on is tourism and they’re very concerned about their pristine beaches. Their attitude is much more akin to what we’ve seen in California ever since the big Santa Barbara spill.
CAVANAUGH: Now are there attempts now to impose a new drilling freeze to sort of circumvent this ruling from the federal judge in Louisiana?
HORSLEY: Yes, the administration’s response has been twofold. On the one hand they are going the legal route and appealing the judge’s order and saying, look, the action by the Interior Department was reasonable. At the same time, Interior Secretary Salazar has said, look, I’ll write a new order. You didn’t like the reasoning of that one, I’ll come up with a new one and this time I’ll make sure that I have my I’s dotted and my T’s crossed. We should say that the rationale that was spelled out for the original moratorium was pretty sloppy and cited engineering experts who quickly repudiated it and said that was not what we recommended. And so, you know, in some ways this was kind of a self-inflicted wound for the administration.
CAVANAUGH: Is there any sign, Scott, that…
HORSLEY: We should say, too, that…
CAVANAUGH: Yes, sorry.
HORSLEY: …it wasn’t as if they imposed a moratorium the day after the spill.
HORSLEY: It took them five weeks to impose the moratorium so they certainly should’ve had time to get their legal papers in order.
CAVANAUGH: Absolutely. Is there any sign that President Obama will be taking a stronger lead position in getting involved in efforts to stop the spill and restore the Gulf? Scott?
HORSLEY: I’m not sure quite what you mean by…
CAVANAUGH: Well, what I mean…
HORSLEY: …a stronger lead position.
CAVANAUGH: I believe – I believe the president has been getting an awful lot of criticism because he’s handling so many things that he’s not giving enough attention to really getting involved in this in what a lot of people feel is an unprecedented ecological disaster occurring off the coast of the United States. Has he been getting a lot of pressure to get…
CAVANAUGH: …more involved?
HORSLEY: …he – Well, he’s absolutely gotten a lot of pressure to get more involved or to be more successful in his involvement.
HORSLEY: The challenge for him is, as he said, no matter how powerful he is as president, he can’t put on a wet suit and dive down there and seal off the well. And short of that, almost anything he does is probably not going to be satisfactory. The White House did take steps to raise his profile. He’s made now four trips to the Gulf coast since this happened. Each time maybe trying to display a little bit more command and control but I don’t think he’s turned any heads and I don’t think there’s any necessarily roadmap for him to set up a, you know, southern White House down there or something.
CAVANAUGH: Got you. I want to thank you so much for your time. Thank you, Scott.
HORSLEY: Always good to talk to you, Maureen.
CAVANAUGH: That’s NPR White House Correspondent Scott Horsley. I’d like to welcome my guests for the rest of the hour. Professor Dan Seiver is professor of finance at San Diego State University. And welcome to These Days.
DAN SEIVER (Professor of Finance, San Diego State University): Thank you. Glad to be here.
CAVANAUGH: Charles Langley is consumer gas price analyst for UCAN, the Utility Consumers Action Network. Charles, good morning.
CHARLES LANGLEY (Consumer Gas Price Analyst, UCAN): Good morning, Maureen.
CAVANAUGH: Andrew McAllister is director of programs for the California Center for Sustainable Energy. Andrew, welcome back.
ANDREW MCALLISTER (Director of Programs, California Center for Sustainable Energy): Hey, Maureen, thanks for having me.
CAVANAUGH: And we invite our listeners to join the conversation. Is the BP disaster the catalyst for change in our use of oil and fossil fuels? How would you like to see energy use change here in San Diego as a response to the BP disaster? Give us a call with your questions and your comments. Our number is 1-888-895-5727, that’s 1-888-895-KPBS. I’d like to start out before we have to take our first break just getting some general reaction to what Scott was talking about. Andrew, I think that statistic about more people involved in the oil and gas industry in Louisiana than fisheries is something – is very surprising and it speaks to how complicated the whole idea of changing energy policy actually is.
