BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 1468 - Kehoe Hearing Date:
June 22, 2004 A
As Amended: May 25, 2004 FISCAL B
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DESCRIPTION
This bill makes numerous findings and declarations, including
the fact that California gasoline and diesel prices have
historically far exceeded the national average, demand for such
fuels far exceeds California's refinery capacity, and
significantly reducing on-road petroleum fuel demand through the
year 2020 is feasible.
This bill declares it's the intent of the Legislature to enact
measures with the goal of reducing California on-road petroleum
demand by 15% below 2003 levels by 2020.
This bill requires the California Energy Commission (CEC) and
the State Air Resources Board (CARB) by January 1, 2010 to
jointly adopt and implement measures to limit on-road petroleum
fuel demand to a level not exceeding 2004 demand levels, and
maintain or reduce demand levels between 2010 and 2020.
This bill prevents the measures adopted by the CEC and CARB from
requiring any new or additional taxes on motor vehicles,
petroleum fuel, or vehicle miles traveled.
This bill authorizes the adopted measures to include, but not be
limited to, a public education program the regarding petroleum
demand reduction benefits of various vehicle operations and
maintenance measures, as well as the use of public transit.
This bill authorizes the CEC and CARB to work with other states,
members of Congress, and other federal agencies to help develop
new standards and regulations designed to increase on-road
light-duty vehicle fuel economy for new vehicles.
This report requires the CEC and CARB to jointly prepare a
report by January 1, 2008 to the Legislature on the progress
made toward meeting California's petroleum fuel reduction goals.
BACKGROUND
Concern over high gasoline and diesel prices has recurred for
many years. California experienced gasoline and diesel price
spikes in 1996 ($1.50/gal), 1999 ($1.60/gal), 2000 ($1.80/gal)
and, once again, in 2004 ($2.20/gal). Each price spike results
in investigations and new ideas, though no California
investigation has found criminal activity. The gas price spikes
in 2000 led to several new ideas and analyses. Ultimately the
new ideas (building a pipeline to Texas and creating a state-run
gasoline reserve) were found to be unworkable. One analysis was
a joint agency report by the California Energy Commission (CEC)
and California Air Resources Board (CARB) on reducing
California's petroleum fuel dependence ("Reducing California's
Petroleum Dependence," August 2003, P600-03-005F).
The report concluded California's demand for gasoline and diesel
fuel will grow far more quickly than will the supply from
California's refineries. From near self-sufficiency in 2000,
the report forecasts that 25% of California's on-road fuel will
come from out-of-state sources by 2010. Based on an analysis of
options that are currently feasible and economical, the report's
first recommendation is that California adopt a policy to reduce
gasoline and diesel fuel demand to 15% below 2003 demand levels
by 2020, and to maintain that level thereafter. A number of
options are suggested for meeting the goal, including using more
fuel efficient replacement tires, improving private vehicle
maintenance, doubling the fuel efficiency of light duty
vehicles, using natural gas-derived fuels as blending agents in
diesel fuel, and implementing fuel cell-powered vehicles. The
second recommendation is that the Governor and Legislature
should work with the California Congressional delegation and
other states to double the national fuel economy standards.
Lastly, the report recommends establishing a goal of increasing
the use of non-petroleum fuels to 20% of on-road fuel
consumption by 2020 and 30% by 2030.
According to an American Automobile Association report,
California had the highest price for self-serve regular gasoline
in the 50 states in May 2004. The six states with the highest
gasoline prices are, in descending order, California, Nevada,
Oregon, Hawaii, Washington and Arizona - all western states.
The effect of high gasoline prices on automobile sales isn't
clear. The 55 miles-per-gallon Toyota Prius hybrid is the
hottest selling car in the United States, based on how quickly
the car sells. Large Internet-based automobile purchasing sites
observe interest in sport-utility vehicles (SUVs) is down, while
interest in smaller, more fuel-efficient cars is up. However,
General Motors indicates May will be its biggest month ever for
SUV sales and Toyota notes gasoline prices have had no effect on
SUV sales.
Though it's small consolation, while California gasoline prices
are high, they pale in comparison to other countries. British
gasoline prices approach $7 per gallon, while gas prices in
Japan are near $4 per gallon.
COMMENTS
1.Hasn't the Governor Already Done Some of This? On May 26,
2004, the Governor announced a program called "Flex Your Power
at the Pump," a derivative of the very successful "Flex Your
Power" energy campaign of 2001 and 2002. The new campaign is
a public education effort aimed at state employees, business
leaders, and government officials, noting Californians can
save up to 15% percent on fuel costs by:
Keeping tires inflated to the recommended pressure.
Using the air conditioning selectively.
Observing posted speed limits.
