Recently, Tesla passed General Motors as the most valuable U.S. automaker. Last week, my writing partner came back from Beijing, talking about how the Chinese were developing new electric cars. The Chinese are predicted to the lead the “NEV” or New Energy Vehicle cycle in a decade.
Hayward now has a hydrogen refueling station, and San Ramon will open one in mid-2017. Walnut Creek has one coming. There are about 100 hydrogen refueling stations open or in development in California, which should make owners of Honda’s Clarity and Toyota’s Mirai happy.
Not so happy will be Benicia’s Valero and the other Bay Area refineries. Despite the current federal administration’s unconscionable disregard for environmental protections, the Bay Area’s five refineries are under pressure from the state and local air quality boards to clean up their emissions.
However, environmental protection and humans’ need for clean air, may not put an end to the refineries’ glory days. Instead, hydrogen fuel cells and wireless charging of electric vehicles will probably have more to do with the end of California’s refinery era.
In past writings, I suggested that the refineries—including Benicia’s Valero—would close in about 20 years. With the emergence of wireless battery charging, I think it will be sooner.
Wireless recharging is a remarkable technology that charges your EV or hybrid car without the need of hoses or any external connections. Instead of pumping gas at a station, or using a super electric charging facility, drivers will pull up to Target or Starbucks and wirelessly “energize” their car while they shop or chit-chat over a latte.
Payment will be made via your Target or Starbucks credit card or phone app, which will probably help prolong the life span of some brick and mortar retailers.
Qualcomm and others, are making wireless charging pads for EV autos. Vehicles connect similar to the way computers connect to Bluetooth or WiFi.
To fully grasp this transformation, look at a report by Statistic Brain (http://www.statisticbrain.com/commute-statistics/) that says that over 95 percent of U.S. commuters have daily, round-trip commutes that are less than 150 miles. Ninety-two percent are under 70 miles. A 200-mile range easily covers most Americans’ daily needs.
There are several EV cars on the market now, including Nissan’s Leaf and Ford’s Focus Electric, but just wait as the new mid-range Tesla 3 and the Chevy Bolt roll out. These two mass market autos with ranges well over 200 miles will stretch the EV market and drive continual range and performance improvements.
As wireless charging emerges, EV drivers will be able to “top off” their cars conveniently on daily routes. Wireless charging is early in its tech cycle, but coming quickly. Mercedes has announced that wireless charging will be built into its S500 plug-in hybrid sedans. BMW is working on it, and China will certainly have it on their electric autos. Soon all the EV makers will include it.
Gas powered cars are getting more and more efficient as they get lighter and internal combustion technology improves. Oil prices are below $50 a barrel and probably going to $40. With an oversupply of gasoline the per gallon price is heading lower even though the summer driving season is coming.
The glory days of the oil industry and the refinery business has peaked and is in decline. Within a few years, at least 20 percent of the Bay Area’s vehicles will be hydrogen or EV powered, which will probably mean that Valero’s revenue will correspondingly decline. So, will its tax payment to the city—not to mention similar declines in the other refinery related industries.
An alternative source of tax revenue is a compelling need for Benicia. Within a few years, it will be a desperate need, and the city’s description of itself as “full-service” won’t survive without it.
In writing “Smart Green Cities,” I found that cities like Bristol that had successfully re-invented themselves after the collapse of legacy industries, coupled strong planning with new knowledge-based industries. Benicia could do the same, and it would probably be easier for Benicia to engage with the knowledge-based economy since we are in the Bay Area—the epicenter for the modern scientific and engineering Renaissance.
While large multi-billion dollar corporations, particularly oil companies, hate to talk publicly about their business, maybe the city can persuade Valero to open up about how they intend to manage this decline, since the refinery’s fate is so intertwined with Benicia’s.
There’s far too much at stake for the refinery, the city and the residents, not to face this reality. Just look at Detroit or small Mid-West company towns that failed to understand that changing market forces could destroy their way of life.
American capitalism is a massive generator as well as a harsh destroyer of capital. The difference is what side your on vis-a-vis emerging and disruptive technologies; just ask Kodak.
In the U.S., wealth is being created by the knowledge-based economy, not the old extraction economy. Benicia needs to quickly recognize that its future is dependent on the former, not the latter.
It would be a tragedy for the city if we wake up one morning and there’s a padlock on Valero’s gate and a “Gone Fishing” sign duct taped across the fence.
