CITY AND COUNTY OF SAN FRANCISCO
PEAK OIL PREPAREDNESS TASK FORCE
TUESDAY, JUNE 17, 2008, 5:00 P.M.
CITY HALL, ROOM 421
ONE DR. CARLTON B. GOODLETT PLACE
SAN FRANCISCO, CA 94102
TASK FORCE MEMBERS: Jeanne-Marie Rosenmeier (Chair), Bernard Meyerson (Vice-Chair), Patricia Gerber, Richard Katz, Jason Mark, Cal Simone; (1 Vacant).
ORDER OF BUSINESS
1. Call to Order and Roll Call. The Peak Oil Preparedness Task Force meeting convened at 5:00 p.m. Present: Chair Rosenmeier, Members Gerber, Katz, Mark (5:17 p.m.), Meyerson and Simone (5:10 p.m.).
2. Approval of the June 3, 2008 Peak Oil Preparedness Task Force Regular Meeting Draft Minutes. (Discussion and Action) Upon Motion by Member Gerber and second by Member Katz, the June 3, 2008 Meeting Minutes were approved with an amendment. (AYES: Chair Rosenmeier, Members Gerber, Katz and Meyerson; Absent: Members Mark and Simone) (Explanatory Document: June 3, 2008 Approved Minutes))
Items 4 and 5 were heard before Item 3.
3. Scalability, Timing, and Alternatives, by David Fridley of Lawrence Berkeley Labs. (Informational Presentation and Discussion). Member Simone introduced Mr. Fridley and described his background in the energy sector. (Explanatory Document: Mr. Fridley’s presentation "Scalability, Timing, and Alternatives ".) See Attachment A for the question and answer session.
4. Planning for Peak Oil Preparedness Task Force Informational Table at “The Big One” Sustainability Event at Golden Gate Park. (Continued from the June 3, 2008 Meeting) (Discussion)
Chair Rosenmeier reported that the Task Force has been asked to speak on the Sunday of the event at 11:00 a.m. Vice Chair Meyerson offered to speak for the Task Force and requested that additional members attend the Saturday and Sunday sessions. Members discussed their availability for attending the event. Chair Rosenmeier recommended creating a handout/invitation to distribute to the public that would include a schedule of meetings and invitation to attend. Vice-Chair Meyerson suggested adding information on how people can contact the Task Force and how to access additional information via the Internet. Member Katz offered to create the informational handout.
5. Progress Reports by Each Member on Report Sections. (Discussion)
Chair Rosenmeier read the Resolved clause from the Board of Supervisors Resolution that established the Task Force and its goals. It was explained that the Resolution specifically states that the Task Force should assess its vulnerability as it relates to electricity and emergency services. Chair Rosenmeier stated that she believes that the Task Force has not yet addressed the emergency services topic.
Chair Rosenmeier distributed a draft of the Economy Section of her report (see link) to members and stated that SF Post Carbon would be reviewing and critiquing on Tuesday, June 24. Task Force members were invited to attend and were asked to review the draft report and provide comments specifically on the organizational structure, concept, sense of urgency to economy predictions, and lastly grammatical suggestions.
Member Katz reported that he and Chair Rosenmeier have been meeting with transportation experts from the bicycle community, BART, and MUNI, and would be creating a written report as the next step. Vice Chair Meyerson reported that he would be meeting with the Vacaville Chief of Police to ask why a recommendation has not yet been made to the Ford and General Motors car dealerships to consider creating black and white police cars that do not rely on gasoline. Vice Chair Meyerson stated that he would also be addressing how much attention would be given to potential increased vandalism (of cooking oil and siphoning of gas tanks, etc.) and researching what plan is in place for dealing with potential rage. Vice Chair Meyerson reported that he is also researching whether there is a plan in place to address potential droughts and how that would affect the Hetch Hetchy water supply.
Vice Chair Meyerson reported that all garbage trucks/collection vehicles are now using a certain amount of biodiesel (about 20%), and the Fire Department vehicles are also part of the program to use biodiesel. It was explained that there are alternative fuel electric and gas combination vehicles or electric and biodiesel combination garbage trucks that have been designed that the garbage companies should be considering, and that he has forwarded this information to the garbage company and Ms. Bali of the Department of the Environment Clean Air program area. Member Gerber suggested addressing the fact that biodiesel is likely to disappear and considering what the alternatives may be when biodiesel is not an option.
Vice-Chair Meyerson reported that he is also researching emergency services as it relates to provision for backup power at hospitals. Member Katz reported that new hospitals are building diesel backup generators. Vice-Chair Meyerson stated that there are problems with using biodiesel for backup diesel for the diesel generators because biodiesel has a more limited shelf life and would have to continuously be replaced with fresh biodiesel. Member Simone recommended researching alternative fuel possibilities for ambulances, and Member Katz suggested including Fire Department emergency vehicles.
