Tuesday, April 28, 2009

Flu Bug Bites Oil Market

Petroleum traders have been keeping a weary eye on the news about the swine flu spreading to other parts of the world. But by now they are used to having the least amount of bad news effect crude oil and in turn fuel prices.

However, the current scare may be short lived as the real story behind the headlines is just beginning to develop. Another medical authority in the field, Dr. Jay Gordon from Santa Monica, CA, has been sending out Twitter messages in the last few day to let people know that the World Health Organization has only able to confirm 7 deaths in Mexico, from the new H1N1 swine flu virus strain, not the 20 being reported far and wide by various media outlets.

Dr. Gordon says that the reason the swine flu pandemic being hyped by the media is to get people to obtain unnecessary vaccinations with Tamiflu to prevent from getting this disease.

The WTI crude oil price is went another 22 cents to 49.92 a barrel on fears that this new flu strain is going to further depress already bleak oil demand. Gasoline and diesel spot market prices on the West Coast dropped 1 - 3 cents per gallon. Pump prices will follow and the average price may even get back down below $2.30 per gallon for regular unleaded gasoline by the end of this week in California. The average price of $2.05 per gallon for gasoline will dip by about the same amount to $2.02 per gallon for the whole of the US.

Oil prices tumbled yesterday under a sea of panic as "swine" flu fever gripped the world's media and the worlds oil markets. Although the probabilities of this evolving into a world wide killer pandemic are still small, the fears of such an occurrence happening are enough to spark short selling in the energy markets. Air travel has already been affected, with the current media hype exaggerating the outbreak of this new strain, as people avoid areas with outbreaks of the flu.

The other shoe will drop on diesel and jet fuel prices if this havoc continues any longer. Jet fuel will start backing up into the distillate stream of the refineries and cause a free fall in both jet and diesel fuel prices.

In other news the Shell refinery in Anacortes, Washington is still struggling to get back up into full operation and is now expected to be up as soon as tomorrow. The Shell and the Tesoro refineries in Anacortes went down on Friday, April 24th due to an unexpected power outage. That will keep fuel prices up and supplies tight in the Northwest US.

Wednesday, April 22, 2009

Welcome to the Bountiful Age of Crude Oil

This week’s DOE inventory statistics came in way over expectations for crude oil stocks rising almost 4 million barrels, twice the number predicted by industry analysts. For the time being, we've got plenty of crude oil on hand but will it continue to be enough for the future?

Finished product prices have remained flat and crude oil prices on the Nymex remained unchanged. In plain language, that means while crude oil prices meander up and down, gasoline and diesel prices are staying firm due to the expected increase in summer demand.

The June WTI closed up roughly 30 cents at $48.85 a barrel today. That price had jumped up a whole $2 a barrel from the May crude oil price, which had settled at $46.64 a barrel on Tuesday afternoon.

Short sellers came into the market on Monday squeezing crude oil prices down almost $5 a barrel before it started recovering late Tuesday. Goldman Sachs, the only investment company with positive earnings in the last quarter, led the charge causing prices to reflect the advice they had issued to their investors over the weekend.

Gholamhossein Nozari, Iran's OPEC governor, spoke at a recent news conference and declared that the oil cartel may decide to cut production at their forthcoming meeting being held in Vienna, Austria at the end of May. He also said that the market continues to remain oversupplied due to the high level of crude oil inventories currently being stored in consumer countries.

The International Energy Agency (IEA) in Paris, France announced a week ago that global demand for oil will decline by 2.4 million barrels per day (bpd), giving credence to economists’ consensus that the world’s economy will not recover until 2010.The IEA stated that such a decline in demand has not been seen in almost 30 years. At the current level of 83.4 million bpd, the world’s demand for oil is already a full one million bpd lower than expected.

The petroleum market awaits the eventual recovery of the US and world economies. But, as our economy shows signs of healing, crude oil and fuel prices will start rising steadily again. It means that you can relax and enjoy your time of plenty with gasoline staying between $2 and $2.50 per gallon for about a month.