MCALLISTER: Absolutely. I mean, there is a huge, you know, 150-year investment in the status quo and we’ve sunk a lot of capital into that, in all of our energy infrastructure, and oil and gas is obviously on that keeps the country running in its current form. You know, I think it’s important to keep perspective. On the one hand, you know, we’re at point A and we need to go to a low carbon point B. I don’t think there’s any – really any legitimate – truly legitimate debate about that issue. We’re at point A. We have to start somewhere and where we are is where we have to start from. The fact is, you know, the world consumes 90 million barrels of oil every day and 30,000 is not that big a deal in the grand scheme of things. Like Charles might have something to say about that. It’s a relatively small number. But the fact is that investments to move to this new clean energy future also – they have to be made going forward. So given where we are, we have to make the choice sooner rather than later, I believe, to move in that direction. And there will be some winners and some losers. I think in California we’re in a great position to be on the winning side of that because we have an innovation culture and we have lots of venture capital and we have a population that’s used to ideation and innovation and entrepreneur – entrepreneurship. So I think nobody would say that there would be – that there won’t be any losers in this transition but, you know, the fact that we depend on coal throughout the nation for much of our electricity, not so much here in California, but that here in California, definitely we have a car culture that is consuming a lot of gas and we’re relatively gasoline intensive here. Liquid fuels are a major challenge to transition away from. Gasoline and diesel is wonderful stuff and it’s hard to replace that. In San Diego, we have some options. We have – we’re sort of a node of the algae-based biofuels…
MCALLISTER: …industry as it’s growing, which is great so that puts us in a potentially competitive position.
MCALLISTER: So I think there are a lot of – it – Like you said, it’s very complex. There’s lots of moving parts and pieces to this puzzle but that doesn’t – shouldn’t make us shy away from the challenge, I think.
CAVANAUGH: And Professor Seiver, if you just could give us your reaction to how the administration has handled this environmental disaster in terms of maybe changing the game when it comes to energy policy.
SEIVER: Well, I think we can change policy a little bit at a time. I think what Andrew said is – I agree. It’s too bad we can’t have more controversy right here. I agree with most of what he said. But if you don’t change the price of energy, you won’t do much to the demand. And even if we were to stop drilling offshore, that won’t change how much we want to use, it’ll just mean we’ll import more from unstable parts of the world. So we saw when the price of gasoline went up a little, you know, a couple of years ago that Americans started driving less and that was really a good thing. And we use a lot of our energy for transportation, particularly here in Southern California, and that won’t change unless we make it more expensive. It has to reflect whatever environmental damage it does, it has to reflect – the price should reflect whatever the long run climate costs are, and it ought to also reflect the political reality that we’re dependent on too many countries that are not friends of ours for energy. And so particularly in Southern California where we have some options I think on balance, as we switch away from a oil-based economy, we’ll be hurt less than some other parts of the country. But I’m – I don’t have to run for office so I’m in favor of driving up the price of gasoline.
CAVANAUGH: We have to take a short break. And, Charles Langley, I will get to you right after we come back. You’re listening to These Days on KPBS.
CAVANAUGH: I'm Maureen Cavanaugh. You're listening to These Days on KPBS. My guests are Dan Seiver, professor of Finance at San Diego State University, Andrew McAllister of the California Center for Sustainable Energy, and Charles Langley, consumer gas price analyst for the Utility Consumers Action Network. And we are taking your calls. The question is will the BP disaster introduce a new energy future for the United States and how would you like to see energy use change here in San Diego as a response to this disaster. Give us a call, 1-888-895-5727. And Charles Langley, thanks for being patient. I want to get your opinion on the matter, being a gas specialist for the Utility Consumers Action Network.
LANGLEY: Well, thank you, Maureen. Essentially, we do need to move away from fossil fuels and the problem is, as Dan mentioned, there aren’t really any cheap replacements so the only option essentially is to look toward higher prices, and the industry has graciously accommodated us in that regard. And the oil industry’s model right now is to essentially charge more for less gasoline, and we’ve seen several active refineries shut down this year because demand for gasoline is down, they’re selling less, and in the long term they realize that people are going to be using less gasoline.
CAVANAUGH: Charles, is it likely that the oil spill itself in the Gulf will raise gas prices here in San Diego?