Member Gerber reported that her word count at the moment is 4,571, which she thinks is too long and has not yet written about retrofits. It was requested that a discussion be held at a future meeting about optimal report length. Member Gerber reported that she contacted Supervisor Mirkarimi’s office about the City and County of San Francisco putting in a tidal application, but has not heard back. Member Gerber stated that in terms of retrofits, it would be more powerful if a finance source was identified instead of just saying that it is a good idea, but that it is not possible or plausible. Member Gerber reported that she is trying to talk to bankers on how to do large-scale retrofits and will follow up if she finds one that is willing to talk to her about this subject.
Member Mark reported that he is confident on fact finding, has most of the information on energy inputs into the current food system, is still confident that American Farmland Trust will share with the Task Force their fact findings on the current food production in the 9 Bay Area counties and 18 Northern California Bay Area counties, and has the information from the charrettes, so it is now a matter of writing the report section.
6. Erica Etelson from Oil Independent Berkeley on Co-sponsorship of Forum for Nonprofit Organizations. (Informational Presentation and Possible Action)
Chair Rosenmeier introduced Ms. Erica Etelson and reported that a group of folks from Oil Independent Berkeley and some of the people who were on the Oil Independent Oakland Task Force are working on a forum for non-profit organizations. Chair Rosenmeier stated that she and Ms. Etelson would like the Peak Oil Preparedness Task Force to sponsor the forum.
Ms. Etelson reported that Oil Independent Berkeley is a citizens’ task force recognized in the Berkeley Peak Oil Resolution, which directs the City Manager to work with the task force in preparing a Peak Oil Preparedness Plan that they would like to fold into Berkeley’s Climate Action Plan. Ms. Etelson explained that the task force is planning an event in September (tentatively September 15) in San Francisco that is called the Bay Area Funders Forum on Energy Scarcity in order to educate members of the community on the scope and magnitude of the peak oil and gas problem. The forum would include a group of concerned citizens and task forces who have been studying the problem to give a heads up to the organizations/community and ask them to reprioritize their program areas based on what they have learned. The purpose of the forum would also be to urge the community to collaborate on a Bay Area wide strategy.
Ms. Etelson explained that it is important to have sponsorship of several of the Bay Area Task Forces in order to build a Bay Area regional strategy in re-localizing our economy and our agriculture and to discuss the role that foundations can play in creating a collaborative regional strategy. Ms. Etelson stated that a request would be made to some of the foundations to pool their resources and develop a funding mechanism where they can do strategic grant making in program areas that they would be steered towards.
Ms. Etelson reported that topics would be dependent on which foundations have provided RSVP’s and what their programmatic priorities are and then discussions would be held on how peak oil and gas might affect those areas. Some of the areas that would be emphasized are food security, transportation, electricity, and health and human services. Several of the speakers include Mr. David Fridley; Ms. Nancy Nadel, Oakland City Council (sponsored the Oakland Peak Oil Resolution); Mr. Richard Heinberg; and Dr. Jeffrey Ritterman on peak medicine (who is a cardiologist with an interest on public health implications of climate change and peak oil); an invitation has been extended to a Marin Supervisor Charles McGlashan, former Santa Clara County Planner, Don Eaton, and a City Council person from either Willits or Sebastapol.
Vice-Chair Meyerson suggested locating economists to hold a discussion on how to transition to a stable state economy. Member Mark asked if someone on the committee already involved in Northern California Bay Area environmental philanthropy is going to help bring these people to the table. Ms. Etelson stated that they are trying to find a foundation co-sponsor that largely funds environmental and energy programs. Member Mark offered names of several potential sponsors.
Ms. Etelson explained that the Peak Oil Preparedness Task Force would be joining the Berkeley Task Force, members of the group formerly known as the Oakland Oil Independence by 2020 Task Force, and Marin Post Carbon to sponsor the forum. In order to get the credibility to attract people to come, the San Francisco Task Force is needed. It was explained that what would be required of the Task Force other than its name as a co-sponsor is attendance at meetings and the event by one or more of the members and participation in planning and possibly speaking at the forum. Funding is not being asked for. The Task Force’s name would be included on the invitation.
Vice-Chair Meyerson stated that he would vote to be a sponsor if the Task Force was given clearance from the City Attorney’s Office on its legality. Chair Rosenmeier reported that the Deputy City Attorney advised that the Task Force could co-sponsor events as long as there was not a quorum of members present at the event. Member Katz stated that he would vote to sponsor the forum but feels that the Task Force should be careful about what it is sponsoring in the future. Member Gerber felt that it would be better to sponsor the event as individuals rather than as a Task Force. Vice-Chair Meyerson stated that the purpose of the forum is to set up a meeting with grant-giving agencies in the area, and at that meeting various elements of peak oil and its problems would be presented to educate them. Vice-Chair Meyerson stated that he does not see what problems could be derived from sponsoring an educational program for grant-giving institutions. Mr. Broomhead stated that as long as it is within the bounds of getting the business of the Task Force accomplished and would help make decisions then co-sponsorship can be done.