Friday, April 17, 2009

Another Day - Same Old Story for Crude Oil and Gasoline Prices

The van der Valk Gas Price Advisory for 4-17-09

Dateline: Issaquah, Washington
April 17, 2009 12:30 PM PST
By: Bob van der Valk

The May WTI crude oil price is up 35 cents to $50.33 a barrel at the close today. The wholesale spot market price for gasoline and diesel went up about a penny per gallon almost in concert with the crude oil price

It's another day - same old story in the petroleum markets.

First - The US Federal Reserve announced a 1.5% month on month decline in industrial production and capacity yesterday. Crude oil prices reacted the other way of expectations by going up this morning in reaction to that bad news

Second - Last week the International Energy Agency, headquartered in Paris, lowered its forecast for global oil demand for this year by 1 million barrels a day down to 83.4 million barrels, which is 2.4 million barrels a day below the 2008 level.

Third - US crude oil inventory levels are now at a 20-year high and refineries are running at just 75% of their current capacity. Fuel conservation has forced the oil companies to reevaluate their 2009 game plan in view of the uncertainties in our economy.

Fourth - Gasoline prices went up some more this week. It's no wonder the average motorist cannot figure out what will be happening to fuel prices in the next month or for that matter the rest of the year. The US average price for gasoline is hovering around $2.05 per gallon today per the AAA fuelgaugereport. The price on the West Coast is still around $2.32 per gallon.

Crude oil will continue to hover around the $50 per barrel mark when at the same time gasoline and diesel prices will be increasing steadily upward. On the West Coast the average price for gasoline is predicted to be $2.50 by Memorial Day and $3.00 by the middle of summer if the current trend continues but... you never know what may be around the corner when a world crisis, weather or refinery problems causes prices to go haywire again. Retail diesel prices will stay about 10 cents per gallon above gasoline prices. The remainder of the country will follow suit and their average price for gasoline will be around $2.50 per gallon by mid-summer.

Refiners have been successful in putting their foot firmly on the hose to constrict the flow of fuel to the market. They have reduced utilization below capacity before their usual planned, maintenance-related springtime reductions. Some shut production down completely earlier this year in order to perform spring maintenance known as turn-a-rounds. The combination of planned and unplanned reductions put 2009 refinery use at its lowest level in the last four years.

The US petroleum industry understands one thing very well and that is that you have to continue to make a profit in order to stay in business. It's either that or going broke and then they will be out of a job.

Go aplusk!

Monday, April 13, 2009

Highway Robbery for California Gas Station Owners

Samuel Johnson said: "Hell is paved with good intentions." It seems that saying applies to unhappy independent service station owners in California today. They made it a through a down turn in the economy and barely survived a recession that is still taking its toll.

Then along comes the bad news in the form of inaction by the California Air Resources Board (CARB) on the letter from Governor Schwarzenegger requesting a delay or holiday in the implementation date set for the Enhanced Vapor Recovery Phase II regulation.

Air Quality Management District personnel have been out in force in the field for the last 10 days. They have been writing up their Notices of Violation to any service station property owner not meeting the mandated April 1, 2009 deadline.

Collateral damage has been caused in the form of gas stations and truck stops being forced to lock up their gasoline pumps or worse yet shut down their whole facility. By CARB’s own count about 5% of the gas stations, designated as Gasoline Dispensing Facilities (GDF), have already done just that.

The number of stations being reported as being in compliance by CARB and the Air Districts are confusing at best.

In some cases stations with pulled permits are already being counted as being in compliance when in fact they have not yet been fully certified. A good faith effort apparently suffices just to make their numbers look better.

By any count almost 40% of the 11,500 California gas stations have not fully complied with the EVR Phase II regulation. Of that number about 1,000 are expected to hang up their nozzles for the last time and lock up their pumps by December 31, 2009. That is the drop dead date by which station owners will have to make the investment to install the vapor enhancement equipment or be shut down by the air districts.

Fines are being imposed based on the level of compliance and volume of gasoline pumped ranging anywhere from $1,000 to $4,000 per month for each station.

Apparently this was meant to serve as notice by the regulators to recalcitrant owners, who did not heed the warnings given out as early as 2000, that the rule would be enforced. Fact of the matter is that the regulation passed through the approval process by CARB and the California legislature without those technologies even being in place.