LANGLEY: Well, you know what may happen is that on the west coast gasoline may seem like a real bargain while on the east coast and in the Gulf it becomes more expensive. We don’t get very much of our fuel here in California from the Gulf. But it is a significant source. It represents about 30% of our nation’s oil supply. And in addition to that, and Scott touched on this, there’s massive refining capacity in the Gulf, so much so that Canadians are actually building a pipeline down to Texas and Louisiana so that they can supply oil to these refineries.
CAVANAUGH: Now what are gas prices like here in San Diego right now? Haven’t they – Don’t they usually go up during the summertime? And have they?
LANGLEY: They do. Right now, they’re about $3.11. That’s down from the record high, which was $3.17 on May 6. And we’ve actually seen remarkably stable gas prices this year. Prices have ranged, on average, between $3.00 and $3.08 a gallon since January one.
CAVANAUGH: Now is – I want to get everyone in on this because it seems like you’re all kind of saying the same thing. Is this what it boils down to in the end? Higher gas prices will be the key to solving America’s oil dependence? Is that – does that fit with you, Andrew?
MCALLISTER: Well, it’s one piece of the puzzle. I mean, there are lots of different ways to skin a cat, right. So that’s the most transparent one. It’s the one that would be most directly impactful on behavior at the individual level. And I think individual decisions have to be part of where we move as a society. We’re not China, we’re not some other country that can just dictate from above, we actually do depend on our populous to do the right thing and we shape that behavior by enlightened policy, basically. I mean, in Europe, if you compare the U.S. and Europe, to get to their gas prices, which are, you know, way above what we pay here in the U.S., you’d have to put a price on carbon somewhere in the range of about $400.00 a ton.
MCALLISTER: And in the policies that are in Washington and elsewhere right now being considered, you know, we’re thinking $50.00 a ton. That’s sort of maybe acceptable. Probably not from what we’re hearing, you know, what’s going on now in Washington. But the $20.00 to $50.00 range is where the price tends to float in the marketplace to the extent that there is a marketplace for carbon. And so that’s – We’re really talking about moderate policies here in comparison with some other parts of the world.
CAVANAUGH: So, Professor Seiver, how high would gas have to get, how high would the price of gas have to get, do you think, before there would be a substantial move towards alternative energies, especially when it comes to automobiles?
SEIVER: Well, it – You can raise the price of gas in the short run and get Americans to drive less and consume less. But if you’re going to turn over the U.S. vehicle fleet into non-gas using vehicles, that’s going to take a long time. And there’s also going to be a lot of pain. And I think, you know, the Europeans pay six, seven, eight dollars a gallon for their gasoline. They drive smaller cars, they live closer to work. There are lots of changes that take time. I’m not saying we should do that overnight but eventually if we’re going to really make electric cars an alternative or even newer hybrids and stuff like that, we have to keep raising the price. I’m in favor of—a lot of economists would support me on this—of gradually raising the tax on gasoline, having it known so everybody could plan for it, but at the same time we have to spend more on research and development to improve battery technology and to find ways to make it more reasonable to drive a non-gasoline vehicle.
CAVANAUGH: I want to talk more about battery technology but I do want to take a couple of calls. A lot of people want to join the conversation at 1-888-895-5727. Don is calling us from Carlsbad. Good morning, Don, and welcome to These Days.
DON (Caller, Carlsbad): Good morning. Great topic. The primary legislation that’s driving California’s clean tech and renewable energy economy is AB-32. Oil companies have funded an initiative which just within the last couple of days was approved by the Secretary of State to be on the November ballot, proposition yet to be named and numbered. However, if that proposition is effective or if that proposition is passed, it will effectively kill AB-32 and knock the support out from under California’s clean tech and renewable energy economy. This is yet another example of special interests attempting to maximize profit at the expense of progress.
CAVANAUGH: Don, thank you for the call. And I’d like your comment, please, Andrew.
MCALLISTER: Hey, Don Christianson, I know that voice. You know, I agree with Don, actually. I mean, this is a – you know, at the face of it, you have Texas oil companies, Valero, Tecero (sic), Tesoro, sorry, and Occidental funding, you know, the vast majority of this proposition drive. And it basically is trying to undermine the competition from clean tech in California. I mean, if you want to, you know, keep your client addicted, you get rid of the opposition, and that’s what’s going on here. I think it would be a massive hit to AB – to the clean tech industry in general and the region and the state because you do have AB-32 in place and it provides a nice, organizing principle, has actually spawned a number of other pieces of legislation that would remain in place if AB-32 goes away but AB-32 has been a very powerful organizing principle for legislation.