Upon Motion by Chair Rosenmeier and second by Vice-Chair Meyerson, Member Gerber was excused from voting without objection.
Upon Motion by Vice-Chair Meyerson and second by Member Mark, the Task Force voted to approve co-sponsorship of the forum without objection.
7. Possible Recommendation regarding New Electric Generating Facilities. (Discussion)
This agenda item was continued to the July 1, 2008 meeting.
Item 9 was heard before Item 8.
8. New Business/Future Agenda Items (Information and Discussion)
9. Public Comments: Members of the public may address the Task Force on matters that are within the Task Force’s jurisdiction and are not on today’s agenda.
Mr. Parsons stated that Chair Rosenmeier read the seven areas from the enabling legislation that the Task Force should address, and that there was a reference to overseeing the drafting of a comprehensive plan by a third party. Mr. Parsons suggested that the Task Force hold a discussion on whether this is something they want to do or would need more clarification from the Board of Supervisors on whether funding would be provided to fund or sponsor a third party assessment. Chair Rosenmeier and Member Gerber felt that it would not be possible. Member Mark suggested adding it as a recommendation in the report. Vice-Chair Meyerson stated that he felt there was a redundancy in writing a report and then have somebody else take that and write up another report. Vice-Chair Meyerson stated that he is more interested in seeing an ongoing oversight structure to watch these changes and respond to them than he is in seeing a report that may be dated by the time it is completed.
Mr. Fridley stated that one element behind that addition to the legislation was several offers of $50,000-$75,000 to actually be able to commission work, but does not see how to do that without money.
Mr. Swan stated that as a writer and as an entrepreneur involved in railroads, he has looked at many of the issues that have been discussed here and offered effective methods/strategies to handle problems and ways to communicate with politicians.
Mr. Steve Vitka stated that he invited Mr. Swan to attend the meeting as a potential member of the Task Force and that he had previously applied to be a member. It was reported that Mr. Swan wrote a book “Electric Water” which was highly recommended.
Chair Rosenmeier reported that she would like to review the Economy section of the report and requested Task Force members’ comments. Member Mark reported that he would not be attending the July 1 meeting. Member Simone asked if an agenda item was required to discuss the third party assessment. Chair Rosenmeier stated that there would be an agenda item to discuss civil unrest.
Member Mark commended Mr. Broomhead’s comments that the Task Force should be focused on the report being a working policy document, to have clearly-defined goals and objectives and tactics/strategies that can lead to precise policy recommendations. Member Katz stated that electricity should also be the focus of the Task Force.
Member Gerber discussed Task Force attendance at the ASPO Sacramento conference as it relates to the legality of more than a quorum of members attending. Ms. Fish stated that she thought it would be legal for more than a quorum of members to attend as long as Task Force business was not discussed.
10. Adjournment. The Peak Oil Preparedness Task Force Meeting adjourned at 7:30 p.m.
** Copies of explanatory documents are available at (1) the Task Force office, 11 Grove Street, San Francisco, California between the hours of 9 a.m. and 5 p.m., (2) upon request to the Task Force Secretary, at telephone number 415-355-3709 or via e-mail at [email protected], or (3) at the Peak Oil Preparedness Task Force meeting website as attachments with each agenda or meeting minutes.
Respectfully submitted by,
Monica Fish, Task Force Secretary
Approved: July 1, 2008
Member Katz: I want to make one correction in what you said. David is one of four people who wrote up the initial proposal (legislation creating the Task Force) that was adopted, and we are fortunate enough to have the second of the four people, Dennis Brumm in attendance at this meeting who is also one of the key people in creating the legislation.
Member Simone: Would there be a crash or gradual power down as it relates to society?
Mr. Fridley: We are entering into a period that we have never encountered before in human history and so we have no roadmaps to go on. When it comes to what some people call the impact or collapse or any of these processes, the physical decline is going to be much slower and less evident to us than what can be that unexpected event, which is the financial catastrophe that could come out of this because our physical world has not changed that much. We have enormous inertia there, but what we don’t have as we have seen in Russia in 1998, Mexico in 1982, and Argentina in the early 2000s is that the financial markets can turn overnight, and financial markets are supported by basically the psychology of the market. If the psychology turns rapidly one day, we could all wake up with bank closures or a whole host of anything. With the financial panic, then all bets are off. I am not sure our standard government is prepared to handle something of that magnitude. The last time we had one we were pretty much still the dominant economy in the world that people owed us money. Now we are the largest debtor in the world and so people calling in our greenbacks could be catastrophic.
