Job Killer Bill May Increase Fuel Costs; Proposal Continues to Move in Assembly

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JopKillerFuel costs for California businesses may increase if a job killer bill passed by the Assembly Utilities and Commerce Committee this week is signed into law.

SB 350 (de León; D-Los Angeles) potentially increases costs and burdens on all Californians by mandating an arbitrary and unrealistic reduction of petroleum use by 50%, increasing the current Renewable Portfolio Standard to 50% and increasing energy efficiency in buildings by 50% — all by 2030 without regard to the impact on individuals, jobs and the economy.

Blank Check Authority

SB 350 provides broad and undefined authority to the California Air Resources Board (CARB) to adopt regulations, standards and specifications “in furtherance of achieving a reduction of petroleum use in motor vehicles by 50% by January 1, 2030….”

This bill does not specify whether CARB should adopt and implement policies that have an impact on the demand for petroleum fuels, or whether it should adopt and implement policies that affect the supply of transportation fuels. SB 350 provides a blank check delegation of authority to CARB and fails to require CARB to give consideration to the cost or job loss associated with the mandatory reduction.

Without legislative guidance or protections against increased costs or job loss, what tools could CARB employ to meet the reduction mandate: Ration the use of petroleum? Limit driving to certain days of the week? Demand vehicle efficiency without available technology?

Implementing any of those approaches will come at a high cost to families and residents in California.

Driving Integral to Daily Life

Most of California’s businesses and families rely on petroleum for their day-to-day transportation needs and SB 350 may compromise the availability of transportation fuels.

The California Energy Commission reported in its 2014 Integrated Energy Policy Report that 92% of all transportation fuels in California are made up of petroleum. Businesses rely on petroleum to transport goods and people. Imagine the upset reducing petroleum by 50% will have on daily activities, including getting to and from work, taking children to school, grocery shopping, getting to the doctor, etc.

Higher-Cost Vehicles

The goal of reducing petroleum consumption by 50% fails to recognize the needs of average Californians. Electric and hybrid vehicles, which consume less petroleum than traditional vehicles, come with a higher price tag and are out of reach for many Californians whose disposable income must be spent on groceries, child care, rent and other basic needs.

Good Petroleum Jobs

The CalChamber and coalition opposing SB 350 also call attention to the potential impact on good-paying jobs in the petroleum industry if petroleum production in California is reduced.

The petroleum industry is a major economic engine in the state and has been helping California grow for more than 100 years. A 2014 report produced by the Los Angeles Economic Development Corporation noted that the petroleum industry is responsible for 468,000 jobs in the state, 104,000 of which are located in Los Angeles County.

The industry provides billions of tax dollars to the state and local government. If half of this is taken away, the job and economic losses to the state would be devastating.

Energy Cost Impacts

In addition to the 50% reduction in petroleum, SB 350 also seeks to increase the current Renewable Portfolio Standard from 33% to 50% as well as increase energy efficiency in buildings to 50%.

Both policies will significantly increase costs to ratepayers. California’s energy price per kilowatt hour is among the highest in the nation and our energy efficiency standards are among the strongest. Upgrading current energy efficiency standards while increasing the cost of energy will make California’s businesses less competitive.

Key Vote

SB 350 passed Assembly Utilities and Commerce on July 6, 9-5.

Ayes: Bonilla (D-Concord), Burke (D-Inglewood), Eggman (D-Stockton), Cristina Garcia (D-Bell Gardens), Quirk (D-Hayward), Rendon (D-Lakewood), Santiago (D-Los Angeles), Ting (D-San Francisco), Williams (D-Carpinteria).

Noes: Achadjian (R-San Luis Obispo), Hadley (R-Torrance), R. Hernández (D-West Covina), Obernolte (R-Big Bear Lake), Patterson (R-Fresno).

Absent, Abstaining, or Not Voting: Dahle (R-Bieber),

Action Needed

The bill now goes to the Assembly Natural Resources Committee, where it is likely be considered on July 13. The CalChamber is encouraging members to contact their Assembly representatives and legislators on the Assembly Natural Resources Committee to ask that they oppose SB 350.

An easy-to-edit sample letter is available at www.calchambervotes.com.

Staff Contact: Amy Mmagu

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Amy Mmagu
About Amy Mmagu
Amy Mmagu has been a CalChamber policy advocate since April 2011. She has presented the business perspective on climate change, education, energy, environmental regulation, housing and land use issues. She joined the CalChamber staff in 2006, working in a wide range of areas. Before coming to the CalChamber, Mmagu worked for the California Cable and Telcommunications Association. She earned a B.A. in international relations from California State University, Sacramento, spending one year at the University of Denmark in Copenhagen, studying European politics.