CAVANAUGH: And what does it do? What does it do?
CAVANAUGH: What would we lose if we lost it?
MCALLISTER: Well, it mandates that California reduce its carbon footprint, so get back to 1990 levels by 2020 and get 80% below 1990 levels by 2050. So that’s a massive undertaking and really needs all hands on deck to make that happen.
CAVANAUGH: So while we’re here talking about what the BP oil spill may engender in a move towards getting us more involved in…
CAVANAUGH: …alternative energy, there’s a move underway to place this ballot measure for the November ballot that would undermine the goals that we have in effect, is that right?
MCALLISTER: That’s correct. It would actually remove those goals. They’re legislative goals that Fran Pavley put forth in…
CAVANAUGH: I see.
MCALLISTER: And there are a number of pieces of legislation that are sort of the offspring of AB-32 in specific sectors so you have a land use planning bill, that’s SB-375. You have transportation planning, you have the renewable portfolio standard. You have a bunch of secondary – second tier bills that are doing the actual implementation of policy on a practical level, at the regulatory level. And so those would remain in place and still be effective but there’s nothing like having a clear direction at the top…
MCALLISTER: …level like AB-32.
CAVANAUGH: Let’s take another call. Tim is calling us from La Mesa. Good morning, Tim, and welcome to These Days.
TIM (Caller, La Mesa): Hi. Good morning.
TIM: Yeah, I just wanted to say that I was on Capitol Hill Tuesday and Wednesday lobbying for a carbon tax and so I’m with a group called Citizens Climate Lobby that was founded right here in San Diego and our goal is to create the political will for a sustainable climate. So there are, you know, everyday citizens that are trying to lobby for a carbon tax.
CAVANAUGH: Well, I appreciate it and I’m glad you called us. Thank you very much. Professor Seiver, even if California’s economy is not badly hurt by the oil spill that’s going on in the Gulf, sometimes economics follows emotion. Will this oil spill have an impact, do you think, on people’s perception of oil?
SEIVER: I think it might. I think there’s a general feeling of psychological distress that Americans are feeling because of this oil spill and, you know, just the pictures of it. And I think that that can affect all kinds of consumption decisions. It could even affect, you know, the stock market in the short run. But there will be – the well’s going to be capped and, you know, in a month. There’ll still be a lot more oil leaking and they’ll finally shut that down and cleanup will continue for a long time. But I guess my fear is then once the well is capped and it’s not in the headlines anymore, the crisis, to some extent, goes away and we lose, you know, we take our eye off the ball and we go to the next crisis du jour. And I think that would be a shame. That’s in Rahm Emanuel’s sense that if we don’t learn something from this and change, you know, nothing good will happen maybe until there’s still another crisis. BP is want – it’s going to drill off the – offshore Alaska. It’s called onshore because they built a little island to drill from but it’s relatively risky new technology, including a lot of horizontal drilling, and BP says, oh, you know, this is perfectly safe. We know what we’re doing. But they’ve lost – I think it’d be fair to say they’ve lost a lot of credibility on that score.
CAVANAUGH: Now, Charles, when we did a recent show about a proposed expansion of Interstate 5, the calls we got from people were exasperated and frustrated and they didn’t want the building of more freeway, they wanted better mass transportation. Do you find that that is a growing consumer sentiment, Charles?
LANGLEY: Well, I don’t – I think California has a love affair with the automobile and it’s partly born out of necessity and, you know, going back to European gas prices versus American gas prices, the difference in price is due to taxes which are largely applied to public transit programs. So when you’re driving an automobile, the more gas you use, the more you are funding public transportation. So people have options for public transportation in other countries that we don’t have in California.
CAVANAUGH: A lot of – some of the callers—and of course this is a completely unscientific survey—but several of the callers wanted to know if there is enough exploration in the creative uses of public transportation in California? Are – is your agency involved in that at all?