Member Simone: Do you have any comments in that regard toward us as San Franciscans because our job is to look at San Francisco?
Mr. Fridley: I did offer this as a higher-level look at things and I do understand that your mandate is very specific.
Member Simone: It is becoming clear to us as we do this that it is all interconnected. We can’t really treat San Francisco as an island.
Mr. Fridley: And San Francisco can’t be. We are one financial center of California, but California is connected to the rest of the world. If something happens, there is no way that we can prepare or prevent or insulate ourselves from them, particularly in the financial world. The other things we are vulnerable to are things you are already working on with the food issue, the transportation issue, the housing, health, and all those other issues. What could we do if there is an interruption of supply—what is our plan for that?
Member Simone: Thank you.
Vice-Chair Meyerson: Two questions—have you dealt with (1) the issue of population per capita consumption relative to the problems, and (2) the massive use of fresh water in the production of things like the tar sands and oil past the cherry picking production period, the steam injection, etc.
Mr. Fridley: Population, yes. It is the core issue behind the reason that we are sitting here today. If we didn’t have 6.7 billion people in the world consuming at the rate we do, we wouldn’t be having this problem. What can we do about it? Nothing politically, socially, or morally because no one will go along with it. It will just happen. We are currently about 30% above the carrying capacity of the globe, which means that in ecological terms there is no way to avoid a population collapse. How that manifests itself is really hard to know. I think we are already seeing it because there is yet another famine and starvation going on in North Korea. Those kinds of events won’t be localized to cut off countries in North Asia. I don’t know how to address the population problem except talk about it.
The water issue is a lot more interesting. Yes, California can’t afford to divert water from one use to another. I just finished a study for the State of California looking at—we developed a new methodology for the State of California to use a physical evaluation of alternative energy projects. What this meant was to purposely avoid the distortions that you get from financial or economic accounting. So, we accounted for everything on a physical basis, land, water, inputs, materials, and so forth. The case study we did was cellulosic ethanol because that’s now the big thing that my lab is working on and everyone is working on. But if you look at the details of water in California--and it is very well documented here and the data are great--we set out the assumption that we would divert all the water currently being used for the production of irrigated pasture land and use that to grow switch grass to make the cellulosic ethanol. That’s millions of acre-feet of water on 2.7 million acres of land and we did that, we provided optimal yields from doing it. We accounted for transportation. We did all of that, and it supplanted 1.4% of California’s gasoline consumption. That would have destroyed the meat industry, the happy cows would be gone, and no cheese and no dairy. California does not have empty land that you could just open up and send water to. If you want new water, you are going to have to pay what you and I pay in urban water districts. You are not going to get free allocations or historical allocations.
Along with water in this state, we actually use a lot of our energy to produce energy. In California, about 9% of our energy is used just to produce energy. Not power generation, which is a transformation, but to produce primary energy like crude oil and natural gas.
Member Gerber: Separate from transmission and delivery?
Mr. Fridley: No, I am excluding that completely. This is just energy used to make primary energy that can be used to generate electricity, or make gasoline or something like that.
Mr. Cal Broomhead: What do you mean by primary energy?
Mr. Fridley: Crude oil and natural gas. So it includes the steam recovery, energy used down in Kern County or Bakersfield area because our energy is already down that energy return slope.
Member Katz: This is unfortunately the reality that we are always bumping up against which are these two issues, the politically unacceptable issue of population growth and just our huge population, and then the lack of scalability of what people call solutions or even mitigation. If you just sort of wipe away a couple of hopes and dreams like let’s put up windmills. What will we need in terms of windmills with what’s available in terms of wind energy in the state to even get started, and how much energy would be needed to build these things, and how much could we hope to get out of it?
Mr. Fridley: I don’t have specific site figures. I have looked at what most people refer to which is this classic map of California’s wind resources. It’s high along the coast, in areas along the foothills, and the Sierras, I believe, and some places in Southern California. But what happens when you actually get down to the nitty-gritty, is that large chunks of those potential resources disappear because of all of these other issues involved in actually doing an open-end project. For example, the slope of the land can’t be above a certain number of degrees, it can’t be within a certain distance of other kinds of facilities, it can’t be on state-protected lands, and there are all these requirements. I once went to a Berkeley Energy Commission meeting where a guy was looking at the evaluation of Ventura County wind resources. It is extensive on a resource base. But in terms of what actually could be built was a thin strip on the far side of the Channel Islands offshore because nothing on the mainland could be done. Now part of that is just human policymaking. You could change policies and bring some of that in. But nonetheless the difference between what a resource is and energy production is quite huge in this state. I don’t see any of this as particularly depressing or pessimistic. The question I always ask when people insist that there has to be some way to keep this status quo going is what are you referring to? I say, well, business as usual and what we see this year is climate change, deforestation, fishery collapse, acid rain, loss of biodiversity, species extinction, air pollution, land pollution, over population, ecological overshoot. And on and on and on, and you say, is this the business as usual that you want to provide this mitigation to keep? I actually think that we are at a point where we could take a deep breath and step back and see what we have done to ourselves and do something reasonable. But I don’t think the vast majority of the population or politicians are ready for that.
