You wouldn?t know it by looking at my pathetic stock portfolio, but I understand the wisdom of diversification to protect what you have from going south, so to speak. And Californians should know firsthand about protecting their energy investments from volatility. But I?m not seeing any of that stock-market common sense in the state?s push to anoint liquefied natural gas as the new fuel of choice. The governor-elect, many state energy officials, and energy companies see LNG as the answer to the looming gas crunch. Governor-elect Arnold Schwarzenegger?s energy policy states that LNG ?is a proven technology that will create more natural gas capacity.? But LNG?s successful development, which involves exploiting gas fields in faraway lands, depends on far more than technology. Sempra Energy is one of several companies planning to spend billions of dollars to develop the infrastructure to import LNG from Bolivia and Indonesia. Other companies hoping to tap into the Andean nation?s gas fields, estimated to hold more than 50 trillion cubic feet, include Shell and El Paso. To give the number some perspective, U.S. households consumed nearly 1 trillion cubic feet of gas last January. Sempra is also the first of several energy firms to get its Mexican LNG proposal permitted, which would allow South American and Indonesian natural gas to flow into California businesses, schools, homes, pool heaters, and vehicle gas tanks. The company and Marathon Oil hope Indonesia will sign a 20-year deal at the end of this year to feed gas into their planned LNG projects in Baja California. Before being shipped across the ocean, the fossil fuel would be condensed and liquefied via extreme chilling. Sempra and PG&E Gas Transmission Northwest were asked last month by seven LNG developers to consider expanding the Baja pipeline system to accommodate LNG suppliers. After shipping, the gas is warmed up and sent through pipes to end users. A proposal has been floating around at the state Capitol to entice California officials to invest in an LNG project that would also extract gas from Bolivia?s abundant gas fields. The proposal by B.B. InterCapital would involve a 30-year gas deal that would be paid for with revenue bonds. ?The U.S. is in the midst of a historic transition from dependence on North American natural gas supplies to one of dependence on megaproject investments and global markets,? according to a recent report by the Center for Energy Efficiency and Renewable Technologies. ?The one certainty in this new environment is that the era of inexpensive natural gas in the United States is coming to a close,? it states. The many uncertainties and risks of exploiting foreign gas fields are taking a backseat to the profit motive. You may wonder what?s wrong with a profit motive, and many of our readers swear by it. The issue is not so much profit but when it results in grossly disparate impacts elsewhere, particularly in our post-9\/11 world. Let?s take Bolivia, a country I traveled a couple of years ago. The poverty of the vast majority of the native population is overwhelming. In the capital of LaPaz, blocks upon blocks of colorfully dressed peasants line the sidewalks selling measly quantities of potatoes, other produce, matchboxes, or cheap knickknacks. Hot water is a rare commodity, as are heated buildings in the two-mile-high city in winter. And blackouts are a common occurrence. Bolivians are feisty and fearless. They oppose government actions by taking to the streets, ripping them up?bringing business to a halt. Take much of the country?s gas away from them, most of who won?t see a dime of the profits, and you foment opposition. In the last few weeks, there were riots in the landlocked nation over plans to export gas to the U.S. Violent clashes between Indian protesters and the military over the export plan left dozens dead, led to the ouster of the impoverished Andean nation?s president, and put the gas export plan in limbo. Before this event, the writing was on the wall. In 2000, Bolivian Indians fiercely protested Bechtel?s plan to privatize the water supply in one of the country?s larger cities, which resulted in the deal being scrapped. Many of Bolivia?s industries have been privatized, which has resulted in crappier services at higher prices, with only a tiny minority of the population reaping any financial benefit. The gas export plan was seen as another variation on that exploitative theme. While LNG exporters were estimated to reap $1.3 billion, Bolivia was going to get only $40 million, expected to line the pockets of the elite. A gas export plan might fare better, however, if an Alaska-type oil royalty sharing program was developed, and every Bolivian got a yearly check from the gas proceeds. Energy ?corporations eager to be the multibillion dollar gas link between Bolivia and California might want to reflect a bit on whether they really want to follow Bechtel?s lead,? warned Jim Shultz, a former Sacramento consumer advocate who relocated to Bolivia. Meanwhile, in the far richer North, yields from domestic natural gas deposits are in decline and energy demand is rising. Today, California wells provide only about 10 percent of the state?s natural gas supply, and new gas-fired power plants will continue to come on line. Natural gas is the chosen fuel for new power plants, and generators are the fastest-growing group of natural gas buyers. ?We can?t solve our energy problems by purchasing gas that has in effect been robbed from other countries,? said Nettie Hoge, head of The Utility Reform Network. Opposition in foreign lands is not the only major obstacle to LNG development, which first surfaced in the 1970s. Californian and Mexican residents of towns where LNG facilities are proposed are making a stink. Several months ago a joint plan by Shell and Bechtel to build an LNG facility on Mare Island in the San Francisco Bay Area was scrapped because of strong local opposition. Residents were concerned about the safety issues surrounding building a gasification terminal near an earthquake fault and the potential for attacks on the plant. Several LNG facilities have been proposed in California. Calpine is considering a project in Humboldt, Mitsubishi at Long Beach, the Australian firm BHP at Oxnard. Opposition to the LNG project in Humboldt, for example, is based on concerns about public safety and a facility?s impacts on the Humboldt Bay estuary and fishing industry. ?An attack on a plant is as likely as the World Trade Center collapse,? said Tim McKay, director of the Northcoast Environmental Center. ?People are not eager to have an LNG facility one or one-and-a-half miles from their homes,? he added. At this point, the state?s role in permitting LNG projects is helter-skelter, with the lead agency varying with each proposal. State agencies involved include the California Public Utilities Commission, the State Lands Commission, the California Coastal Commission, the Department of Fish and Game, and the California Energy Commission?if a power plant is involved?along with local agencies. A multiagency task force has been meeting to try to clear a permitting path for LNG projects with the CEC in the lead, said CEC spokesperson Chris Davis. In another venue, CPUC president Michael Peevey criticized the CEC for not fully assessing the pros and cons of LNG development in its upcoming Integrated Energy Policy Report, including how it would benefit the state. ?Our commissions should continue working together to identify the benefits and costs of pursuing supplies for the state,? Peevey said. Hopefully, their analysis will have LNG play a much smaller role and one on par with other strategies?including renewable supplies and efficiency measures?for meeting the state?s energy demand. ?We must have energy efficiency first, otherwise we are wasting resources,? said CEC spokesperson Claudia Chandler. A well-balanced energy portfolio will help avoid impacts that could come back to haunt us.