LANGLEY: Well, we’ve – we haven’t really looked at it that intensively. But I think what’s happened is, is that with perhaps the exception of the Coaster, public transportation is for people who basically can’t afford an automobile and still need to commute. And for most of the people, in San Diego at least, who live in suburbs, having a vehicle is a necessity.
CAVANAUGH: Let’s take another call. Patricia is calling from San Ramon. Good morning, Patricia. Welcome to These Days.
PATRICIA (Caller, San Ramon): Good morning. Thank you. I have a question for the gentlemen. I’m wondering how this electric vehicle infrastructure is going to roll out. You know, we – I, myself, in response to the BP spill, I’m really starting to think about an electric vehicle and I was kind of impressed that San Diego Gas & Electric said that we don’t have to treat electric vehicle charging stations like utilities, you know, to help encourage the rollout of that. And then I also want to know what you think about the fuel mix that will supply that electric vehicle charging demand that might grow. Is nuclear still a nonstarter in California?
CAVANAUGH: Ah, that was a big question at the end there. Thank you, Patricia. Is – what about – Let’s start with that first because I want to talk more about cars a little bit later. What about nuclear energy, is that a nonstarter in California, Andrew?
MCALLISTER: Well, it is actually at the moment because there’s a moratorium on nuclear power in California. We have the two plants, San Onofre, Diablo Canyon, and that’s the way it’s going to be until something changes at the policy level. You know, my own view on this is that if we insist, as a society, on using as much energy as we do, then it’s hard to take anything off the table. So I would rather not be in the position of having to make these Faustian bargains and say, okay, is it coal or nuclear or what? But we sort of are painting ourselves into a corner with that respect – in that respect if we shy away from some of these tough decisions about how we’re going to use energy, how much we need and be very forthright about the planning process to get that energy. And we have the renewable portfolio standard, which is going to ramp up over the next couple of decades, the percentage of our electricity supply that comes from renewable power. The utilities are having a hard time meeting the near term goals but I think it’s a matter of getting through that sticky patch where they learn how to do it and that the siting and other policy issues get worked out. So I think we will meet a 33% renewable portfolio standard, you know, by 2020 or so. That needs to be set in stone with legislation. Currently it’s just an executive order. But I think, you know – So I can’t say that nuclear will be taken off the table or even should because we’re not really giving ourselves great options. I think we could do a lot more with local renewable generation, larger scale renewable and a little bit further timeline…
CAVANAUGH: And it sounds like conservation is part of what you see as the energy future as well but basically ramping back a little bit on our consumption.
MCALLISTER: Well, you know, Cal – I think it was Charles who referred to this a little bit earlier, we have a very extensive settlement pattern here in San Diego so we’re sort of a one-story town with lots of suburbs. And that means that the transportation part of our energy consumption is relatively high. But at the same time we have large houses, particularly inland. We use a lot of air-conditioning. There are a lot of ways to improve the energy efficiency of our homes and our businesses so that we actually consume less. And SANDAG and other bodies here in the region are really working on strategies and programs to do that. CCSE, obviously, is near the center of that, those activities, as well, and there’s some federal and state resources that are helping to put programs in place to help people retrofit their homes.
MCALLISTER: So that’s a great development.
CAVANAUGH: When we talk about changing America’s energy future and we talk about, you know, nothing big going to happen until the price of gas really goes up and affects people, Professor Seiver, doesn’t the price of alternative energies also have to come down in order for sustainable energies to catch on?
SEIVER: Well, they will with R&D. But let me go back to the first part of that…
SEIVER: …equation. If you think back to the 1970s, which are a bad decade economically because of the OPEC oil price shocks, if you looked at the big picture of how much energy we used to produce the output, the gross domestic product, in the country, it began to improve significantly that we were able to produce more without using more energy or the energy intensity of our output went down because we made millions and millions of decisions to conserve, to look for alternatives, to change the way that we lived, and it was partly driven by this repeated crisis of oil prices shooting up and being at the mercy of OPEC and so on. It went on for years. And we made some important changes in how we used energy and where we got our energy from. And so we have to do the same kind of thing, and part of it has to be research and development to improve alternatives to bring down, you know, the price of solar. Solar’s still not competitive. It will be someday but the sooner we make it competitive, the better we’ll be. We have to get it to the point where we don’t really need big subsidies and I think that could happen if we’re willing to spend enough on R&D, the equivalent of a Manhattan type project.