Accelerating smoothly and braking gradually.
Properly maintaining vehicles by replacing air and oil
filters as recommended.
Minimizing the amount of time a vehicle idles.
This measure says the CEC and CARB may adopt a public
education campaign similar to the one adopted by the Governor
that covers:
Proper vehicle maintenance.
Proper tire inflation.
Selecting low-rolling-resistance tires when replacing
tires.
Selecting fuel efficient and alternative fuel vehicles
when selecting vehicles.
Planning ahead and combining vehicle trips or
eliminating trips when possible.
Practicing fuel efficient driving habits.
Reducing vehicle payload.
Using public transit for longer trips and alternative
means of transportation such as walking and bicycling for
shorter trips around the neighborhood.
Given that the Governor has already unveiled his program, the
author and committee may wish to consider whether it would be
more efficient to simply ask the Governor to expand his
existing program, rather than to put a new public education
program into statute.
1.Is Success Likely? The "Flex Your Power" campaign was never
placed into statute by the Legislature or former Governor
Davis, yet it was highly successful due largely to a massive
paid radio, television, and print campaign coupled with
countless unpaid articles and stories confirming the
electricity emergency. While there have been plenty of news
stories about the high price of gasoline, without a paid media
campaign or news stories about an actual gasoline "emergency,"
it's difficult to see how a public education campaign, even
when it's placed into statute, can be successful.
2.Making Californians Sip Instead Of Guzzle . The second piece
of this bill implements the first of the recommendations of
the CEC/CARB joint agency report on reducing California's
dependence on petroleum. By establishing a technically and
economically reasonable goal and expressing legislative intent
to cut petroleum demand by 15% below 2003 levels, the author
hopes to spur the creation of new ideas and programs that will
help Californians meet that goal. While the bill requires the
agencies to jointly adopt and implement measures to limit on
road fuel demand to 2004 levels by January 1, 2010, it doesn't
provide any new funding to meet that goal. Any new program
requiring funding will need to be either approved in the
budget or in subsequent legislation.
3.Setting Goals & Meeting Them Are Two Different Things .
Opponents to this measure are concerned that establishing a
specific, numeric petroleum demand reduction goal will
discourage investments in expanding refining, marketing and
distribution facilities. The assertion that few companies
would be willing to invest in more production facilities when
the state goal is to reduce demand may be on point, but
establishing a state goal is one thing, while achieving it is
quite another.
The cornerstone of the 2003 CEC/CARB recommendation is to
double the Corporate Average Fuel Economy (CAF?) standard,
which takes an act of Congress. In 2002, a bipartisan
congressional effort to raise the CAF? standard failed,
leaving in place a CAF? standard that was established in the
1980s. Any demand reduction that comes from the measures the
CEC and CARB adopt as a result of this bill are speculative,
but it's difficult to see how anything will hold petroleum
demand at 2004 levels for the next 16 years. On the other
hand, even if the CEC and CARB were to develop a cost-free
plan that were to be embraced by drivers to cut gasoline use
by 25%, it, too, would be opposed by the oil industry.
5.As Long As We're Trying To Cut Demand . . . . The CEC/CARB
analysis also recommends working with the Governor and
Congress to increase the CAF? standard, and encouraging the
use of alternative fuels. The author and committee may wish
to consider broadening the bill to include those
recommendations.
While technological improvements will reduce gasoline and
diesel consumption, significant additional savings may result
from social change as well by, for example, making public
transit more appealing. The author and committee may wish to
consider authorizing the CEC and CARB to work with other state
and local agencies to encourage the use of public transit.
6.Technically Speaking . On Page 4, Line 28 and Page 5, Line 6,
the word "fuel" should be inserted after the word "petroleum."
7.Related Legislation . AB 2685 (Oropeza), which contains a
related piece of AB 1468, is also scheduled to be heard by the
committee today. AB 2685 requires the Governor to launch a
public education campaign about reducing the demand for
gasoline and diesel fuel.
PRIOR VOTES
Senate Appropriations Committee (12-0)*
Senate Environmental Quality Committee
(5-2)*
Assembly Floor (47-32)*
Assembly Appropriations Committee (18-7)*
Assembly Natural Resources Committee
(8-3)*
*Votes are on a prior, unrelated version of the bill.
POSITIONS
Sponsor:
Clean Power Campaign
Support:
American Lung Association
California Natural Gas Vehicle Coalition
California League of Conservation voters
Coalition for Clean Air
Consumer Federation of California
Environment California
Natural Resources Defense Council
Sierra Club
Union of Concerned Scientists
Oppose:
Western States Petroleum Association
Randy Chinn
AB 1468 Analysis
Hearing Date: June 22, 2004