HSR as an Energy Lifeline
As we continue to examine the future of the high speed rail project, it’s worth taking a moment to look at its impact on California’s energy needs. As it turns out, HSR will provide significant savings in terms of both energy usage as well as in the amount of money Californians send out of state every year for oil. A recent article by Chris Nelder provides some key insights along those lines:
Since its halcyon days of producing almost as much oil as it consumed in 1960, a widening gap has opened between production and consumption. As of 2010 (the latest state data the EIA has), California had a nearly 451 million barrel annual oil deficit. At today’s $86 a barrel (for WTI), that’s a $39 billion annual cash outflow, just to buy oil.
Now, it’s true that the oil producers are private companies participating in a global market, so the state’s oil production has a much more complex interaction with the state budget than this simple math suggests. But it’s also true that nearly three straight decades of declining oil production have exerted a heavy drag on the state’s economy in the form of declining tax revenues and lost jobs, and has contributed greatly to the state’s chronic budget problems. Now, the ever-growing amount of energy the state must import has dramatic implications for its fiscal future.
In fact, California’s energy production as a whole, from all sources, is now at a 50-year low. In 2007, according to EIA data, the state’s total energy production dropped below its 1960 level of 2,630 trillion BTU, and has continued to decline. Most of the drop owes to oil production, which fell from a peak of 2,285 trillion BTU in 1985 to 1,168 trillion BTU in 2010, and to natural gas, which fell from a peak of 815 trillion BTU in 1968 to 318 trillion BTU in 2010. Non-biofuel renewable energy has only grown from 270 trillion BTU in 1960 to 692 trillion BTU in 2010, less than the post-peak loss of natural gas BTUs alone.
It’s worth noting that the opponents and critics of high speed rail, so quick to cry “boondoggle” when they see the project’s costs, never discuss this issue. It’s as if it doesn’t exist in their minds. The true boondoggle, as clearly demonstrated above, is California’s wasteful dependence on oil. Wasting $39 billion a year on buying oil, money that leaves the state never to return (unless you’re a wealthy Chevron or Oxy exec), is totally absurd. Californians might as well just light that money on fire. Hell, doing so might actually have less of a negative environmental impact than lighting oil on fire, which is what happens with what that $39 billion buys.
Californians are broadly supportive of alternative energy sources, as well they should be. Governor Jerry Brown played a key role in making California an early leader of wind power, as anyone driving through the Altamont, Tehachapi, or San Gorgonio passes knows. And yet building HSR saved the equivalent of the entire amount of electricity generated by wind power in the state:
A 2008 study by Navigant Consulting found that the California HSR could cut state oil demand by 12.7 million barrels per year through displaced air and car travel. That’s roughly two percent of the state’s 2010 oil consumption of 653 million barrels, or about 74 trillion BTU, more than the 59 trillion BTU the state produced from wind that year.
In other words, the energy savings from building the HSR system is equivalent to more than the state’s entire wind generation.
It’s been nearly 40 years since Californians first learned of the need to develop alternative energy sources. The 1973 oil crisis was a key turning point as Californians, including a young Jerry Brown who was elected governor the next year, embraced solar and wind power. The 1979 oil crisis merely reinforced the point. The next 20 years of cheap oil prices lulled too many into complacency but many Californians never forgot and never abandoned their interest in developing sustainable energy sources. And as the price of oil began its relentless, long-term upward climb early in the ’00s, that interest grew and deepened. As Californians build more wind farms and install more solar panels, they’ve also shown a clear interest in reducing consumption as well. High speed rail, then, is a crucial element of that strategy.
Reducing the amount of oil purchased produces a green dividend that has been estimated to be as much as $10 billion a year for the state. Even if that estimate is way high, savings in the low billions or even in the hundreds of millions is still a big economic boost for a state that needs every sort of boost it can get.