Benicia’s new city manager will be facing a huge challenge.
Grant Cooke is a long-time Benicia resident, owner of Sustainable Energy Associates and a founder of Dew, a water technology company. He is co-author of “The Green Industrial Revolution: Energy, Engineering and Economics,” and “Smart Green Cities.”
Sharing is caring!
This article seems to be about California only. I think some of it is correct. The issue of financial drain on the budget is correct. But the Mayor lead council has done nothing to develop economic plans locally to offset a reduction in revenue as expenses will very soon out number revenue. CalPers is the big issue not Valero. Valero will be able to adjust. The city is not taking that road at present. Any new business’ that come to Benicia must be revenue producing. By that I mean sales tax. We get 1% of sales tax plus an additional 1% from measure C. That 2% could in the very near future be only for a balanced budget. The measure C funds intended use for infrastructure could no longer be available unless this city gets its economic develop plan going very fast. That does not seem to worry the Mayor. She has other agenda driven ideals such Amport Demo, Sanctuary City issue. You name it she has it. Except all her agendas driven ideals have no revenue attached to them. Grants approach is pure “Enviro Greenie” agenda driven and self serving. Will some of what he says happen in Benicia, Solano County and California some where down the road? Maybe. But not in the other states. A long ways off. So as much as I think he does have some good thoughts they do not answer the immediate needs for the City of Benicia. Sorry Grant you seem to be in a dream world. Time will always see changes maybe not just as you see them. I love the City of Benicia. Does the Mayor?
Very informative piece, Grant. Keep up the good work.
I feel it’s worth mentioning that refineries produce a lot more than fuel for personal automobiles. Jet Fuel and Petroleum are resources we currently have limited tech to replace, without uprooting out polymer and plastic productions. Secondly, while the concepts of wireless charging and the like are appealing and need to be developed, the matter of implementing the required infastructure seems difficult. I think it would be hard to find a way to get such technology integrated in small towns like Benicia. While these are good things, and we should work towards them, I feel it might be jumping the gun a bit to imply Valero should worry about the usefulness of their refineries being overshadowed by the variety of new energy technology now.
Very good.
Actually, there are emerging technologies that are creating bio-cellulose jet fuel via plant sugars–see Gevo. As far as hydrogen and EVs, as mentioned, the Chinese are very aggressive in developing NEVs, as are the Europeans. The EU has a program of replacing diesel powered buses with hydrogen powered ones. London has several. Berkeley has NEV buses. Integrating wireless charging technology can easily be done. In fact, I suggest that the library put one in their parking lot. Drivers could use their library cards for payment and the money collected could go to extending the library hours of operation. One only has to go to New York CIty and see the vast number of hybrid taxis to realize that this is not a California-only trend. Tesla is coming out with an EV pickup truck that will probably be so compelling that Ford and Chevy will follow. Finally, pay close attention to Canada’s oil shale bubble. That market may collapse with the decline in oil prices and if it does, the US market will probably follow. If the shale oil markets implode it will hasten the adoption of NEVs. As solar and other renewables come on line their cycle of zero marginal cost will hasten the decline of the oil industry as well as the central utilities. Both industries have flawed business plans based on ever increasing demand. Both will eventually be replaced by smart grids and onsite energy generation pushing the cost of energy way down. Cities like Benicia, Martinez and Richmond with significant portions of their operating budgets derived from refinery’s taxes need to proactively engage those businesses. It’s an open secret that most of the Bay Area’s refineries are for sale, but buyers aren’t stepping up–a strong indication that the business is in decline.
It currently takes all 5 Bay Area refineries running full out to supply the 4 regional airports and 1 military base with jet fuel. I don’t see how a plant based kerosene product will be able to scale up to that output.
Valero does have a Joint Venture in Louisiana that’s producing biodiesel from animal fats and waste by-products. https://www.diamondgreendiesel.com/ but I wonder what that smells like.
I looked up GEVO: they produce isobutanol, which can be refined to a jet fuel; their capacity is 5-10 thousand gallons per month. US consumption of jet fuel is over 35 billion gallons per year. That is why, even if we were to have the agricultural capacity to produce enough biofuel (which takes a lot of land and a lot of water–remember this is essentially solar energy driven) or can produce it from organic material that is not used for food now (say, waste grape vines or corn stalks) we still need a lot of refinery capacity.
