Guest Editorial: LNG Must be Part of CA’s Secure Energy Future

By Published On: June 10, 2005

When Federal Reserve chair Alan Greenspan says high oil and natural gas prices have put energy markets under the greatest strain in a generation, policy makers need to pay attention. Here in California, the world’s tenth-largest natural gas consumer, that strain is quickly becoming acute pain. Coming out of the recent recession, California is experiencing modest economic growth. This is good news for employers and the state budget, but economic growth also increases demand for already tight supplies of both electricity and natural gas. California is on the leading edge of energy policy?embracing increased use of renewable electric generation resources such as solar, wind, and geothermal and placing conservation measures above new generation on the list of future energy sources. Yet these progressive policy measures are not enough to meet our fast-growing demand for natural gas and electricity. While a potential energy crisis alarms policy makers, all Californians should be concerned about shortages and higher energy prices. Residential consumers and small business owners could see hefty swings in the price of natural gas, driving utility bills up hundreds of dollars a year. In fact, many regulators in the Western U.S. have already approved higher electricity rates based on higher natural gas costs. With more than 43 percent of the electricity generated in California coming from natural gas, those price impacts are felt on our electricity bills too. Because of its location, California competes with other states for existing natural gas supplies, driving up the price we pay for this essential commodity. Most of the natural gas used in our homes, businesses, and electricity system comes from Canada and Texas, leaving California at the “end of the pipeline.” A recent report from the California Energy Commission reminds us that we rely too much on limited interstate natural gas pipeline capacity. Indeed, we produce only 16 percent of the natural gas consumed in the state, relying on imports for the rest. In addition to limited interstate pipeline capacity, California faces the long-term challenge of replacing the natural gas that comes from maturing domestic fields with dwindling reserve volumes. Despite California’s efforts to expand the use of cleaner energy sources and become more energy efficient, new, reliable natural gas supplies are needed to bolster California’s energy security in the decades to come. Other states and nations facing the same energy challenge have found that there is a safe, well-tested way to prevent costly, disruptive energy shortages: imported liquefied natural gas (LNG). LNG is the same natural gas we all use transformed into a liquid to ease transportation. In fact, much of Europe, Japan, South Korea, and the Eastern United States have used imported LNG for as long as 45 years without a significant safety problem. To help increase and diversify our natural gas supply, California should encourage the construction of one or two LNG facilities. The benefits of bringing LNG ports to California are more than economic. The environment will benefit by increasing access to cleaner-burning natural gas. LNG equipment can often replace heavy-duty diesel fuel equipment, reducing heavy particulate matter pollution that plagues neighborhoods around ports and freeways. Indeed, natural gas combustion produces fewer greenhouse gases than an energy-equivalent amount of gasoline or diesel fuels. LNG has a well-established environmental and safety record. During the last 25 years, none of the five LNG ports located in the U.S. has had safety problems. Efforts to maintain that perfect safety record have led to important innovations such as equipping LNG tanks with interior cameras and instruments to monitor conditions. Moreover, wide safety zones ensure that public activities and structures remain safe under any plausible scenario. No other source of reliable and affordable energy provides these safety margins. Contrary to extremists’ fear-mongering, LNG facilities will not jeopardize California’s safety or our environment. But failure to secure a safe, reliable, and lower-cost energy future will. Without LNG, California remains vulnerable to costly shortages and crippling disruptions. So long as California remains a high-cost-energy state, neighboring states with cheaper power supplies are more attractive to employers and residents. Increasing badly needed natural gas supply by locating LNG facilities in California is a commonsense response to mounting business and consumer demand. If we don’t build California LNG facilities, employers and consumers may see their bills increase by forces outside the state’s control. Greenspan’s words, CEC reports, and our monthly utility bills illustrate the need for imported LNG. But this new source of a familiar fuel will become a reality only if policy makers muster the political will to take an important step for California’s future. <i>Keith Richman, a Republican, represents Northridge in the state Legislature.</i>

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