SEIVER: And that would, of course, frighten the Venezuelans and the Iranians and the Saudi Arabians, and I don’t know who’s against that.
CAVANAUGH: President Obama referenced World War II in his Oval Office speech on energy so that’s an interesting point. We have to take a break. When we come back, we will take a lot of your calls because a lot of people want to get involved. And if you would, please call us, 1-888-895-5727, or go online with your comment. That’s KPBS.org/thesedays. These Days continues in just a few minutes.
CAVANAUGH: 38.22 I'm Maureen Cavanaugh, and you're listening to These Days on KPBS. We’re talking about what the BP oil spill might mean to the future of energy use in the United States and right here in San Diego. My guests are Dan Seiver, he’s professor of Finance at San Diego State University. Charles Langley is consumer gas price analyst for the Utility Consumers Action Network. And Andrew McAllister is with the California Center for Sustainable Energy. We’re taking your calls at 1-888-895-5727. Let’s go right to the phones and hear from Mike. He’s calling from Leucadia. Good morning, Mike. Welcome to These Days.
MIKE (Caller, Leucadia): Hi. Thanks for taking my call.
CAVANAUGH: You’re welcome.
MIKE: I have a really low-fi solution to saving some oil and a lot of it, and I’m really surprised that it hasn’t happened sooner. And that is lowering the speed limit back down to 55. I remember when I was a kid in the seventies, that happened and I remember also reading something, you know, I think in The Nation about how much gas that single act would save. It’s massive amounts. The difference between 75 or 65 and 55 is huge. And I don’t – and I think it’s a political nonstarter and it’ll never happen, and I think it kind of serves to show what kind of people we are that we’re not willing to drive 10 miles an hour slower. And nowadays we know it’s a point of national security, that oil and our addiction to it is a matter of national security both in terms of foreign policy and, as we see on the Gulf of Mexico, environmental security. I’ll take your…
CAVANAUGH: Mike, thank you for the call. I appreciate it. Thanks for your call. And let’s go – take another call right now from Justin. He’s driving, he’s going north on I-15. Hi, Justin.
JUSTIN (Caller, Mobile): Hi, Maureen. I’m calling because a couple things. I work for a company in San Diego, Teradata Corporation. We have an R&D facility here in Rancho Bernardo and they recently received a check from Sempra Energy for $300,000 incentive for their alternative energy use at their facilities here, primarily installing like solar panels, creative use of powering down their server systems for testing and research. So that was kind of interesting to see that Sempra is actually supporting alternative energy consumption. But also I’m a researcher at UCSD. I’m doing some research in, well, software development, so primarily what I do is develop ways to power manage server clusters and primarily with cloud computing, there’s quite a bit of demand for the power systems so we’re looking at more creative ways to power down components when they’re not being used.
CAVANAUGH: Oh, I see.
JUSTIN: And a couple research papers have been published where findings are showing about anywhere up to 50% power energy savings on servers just by lowering the fan speed and shutting off hard drives when they’re not being used.
CAVANAUGH: That’s very interesting. Thank you. Thank you for calling in, Justin. Since Justin mentioned SDG&E, I do want to spend a little time talking about the introduction of the electric car because there’s going to be a mass produced electric car introduced to Southern California later this year. It’s the Nissan Leaf. And I want to get your feeling, all of your feeling, are we ready for electric cars here? Andrew, let me go to you first.
MCALLISTER: Sure. Just that issue of electronics and server consumption is one that’s…
MCALLISTER: …close to my heart, too, having done some university research on that issue and the a/c load, you know, many of us don’t know the air-conditioning load of a major server farm is massive. Really, any server room in any facility has to be kept cold and so if you increase the efficiency of those circuit boards and the electronics in there and you manage them, you do demand response and power management, you can really reduce the air-conditioning load. These are…
CAVANAUGH: You can save a lot of energy that way.
