“Would you like a E 85 Super frappe, sir?” “Or perhaps you would prefer the pumpkin spice regular?” – explaining California’s insane energy system

Driving by the local gas station this morning I saw that regular was at $4.65/gallon. Anyone who has been reading the dead tree media or watching television now has California’s gas crisis on the radar.

Refinery fires and the winter gas switchover and Jerry Brown’s haircut have combined to send prices skyrocketing. California finds itself once again leading the nation in foolishness.

Here in California, where we still actually have a substantial oil industry, we have had higher prices than anyone in the country with the exception of Hawaii and Alaska for the past 40 years. California was the first state in the union to manage air quality. I remember as a boy having recess and sports cancelled because the smog in the San Gabriel Valley was so bad.

The state created agencies and a set of regulations 3′ thick on gasoline formulations and exhaust scrubbers for factories and solvent usage, and today 30% of our air pollution comes in courtesy of coal-burning power plants in China. Even with this the air is still much cleaner, but our regulatory system has gone insane.

You cannot build a refinery in California anymore. You would have to be certifiable to go through the regulatory process. Just the mention of such a project would have the Sierra Club and Earth First and the Environmental Defense Fund lawyered up and descending upon Sacramento like a Mongol Horde taking no prisoners. There is no compromise in their vocabulary.

Then comes the Methyl Tert Butyl Ether (MTBE) scam. MTBE was used in gasoline as an oxygenator to raise fuel octane and help it burn more efficiently, but it was outlawed in the early ’00’s because it was a groundwater pollutant. The problem with that logic is that gasoline itself is highly dispersant and one gallon can pollute up to 750,000 gallons of water. A minimal additive can do little to affect the basic science. But California and New York and then the EPA decided that we needed our own special blends.

Then came ethanol. It too is an oxygenator. Most of the ethanol in this country comes from corn. We could buy sugar ethanol from Brazil, which is cheaper and has a much higher energy potential, but the American sugar lobby and the corn ethanol lobby will have none of that.

The price of corn has been at record levels for the past year not only because of the drought, but because the law mandates up to 10% ethanol in conventional fuels, with E 85 (15% ethanol) growing rapidly. It doesn’t matter that corn ethanol has 66% of the energy efficiency of gasoline, or that processing corn ethanol is highly inefficient and costly. The subsidies are massive. When villagers in Egypt are rioting over the rising cost of flour, Pharoah in Washington has said “so let it be written. So let it be done” on corn prices. The United States could do more good in the Middle East today by re-purposing our corn crop than our fumbling diplomatic efforts to date.

Then came our Starbucks Winter and Summer blends courtesy of the EPA. So we have our own special California blends on top of it the EPA mandated blends. Mocha frappucino E-85? Half & half latte Super? It’s no wonder the refineries have had fires recently. They’re so damned confused they probably threw the wrong switch.

California’s gasoline industry is a mess. Our power generation industry is a mess. We now experience regular power outages. All because of the regulatory environment. Electronics manufacturers in the Los Angeles area are no longer allowed to use simple rubbing alcohol to clean circuit assembles any more, no matter if it’s one or 1,000. So there goes that industry.  And all kinds of manufacturing has been exiting the state at an accelerating rate.

California is one of the wealthiest political entities in the world, but an insane regulatory environment has the state in free fall economically. It might even be mitigated by have a cleaner environment, but regular sewage dumps along the coast because of overstretched water treatment plants have one checking the water quality every time you go to the beach. We’d rather build high-speed rail lines to nowhere.


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