Member Katz: You said that we are 30% above caring capacity based on whose analysis?
Mr. Fridley: There is information that I can refer you too.
Member Katz: Do it offline--that is fine.
Vice Chair Meyerson: Some people say 2/3 in terms if there were no fossil fuels left, then we probably would have 2/3 more than we can sustain.
Mr. Fridley: It is based how you calculate it. For example, if you go back and make an analogy to our pre-fossil fuels days, what the population of the world was in a purely solar globe, then it was one to two billion, and we have 6.7. Purely in that regard with no fossil fuels we are way over. But carrying capacity in this regard means how much ecological services are there to provide us the sustainability of our life. And we have damaged them so much. It is not just energy to keep us alive, it is our environmental services.
Member Mark: I will ask a question but I think I have found this in the D.C. energy report called “Energy Down the Drain.” Do you have an estimate off the top of your head on how much of California’s energy goes to water pumping?
Mr. Fridley: The whole water system I believe is somewhere around 20%. I recall looking it up just a few weeks ago and found that just the pumps at Tehachapi are 10% of our electricity.
Chair Rosenmeier: It is 20% of our electricity.
Member Gerber: It is 18-20% of electricity statewide.
Mr. Fridley: Right.
Vice-Chair Meyerson: But that includes pumping all of the water south.
Mr. Fridley: The energy intensity of water delivered in the south is about eight times higher than the energy intensity of the water delivered in the north. So if you are going to do something with water, do it in the north.
Member Mark: Then how about the total amount of energy in Southern California that goes to food production?
Mr. Fridley: I don’t know off the top of my head.
Mr. Christopher Swan: You may know the number easily. Just to round out the picture of water. How much is used in boilers and major steam generating stations?
Mr. Fridley: Industrial use of water, I can look it up, I don’t have the number.
Mr. Swan: 50% nationwide of the freshwater that we use goes to power plant.
Mr. Fridley: That would be hard for me to believe in California because of the dominance of agriculture and the fact that we have a climate that absolutely positively requires some irrigation and typically any acre of land in cultivation is going to require between 9 and 12 inches of water each month in the summer. If you add all that up, I think that agriculture is our largest water user.
Mr. Swan: It seemed high to me for California.
Member Gerber: That makes agriculture a larger percentage.
Member Mark: Roughly ¾ of the state’s water distribution.
Member Gerber: I think that you understand what it is we are supposed to be doing in terms of delivering a report for the Board of Supervisors, to hopefully take some action as a result of. I was wondering what recommendations if any you would have for what we should be looking at, what we should be thinking of, how we should skew our report, any other input you would have in terms of what would make our report more valuable?
Mr. Fridley: That’s a great question.
Member Gerber: What sort of recommendations do you think would be most valuable?
Mr. Fridley: I would love to have the ability to have this kind of input. I am not sure I could give it all right now. I think one thing that you are up against is that you have got to deliver the message to City government that this is an extremely serious problem that is going to be the most disruptive thing that has ever happened to us. But at the same time, recognize that they have a term of office and the fiduciary responsibility of the City is such that because everything here is accounted for in terms of money, it is very, very hard to persuade them to do things for the long-term benefit of the city if it doesn’t have a short-term payback because that is the metric they are forced to use. I struggle with this because I don’t know how to break through it. One example where this is detrimental is for example, the City could have programs for… well, and the SFPUC is evaluating it now, what is the payback for efficiency programs in low-income housing or something? Well, the payback in monetary terms is based upon what their assumed rate of energy price increases is. And the assumed rate of energy price increases as I can fathom from the budget in the City is based upon what the California Department of Finance comes up with. And the California Department of Finance uses some kind of general equilibrium model of the state, and general equilibrium models by their nature will always produce lower prices in the future and that becomes a forecast. That it is going to be either a lower price or it is going to be an smaller increase of prices. One thing you are up against is that you know the City could do a lot more and justify a lot more if they simply accepted that energy prices were going to be a lot higher than they think they are going to be. If they have to use the Department of Finances forecasts, that’s one thing, but I don’t think they have to. I am not sure.
Chair Rosenmeier: That is one of the recommendations that I recommended in the report I just handed out.