MCALLISTER: …creative ways of…
MCALLISTER: …saving energy, right. And demand response program, in general, which he referred to at his company’s facility, you can save a lot of money on your electric bill if you just agree to cycle some of your equipment, to turn it off when the utility asks you to turn it off. So those are great programs that are out there for any business. As far as the EV rollout goes, you know, there’s a really great consortium going on here in San Diego. CCSE’s part of it. SDG&E’s obviously a major player because they’re going to supply the electricity that powers all these EVs. And there are a number of other players in the EV infrastructure space that have come together on this Nissan Leaf project. So there’s going to be at least 1,000 or so, probably more, Leafs available starting around the end of the year this year. And it’s a great technology. It’s really – they’re – Nissan’s the first company to get out in front of this really and get a car on the market, in production, and they’ve chosen five urban areas in the States, two of which are in California, to test out the Leaf, put in some charging infrastructure, put the home chargers into everybody’s houses and see how it works.
MCALLISTER: And so it’s a really great project to develop this marketplace, and I think there’s a lot of great innovation that’s waiting to happen in that – in the electric vehicle space. And it brings up the previous caller’s question about how are we going to get the electricity to all these vehicles…
MCALLISTER: …and that is a major challenge. Our distribution infrastructure in the places where these vehicles are likely to go, which may overlap and probably will overlap with those who have adopted solar and other innovative technologies, you can sort of predict it but not really. And so when you get a bunch of cars in one node on one little area of the distribution infrastructure, you have to change out some of that equipment and upgrade the distribution network. So that’s another big investment that’s going to have to happen.
CAVANAUGH: Charles, what do you see as the challenges of electric cars on Southern California freeways?
LANGLEY: Well, the real challenge, again, as we’ve touched on is the price of gasoline. The oil companies call it a – the oil collar, like a collar on a dog. And I’m looking at a article from the Motor Trend magazine, 1979, that says 20 electric cars you can buy. And this was in response, it was a market response to very high oil prices in the seventies. And then came the eighties after Americans started using less fuel, suddenly the price of oil plummeted and there was this wonderful supply-side boom of cheap oil. We had a booming economy and everyone forgot about the oil crisis. And now we’re back to it, essentially hooked on oil. And, hopefully, what has to happen is we have to see relatively high prices in order for these infant technologies to survive.
CAVANAUGH: I see. And there was a wonderful documentary made, “Who Killed the Electric Car,” and that, of course, was the electric car that came out in the early nineties. And so now we have a rebirth of the electric car. Dan, Professor Seiver, I want to get your feeling because you talked about battery storage and I know that that really is a huge issue when it comes to not only electric cars but all forms of alternative energy. Do we have the capacity to store the energy that we generate from alternative sources, renewable sources?
SEIVER: Well, let me twist that around a little bit.
SEIVER: Let’s go back to the electric car that I think there is a large pent-up demand for electric cars in this country and not just in California. And a large number of the trips that we take—and, remember, transportation uses a huge portion of our energy use—a large portion of the trips we take are short enough that you could charge up your car at night with a home charger and drive it to your place of work or wherever else and come back on that one charge. And charging overnight also has the advantage of the grid is less stressed at night. And so I think the possibility’s there but you have to – You know, to get Americans to change, we need to encourage them to change and so we need to subsidize electric cars for some time. We also have to spend enough money to try and improve battery technology because for the batteries in cars, we want them to be able to have longer driving distances and that will make electric cars even more useful. And if we spend enough money, I think, on R&D, we’re innovative enough and we have the science and the scientists that we could, in fact, improve battery technology significantly. And if we don’t do it, other countries will do it and we’ll end up buying their batteries instead.
CAVANAUGH: Let’s talk to Ed. He’s calling from Point Loma. Good morning, Ed. Welcome to These Days.
ED (Caller, Point Loma): How do you do? Thank you for having me on. Something that has bothered me for a long time. The – there’s 19.2 pounds of CO2 produced for every 7 gallons – 7 pounds of gasoline burned. A 20 gallon tank will make 380 pounds of CO2 for the atmosphere. And it seems to be a secret when I ask people if they –what they think about that. They don’t know. The – I might add, the electricity that is generated is kind of a waste during the hours from 11:00 to 6:00 a.m. The hydro plants and the steam plants, the coal-steam plants, they’re functioning anyway and there’s not much to do with the load so…
ED: …it’s an advantage. But thank you very much for having me on.
