The future of energy demands a fact-based approach to create a sustainable path forward
By Sergio de Castro, senior vice president of strategy and chief financial officer
With a financial career spanning more than 20 years and four continents, De Castro brings Aera a global perspective well suited to one of California’s leading oil and gas producers.
We think a lot about the future of energy at Aera. With the investments we’ve made to become one of California’s largest and most responsible oil and gas producers, that only makes sense.
At the same time, we’re keenly aware of the initiative calling for California to transition away from its dependence on oil and gas to a reliance on renewable energy.
In joining the energy-transition conversation, Aera advocates a realistic and pragmatic approach to 21st century policies. We caution against a “too much, too soon” approach that may hurt the reliability and resiliency of California’s energy market. We believe it’s crucial that California’s decision-makers and residents keep these facts in mind:
- California cannot today, or even in the foreseeable future, replace the essential products made from hydrocarbons. Oil and gas provide more than electricity. They’re key in creating the products so central to our lives, from gasoline to plastics, from phones to heart valves. Petroleum-based products are indispensable in transportation, medicine, food production, electronics and every other industry I can think of.
- California is home to more than 35 million registered vehicles – automobiles, motorcycles, trucks and more, according to the California Department of Motor Vehicles. Among those are 5 million hybrid and electric vehicles. Worldwide, only 1 million electric cars are produced annually. Replacing gas-powered vehicles with even 5 million electric cars by 2025 will require all the world’s current electric-car production – and then some.
- California consumes 1.7 million barrels of oil per day – and that amount is increasing. Yet the state produces just 463,000 barrels per day. That means California must import more than 70% of its oil. In fact, Californians already pay over $25 billion a year for imported oil. Most of it comes from foreign sources, including Saudi Arabia and South America. Because of constraints in pipeline and transportation infrastructure, California is extremely limited in its ability to import crude oil from the rest of the U.S. California’s reliance on foreign crude oil puts our energy supply at risk.
- Out-of-state and foreign oil producers don’t operate under the same stringent environmental health and safety standards that we do in California. They also don’t carry our same labor and worker protections. Many of the world’s major oil producers operate in autocratic regimes with abysmal human-rights records. And their crude oil is shipped to us in supertankers, which burn bunker fuel, one of the most polluting fuel sources.
- Oil and gas continue to be the most affordable source of energy. Solar is great, but it’s expensive and doesn’t work at night. High energy costs are a major challenge for many Californians who already struggle with the cost of cooling or heating their homes. We already have the highest gasoline prices in the nation. Even higher prices await us if we eliminate oil and gas production in California.
- Removing oil and gas production will mean a dramatic loss in California jobs and tax revenues. The oil and gas industry supported 366,000 jobs in California in 2017. The industry also generated $152.3 billion in total economic output. It contributed more than $135 billion in state and local taxes, fees and other revenues. These dollar amounts aren’t easily replaced.
Responsible oil and gas production is already underway in California. As just one example, Aera is committed to reducing our carbon footprint with a companywide mission that puts safety and environmental performance first.
But statewide, many questions remain unanswered as California pursues its low-carbon future. These questions must be factually addressed so we can create a sustainable path forward.
We need all Californians to be at the table as we work together to create an energy future with sensible regulations that aren’t overly costly or burdensome. That will allow responsible oil and gas producers, like Aera, to continue providing the energy California needs for decades to come.