Opinion: Blame California Environmental Polices for the Spike in Natural Gas Prices - Times of San Diego
Opinion: Blame California Environmental Polices for the Spike in Natural Gas Prices
A governor who has come to be perpetually angry about something or the other is demanding a federal probe into natural gas prices in California and other Western states. Gov. Gavin Newsom just has to know why prices “have risen to alarming levels.”
If he’d shuffle some of the papers on his desk or rummage through his file cabinet looking for the folder labeled “2021 executive orders,” he’d find out that “the root causes of these extraordinary prices” are coming from inside the building.
Natural gas prices more than tripled in California last month. Though forecasts are telling us relief has arrived with February, Newsom wants answers about what happened in January. In his Feb. 6 letter to the chairman of the Federal Energy Regulatory Commission, the governor asked for “immediate attention,” as “California’s residential customers are, consequentially, suffering the economic burden of extreme and unexpectedly high gas and electric utility bills.”
Increased demand during a particularly cold spell and a deadly Texas pipeline explosion that idled an important artery that still hasn’t been restarted have been cited as factors behind January’s price spike. The former is a whim of nature. But the latter is manmade and underscores the reality that California is not energy independent. It has to import nearly 90% of its natural gas from other states. So the state is vulnerable to supply interruptions, which will pressure prices upward in any market.
“All of the state’s mandates have created a rigid energy infrastructure that makes prices in the state volatile,” says PRI senior fellow Wayne Winegarden. “When supply shortages hit demand surges — such as was the case in January — the typically tight supplies will accentuate the price impacts.”
But let’s say California could provide half of its natural gas rather than import it. That would be a vast improvement. Future price shocks could be avoided.
It can’t happen, though, under Newsom’s regulatory regime. The governor issued an executive order in 2021 that bans fracking in the state in 2024. While fracking is widely associated with crude oil extraction, it also stimulates the flow of natural gas. About two-thirds of the natural gas in this country is a product of fracking.
While the ban doesn’t take effect until next year, fracking is effectively dead in California. More than 100 permit applications were rejected in 2021. None were issued between February and November of that year. The Associated Press called this “effectively phasing out the process ahead of Gov. Gavin Newsom’s 2024 deadline to end it.”
The purge began, though, long before the 2021 executive order. Several months after taking office in 2019, Newsom fired Ken Harris, then head of the state Division of Oil, Gas and Geothermal Resources, “after environmental groups complained about a surge in fracking permits,” the Bakersfield Californian reported.
History somewhat repeated itself last month when Uduak-Joe Ntuk, appointed by Newsom in 2019 to succeed Harris as California’s chief petroleum regulator, left his job after “some environmental groups thought” his pace of regulation was too slow. According to the AP, “watchdog groups said permits for traditional oil drilling were climbing at the end of 2022 as the state’s ban on neighborhood oil drilling neared.” Under Ntuk, there was a 754% boom in new oil drilling permits issued in last year’s fourth quarter, which to the green groups that have so much influence in Sacramento meant that he had “gone rogue.”
Even before Newsom became governor, natural gas production in California, which consumes more natural gas than any state other than Texas, was in decline. Less gas is produced today than in 1999. While the state’s proved natural gas reserves are not as plentiful as its inventory of crude, what is available would seem to be sufficient for meeting demand. But orders are orders, so it must stay in the ground where it does no good.
When Newsom announced he was shutting down fracking, he said he didn’t “see a role” for it in the state’s future, and was convinced “that California needs to move beyond oil.” Would he rethink that position if a federal investigation concluded that his state’s radical climate policies were responsible for the steep natural gas prices of last month, and place the state in an unnecessarily exposed position going forward?
Unlikely. He and many others are too invested in the green agenda to listen to reason.
Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.
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