CAVANAUGH: Well, Ed, thank you so much for calling. And, Andrew, do we have a good – really a good grip on how much CO2 that we are emitting?
MCALLISTER: Yeah, I think we do. I mean, it’s – what the caller mentioned there is just a chemical. You know, you have carbon, you put a couple of oxygens on it…
MCALLISTER: …and you end up with, you know, two and a half – or… You end up with a lot – heavier – heavier carbon dioxide, you know, coming out your tailpipe than you had gasoline going in. But there are many estimates – you know, University of San Diego EPIC Center over there has done a nice carbon footprint analysis of the region, so that’s out there. People can look at that. I think we understand how much carbon we’re producing. The, you know, the bigger picture of exactly what the mechanisms are that are causing warming, you know, there’s a robust scientific community that’s looking at what the impacts of all that carbon and other greenhouse gases actually are but I think we know the general trend and there’s really no, you know, legitimate debate about that.
CAVANAUGH: Both Charles and Professor Seiver, Andrew, have made the point that there are some powerful forces that basically drive us toward inertia, that we don’t do anything or that we even go back in time and we don’t worry about it. When the BP oil spill is capped maybe we’ll forget about all this. I’m wondering what your take is on how far forward we can go at this point, looking at the disaster in the Gulf.
MCALLISTER: Well, I think one overarching point about how you make and implement policy is that you have to have a longterm vision and you have to step forthrightly and very transparently towards that vision. So when you have a policy that puts in place, you know, an incentive for renewable energy, implementation, for example, it helps when that program is defined for the next 10, 15, 20 years. If we had a tax on gasoline, for example, that we projected that, okay, here’s what’s going to happen, here’s the plan, and we said for the next 20 years, here’s how we’re going to wean ourselves off of gasoline. We’re going to gradually increase the tax, I think Dan referred to this, and here’s what’s going to happen. And then follow through forthrightly, administration after administration with no ups and downs. That’s what we have not had in this country. We have had a little bit better, I would say, in this state. We’ve got policies that last. For example, the solar rebate. That started high, it’s now tapering off, it’s getting lower. We’ve had solar rebates in this state for over 10 years now and it’s really had an impact on the marketplace. PV installation costs about half of what it did 10, 12 years ago in California. And I think you can’t assign all of the credit to that program in the state but you can say that the marketplace has really known what’s going to happen, there’s been predictability, and, therefore, there’s been more investment, more R&D, more development of innovative business models to make this stuff happen. We’re seeing the same thing starting in the EV, in the alternative fuel vehicle realm as well. The state ARB, the Air Resources Board, has started a series of policies that’s going to push us down this road, so to speak, pardon the pun, in the electric vehicles and the alternative vehicles realm. So I think we do have some enlightened policymakers here in California. You know, opinions will differ about how much the govern – people think the government ought to be, you know, influencing their lives but I really believe that it’s got to be a cooperation between the policymakers, the elected officials and the public that’s got to have some buy-in in this.
CAVANAUGH: We are just about out of time but I know, Andrew, you wanted to mention an event that’s coming up this weekend?
MCALLISTER: Oh, yes, thank you very much. The Kensington Clean Energy Festival is this Saturday. It’s in Kensington, obviously. 10:30 to 2:30. And it’s oriented towards families. Bring your kids. It’s going to be a fun event with lots of educational activities about clean energy and water efficiency.
CAVANAUGH: That’s Andrew McAllister, director of programs for the California Center for Sustainable Energy. I want to thank my other guests, Dan Seiver, professor of Finance at San Diego State University and Charles Langley, consumer gas price analyst for UCAN. Gentlemen, thank you all very much for speaking with us today.
MCALLISTER: Thank you, Maureen.
SEIVER: Thank you.
LANGLEY: Thank you.
CAVANAUGH: I want to thank everyone who called. There are a lot of people we couldn’t get on the air, so please do place your comment online, KPBS.org/thesedays. And stay with us for hour two of These Days coming up in just a few minutes here on KPBS.
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