Mr. Fridley: That impacts a lot of what the City can justify doing simply because everything has to be engaged in terms of money. Otherwise, the only other thing I would offer at this point is to clearly bring in things that can be done in one, two or three years versus things that are going to be the next two administrations.
Member Gerber: Let me follow up on two different threads that came out of what you just said. The first is in terms of driving home the importance of this. I have hit the problem of when I have tried to drive home the importance of this as being looked at as totally "wacko" "crackpot" "get her out." How do you tread the line of driving it home without getting yourself dismissed? Or can it be done?
Mr. Fridley: These are all excellent suggestions. Data and being logical don’t always convince people. That’s for sure. I tend to be very data driven, and so I don’t always get my point across if the audience is not appreciative of data. There was an excellent discussion on The Oil Drum yesterday, actually a whole posting of how to give a peak oil presentation. It addressed all of these issues about how you actually talk to people about the issue and make them own it or relate it to them personally somehow so they can actually understand the implications. There were many, many, many good suggestions on there. Instead of having to go through them, I recommend reading this, “How to Make a Peak Oil Presentation” on The Oil Drum yesterday.
Member Gerber: The second thread I wanted to follow up is in terms of short-term and long-term because it seems that everybody we talk to has a really short-term horizon and some of the most impactful things that we can recommend are long-term. Do you have any suggestions in terms of how we can work with this? When you talk to some of these people with a three-year time horizon, they already dismiss you because more than three years is longer than they can think. How can you convince them to look at 80 years?
Mr. Fridley: Well, I wouldn’t look at 80 years. The world in 80 years is going to be so completely different.
Member Gerber: 30?
Mr. Fridley: In 30, I really don’t know; otherwise, I would probably write a book about it or something like that. I look at this AB32 goal for 2050 and I laugh at it because the goal could be reached but not for any of the reasons they give.
Member Gerber: Right, for all of the wrong reasons.
Mr. Fridley: Part of the problem is that we don’t a metric of prioritization of what to do. I think a big contribution whether they decide to do it or not is to provide them the metric for prioritization, and the metric for example could include some of these issues I raised today about how do you judge these projects. We just put in for about a half-million dollars from the Energy Commission to extend our physical analysis to developing again a physical approach to prioritization of AB32 proposed projects. And many of the AB32 proposed projects would be beneficial if they could be done in the short-term in terms of energy and peak oil. So I am hopeful that the work that comes out of that will provide the state, certainly the city, with some alternative metric beyond just pure economics. Because as long as we live in a world with interest rates and discount rates, the future doesn’t matter. That’s the unfortunate fact.
Member Gerber: If you think of anything else that you think could be useful for us, please send it to Monica and she will email all of us.
Vice Chair Meyerson: When you said that you were avoiding the economics and the financial, to avoid that distortion, have you put any human labor as a factor there? How much could be accomplished without regard to financial or …?
Mr. Fridley: That’s a very serious issue and it has to be directly dealt with. It’s not just how many mega joules of energy can we can get out of human muscle. It’s how many people have what skills set to do what. I mean we want to do an incredible nuclear buildup in this country which I think is wildly mistaken, but it’s not going to happen because we don’t have enough nuclear engineers. The average age of petroleum engineering society in this country is 55. We are losing 40% of all of the people who know about geology and petroleum engineering in the next five years and we don’t have people studying those topics and our schools are prepping us for a whole range of stuff. To me, the human element is just do we have the skill set?
Vice Chair Meyerson: Can you identify any of those skills? Does that exist anywhere in a list?
Mr. Fridley: No, I bring that up because that was one of the specific things that we will be addressing if we get the money to do this project is looking at what California actually has available.
Mr. Cal Broomhead: You mentioned at the outset about countries that have already gone through an economic downturn that created a big ripple-related similar to what we are expecting to see. Cuba also came to my mind because they were suddenly cut off from oil coming from the Soviet Union. Have you looked at that to see how that might apply to the United States, California and how we might extrapolate that in San Francisco what those societies went through and what kinds of processes they started putting in place in order to deal with this change?
Mr. Fridley: The issues are recent enough that I don’t think we have a lot of experience except the hardships that are ongoing. One thing that I was asked to do, and this was for a private company here, and this company is concerned about is what they are seeing is the increasing problems with intermittency and the range of energy systems all over the world. Particularly, the fact that from South Asia through Africa, grids are no longer operating 24/7, and this affects their business interests. So, I suggested to them that there are hundreds and hundreds of reports about what is happening in a variety of countries. If you go to a place like www.energyshortage.org it is an excellent compilation of what is globally happening with these shortages. My suggestion to them, which I would like to do and not yet have done is to go through all of this and pull out commonalities. And from the commonalities, see what lessons there are. Right now, it’s more anecdotal and ad-hoc, ranging for example the unaffordability of and suicide rising among Indian farmers because they can’t afford the kerosene or the diesel to run the pumps to pump the water to irrigate their crops to feed themselves and their family because their water table has dropped from 50 feet to 300 feet, and they have to run their generators more and they can’t afford the energy. This is happening around. This is something I want to do, but I really haven’t looked at it in depth yet.