Which is why the refineries are not going away: they have the infrastructure to not just refine huge quantities of hydrocarbons, they have the pipelines and infrastructure to move the product in to the refinery and out to the airports. If the refineries go away, as is claimed here, in 20 years, all that infrastructure has to be replaced, not very cost effective. Far easier and cheaper to adapt the refineries to other sources, assuming of course we can get the land, water and other resources to produce the biofuel.
So, is there a calculation that shows what is needed and how it can get done in 20 years?.
That is just for jet fuel. Heavy truck and rail transportation are not going electric any time soon either, although rail can do that more easily.
Tesla is on schedule to unveil its’ semi truck in September.
Good. Buy one.
Ummm, I don’t really need a semi. Mainly because I’m not a truck driver. So, I don’t think it would be a wise investment. Plus parking would be a pain. But……..thanks……I guess?
Good bye Grant. You are in a dream world as I have said many times before. Pure “Enviro Greenie”. Good luck with your personal endeavor’s. It is not in the best interest of Benicia..
Just because a technology is in the process of being developed or in its infancy of implantation, does not a viable energy source does it make.
Because it exists does not make it economically viable.
Could the answer be that it is very difficult to do business in California. Maybe far too many regs. that may just be the answer. This state now has about 18 refinery’s and used to have over 40. So that is not a secret that they are shutting down to never open again. There are many states that would like to supply fossil fuel to California. If it is the desire to run the Refinery’s off the “Enviro Greenies” are hard at it. We shall see. Fossil fuel is not out of the picture for many reasons. There are will over 200 product made from fossil fuel. So do not count them out yet.
Unfortunately, the track record of the environmental movement is replete with predictions that have never materialized, faked data, attacks against dissenters and manipulated data.
It seems to me that the first thing that should be done by those who are still on board with the theory that man is the primary cause of global warming is to try and get their credibility back by condemning those who have been involved in the above mentioned actions.
The next step would be to start seeking an honest analysis of the facts.
The issue isn’t ease of access or ease of payment, the issue is affordable energy.
The second that EV cars become more economical than internal combustion cars, EV vehicles will dominate.
The author goes to great strides to cover up this basic fact of economics. When EV cars become economical to buy and maintain they will dominate the market. They are not there yet. Therefore gas fired vehicles will dominate. End of story.
The last comment is worth a response. Yes, it is a question of economics. One of the primary principles of economics is cost vs. demand. Demand for energy is going up worldwide, particularly in developing nations. Renewable energy is far cheaper and more plentiful than fossil fuel–after all the wind and sun is free. This is true now in about 19 regions worldwide. As mentioned, zero cost margin, which is the principle that once the equipment is paid for, incremental units are nominal or free, will overwhelm an increasing cost structure every time–no contest. So it is with solar and other renewables, once the equipment is paid for usually in 5-7 years, the energy is free. Which is an unbeatable deal. Zero cost margin will drive renewable energy up and overall energy costs down–simple economics. There will be major breakthroughs in EV range and performance is already superior to internal combustion technology, Once EVs and NEVs increase market penetration with mid-range autos, the game will be over. Why pay for gas to run your vehicle, when electricity or hydrogen will be cheaper? One only has to sit at an outside table on First Street and watch the growing number of hybrids and EV autos (not to mention highly efficient gas powered cars) going by to understand that the impact on refineries. The problem for the city is that there are far too many residents with a company-town mindset who don’t want to think about the future or make plans to address technological change.
You may be correct but we are a long way from what you say/want. The city is being pushed to not rely on fossil fuel. All done by ,the mayor. Big problem is the Mayor has no clue on economic development so that issue is stalled. Manly because the Mayor is agenda driven. She wants to stop fossil fuel but has no plans in Benicia to replace the refinery revenue. Your projections are way down the road and you will not see that issue in the entire USA for many years to come. California will lead the nation but what you see on First Street is not duplicated in other parts of the USA.
“Renewable energy is far cheaper and more plentiful than fossil fuel–after all the wind and sun is free” — Grant usually has some valid points to make, but that one is a stunning simplification of obtaining electricity from the two “free” sources he refers to. Yes the wind blows ad the sun shines, but converting those sources into electricity is anything but free (or cheap).
See above discussion on zero cost margin. Read Jeremy Rifkin’s analysis,. For a simpler and more understandable explanation see the discussion in The Green Industrial Revolution: Energy, Engineering and Economics. Available form Amazon.