Ms. Erica Etelson: What is your prognosis on using algae as a biofuel feedstock?
Mr. Fridley: I think it has limited useful niche applications, but I don’t think it can be commercialized on a large scale. There is a whole host of reasons. What has been demonstrated with algae so far has been in small-enclosed containers, and that is not scalable. We can’t build hundreds and thousands of miles of tubes to make algae in large scale. Moreover, when you have them in enclosed containers, there is a shadow effect where the algae growth in the surface, then shades the stuff below, and you lose your output. But some of the biggest issues is it is not a very high return of energy. The liquid content is high, and it goes back to the same water issue. The Algae grows in water. That water has to be moved. It has to be circulated. It has to be sieved. The algae has to be extracted. A cubic meter of water weighs one ton, and that water has to be moved 24/7. So it is highly energy intensive to move that much water. We don’t yet have the appropriate sieves to do large-scale real-time extraction. You have the problem if you have open ponds, you have foreign species that could come in that will out compete because generally the highest lipid algae are also the least able to compete. The other problem is that you can’t control the temperature. You can’t control the CO2 availability and so forth. I simply don’t think it is feasible. However, if you have a power plant and you have a source of CO2, you could pack it on to that power plant, feed the algae with the CO2 as the demonstration plants have been done and on a small scale produce some algae-based biodiesel.
Mr. Nick Parsons: I was sitting with two things that you said. One is that we are really going to have to reduce our energy as a society or it’s going to get thrust upon us. Ideally we need to start producing that pretty quickly before we have to. On the other hand, you said about the psychology of the market if people freak out and if they really understand the situation then that is going to have a bunch of bad effects on the economy. My question is, how do you educate the public in a way that inspires them to make these changes without scaring them into making financial problems in the economy?
Mr. Fridley: I am not sure how to educate the public to give them a message that is going to make any difference without having exactly the impact you are talking about. Because I think unfortunately at this point it is going to be prices that are going to be the educational tool for most people. They are only going to respond to what they are having to pay for stuff. Even all the so called good green stuff that we are telling people to do, what was the first thing that happened when Wal-Mart said that they were going to sell 180 million CFL’s and be green and get people to save energy? Well, they got sued by Phillips and GE because it was going to put their incandescent industry out of business because CFL's last for ten years, I am quite sure. So we have this inherent contradiction that our financial system and our economic system absolutely positively requires growth, and that growth has to occur and be reported every three months to the financial shareholders of all of the companies that do it. I don’t know how to convince people that overturning this to the detriment of this growth based exponential growth and consumption economy is possible. I don’t know. You can tell people to use a clothesline instead of the dryer. Then PG&E revenues will fall because they are not selling the gas anymore, therefore the rates will have to go up and people will say we are screwed anyway. I think it is a really hard question.
Ms. Alice Friedemann: I am interested in all levels of government, United States, California, as well as PG&E. They planned to make up for losses in energy with natural gas and liquid natural gas, and I wondered what you thought about that?
Mr. Fridley: What’s the saying? Jump out of the frying pan into the fire.
Ms. Friedemann: Do you know when the possible natural gas crises might hit, the timeline on that?
Mr. Fridley: I think we are seeing a very interesting thing happening right now. North American natural gas production peaked a number of years ago, about 2002 I think. Then the prices in the U.S. rose. And they moderated a bit in the last couple of years simply because we had very warm winters. But underlying that, we also had an enormous amount of demand destruction. About 10% of U.S. natural gas demand was destroyed. Either consumption just ended or most it just left. In 2000, we produced 80% of our fertilizers and natural gas. We now virtually do not have a natural gas based fertilizer industry left. It went to Trinidad and Tobego, and into Saudi Arabia where gas is cheap. Dow Chemical is not going to ever build anything again in this country, which is not a bad thing. They are moving all of their operations to low-price gas countries such as Saudi Arabia, and they are talking with Aramco. So unlike oil where so much is concentrated in just one sector like transportation, gas is really divided kind of evenly among industry, power generation, residential use, and other applications. And so what we are seeing is gas is being destroyed out of industry first. If there is a shortfall, for example in New England, that’s at the end of the pipeline, residents are going to get prioritized over the other use. So heating a home in winter is always going to be considered the last use for natural gas.
What prices did stimulate is a lot of new drilling and it’s not conventional gas. We have no untapped supplies of conventional gas. It’s what is called a shale gas. This is quite different from the regular gas in that you have to drill down, you have to fracture it, the rock, and the gas comes out. This is now all through northern Texas—it’s quite a boom now. The problem there is that you need three to four times as many drilling rigs as you would with conventional because that gas comes out very quickly. It flows very high, but 60% of it is gone in the first year, and then it tails off very slowly. If you want to keep up this rate of production, you have to have thousands of new rigs drilling every single year. Now, we have had a little blip up. (Tape cut off a bit at this point) We are not paying what the energy producers are asking and other people in the world are very happy to pay it. Our largest supplier of LNG is Trinidad Tobago and it is right off our southern coast. It is in the Caribbean. So you would assume that it would just come up to Louisiana, but we have already seen cargo after cargo this year be diverted to Asia because Japan and Korea and Taiwan are willing to pay 18 to 20 dollars a million BTU, whereas here in California still, our retail we are paying 13. We can’t compete away from the rest of the world at the price that LNG would take nor can LNG come here at a price that would lower our prices. I think we probably have a couple of good years of this shale gas production, but once that declines, LNG is not going to be there. Indonesia’s LNG production is declining. They have ended some of their contracts with Japan because they can’t supply them all. All of Japan’s contracts are up in 2012 so they have to replace 40 million tons of LNG. Same with Korea and now China is a new player. They have 3 million tons and they are planning to build out 50. So we have all of these people in the Asia rim competing against California and what our California Energy Commission is saying is that LNG is going come in here and bring down our prices to 6, 7 dollars per million BTU—it is never going to happen. That is going to be the crunch, is LNG in California.
Member Mark: On the shale production, so all of the controversy in the mountain west, Colorado, Wyoming, New Mexico, all of that recent gas boom is shale gas?
Mr. Fridley: No, the shale is Arkansas, North Texas, and over into New Mexico.
Member Mark: What about this huge boom?
Mr. Fridley: That is a geology called tight sands, which is also more difficult to get from, declines faster than a conventional sandstone, which is your ideal gas formation. I mean that boom is going to continue particularly since they have gotten a new pipeline in to bring it from Colorado into the Midwest and they are just going to keep eating up the acres and drilling and pumping up all that brine water and destroying the environment, but they are going to continue doing it.
Mr. David Holterman: I work for Safeway, 2020 Market Street. My comment is five years ago we used to do price changes per level of the hundreds, now they are in the thousands. Eight thousand a night. It is very common now. We have to change the prices. That is how fast food pricing is changing.
Member Gerber: Out of how many items? What percentage is that?
Mr. Holterman: I have no idea. Hundreds of thousands.
Member Gerber: Is it 10%, 20%?
Mr. Holterman: I don’t know that. I just know the quantity. They used to have small little stacks, now they have big stacks.
Mr. Dennis Brumm: I just had a thought on the way over. It is just a metaphor and probably useless. In Iowa where all the floods are happening and all the levees are built, what the people are doing is sending the problem further down. If you kind of take a river as a timeline and what we are doing here is trying to keep the problem from happening to us but at the same time there is a flood plane. Somewhere along the way letting it sort of happen in different ways might be better than what happens when it bursts further down and there is more water. I don’t know how that works in. When David was talking about population and said we can’t talk about it, if you can’t talk about it, I don’t think that you are still talking about the problem because everything else is irrelevant if you can’t do something about the numbers that are using all of the resources. I mean you can do anything you want, but the flood is still happening further down. Somewhere along the line there is a metaphor there.
Mr. Christopher Swan: I just wanted to comment on the whole issue of population and growth. I have been following the issue for quite a while myself as a writer. It looks to me like in several continents and countries, population is somewhat taking care of itself. I know of several areas in Europe where small towns are becoming ghost towns because there is just no young people coming up. The other thing that I think we need to be more concerned about in California is migration of people to here. In other words whoever solves these problems is going to be as much a target as anything else. People will want to be here. I can see how that could play out quite easily because certain governments are more effective at solving problems and certain private enterprises are more effective as well. Plus we have a history, although it is not widely known, we have a history in this country of stable state economies. We tend to think in terms of growth being defined only in population terms, but I could cite many, many cities and towns in this country that have kind of hovered along at the same level of population and have been quite happy doing that and have had a local industry that was very (un?)steady in terms of its output. That model is still very real. It’s not as if growth is the only option.
San Francisco is economically, I don’t know the numbers exactly, but in proportion to our total population, we are probably very powerful as an economy but much of that economy is people coming in here everyday and working. It is not us who lives here. So it isn’t necessarily a function strictly of population and numbers. It is a function of what they do.
Member Simone: I am going to add something about what David said about the ships coming up from the Caribbean is that they actually leave port headed for here and we are expecting them to come here. While they are at sea, they get diverted to other countries. Thank you very much David for coming.