Major oil companies jumped on the band wagon early by insisting that the law be enforced if they were going to be making the required investment. The service station equipment manufacturers went to work and one system was approved by CARB in 2005. As late as 2008 two more systems were certified and at this writing one more is in the works to be approved by CARB.

As magic would have it each system became more economical than the one before. It was even made it possible to retrofit the nozzles being used by stations equipped with the Phase I equipment. The earlier approved system was only able to interface with its own equipment and was not adaptable to the other systems. Initially station owners had to make a choice to replace their whole system or wait it out until 2008 to retrofit their existing nozzles and install the scrubbers with the CARB certified equipment made to fit their own equipment specifications.

Up jumped the devil just as things were beginning to look up for the independent service station owners. The recession came along with the resulting financial tightening of the credit market. Station owners in the process on obtaining loans were put on hold and told to wait until the banking situation straightened itself out.

Accusations are now being made by regulators and clean air organizations such as the Sierra Club that this group of station owners is not doing their part for cleaner air in California. The station owners are citizens, who live and breathe the same air just like the rest of their fellow Californians. In the past they have made improvements to their facilities to aid in the clean air effort and have plans to continue to do so in the future.

In-Station Diagnostic (ISD) portion of the law takes affect in a year and the EVR Phase II compliance date could have easily been coincided with the implementation of that program. One program interfaces with the other when both of them installed at the same time could save the owners money.

Also starting in 1998 new automobiles in California had Onboard Refueling Vapor Recovery (ORVR) systems installed on them. The ORVR system captures the gasoline vapors that are displaced when gasoline is dispensed to the vehicle tank and stores those vapors in a canister filled with activated carbon. When the vehicle engine is started, gasoline vapors stored on the carbon are purged and burned in the engine. The ORVR system on new cars interferes with the ISD system creating false readings that throws the system into alarm at the station.

As of 2008 about 65% of the automobiles and light trucks in California are equipped with the ORVR system and about 94% of them will be so equipped in another ten years. In other words the ORVR and the EVR Phase II system will overlap each other recapturing the gasoline vapors during fill ups. California station owners will have spent a lot of money for little gain all in the name of attaining cleaner air.

Reasonable people should be making reasonable choices and this time Californians are going to get hurt right where it will hurt them the most – in their pocket book.

It’s time for each of us to open our windows and stick out our heads and yell like broadcaster Howard Beale did in the movie Network: “I’m mad as hell, and I’m not going to take this anymore”.

Thursday, April 9, 2009

Has the US Petroleum Industry Learned from its Past?

The van der Valk Gas Price Advisory for 4-9-09

Quoting George Santayana: "Those who cannot remember the past are condemned to repeat it".

The amount of money being poured into commodities investments was $1.5 billion in the first quarter of 2009; almost triple that of the end of 2008. That amount of money was being invested significantly when oil dipped below $50. Investors in commodities have a great influence on crude oil prices as the lessons from the past years have taught us.

The June WTI crude oil price is up $1.89 at $51.27 a barrel this morning with several factors, including gasoline demand exceeding supply poised to send prices even higher. Crude oil will be pulled up by the price of gasoline instead of vice versa.Equities have also been given a boost as well and are up this morning based on a strong earnings report from Wells Fargo. The West Coast spot market gasoline is up 7 cents and diesel 4 cents per gallon so far today.

Gasoline and diesel pump prices continue their march upwards regardless of the ups and downs in crude oil prices. Per the AAA fuelgaugereport the average per gallon prices for gasoline range all the way from $2.36 in San Diego, $2.33 in Los Angeles to $2.313 in Seattle up about 1 penny per gallon from the day before. The average price in the US is at $2.051 and prices are expected to increase with the holiday weekend traveling ahead.

With no relief in sight it would not be a surprise see prices heading back up at $3 a gallon on the West Coast of the US by the middle of summer
Prices will be being affected by adverse weather such as hurricanes, rising crude oil costs and now hopes that the worst of the recession is behind us.

California has in own unique blend of gasoline and it costs more to produce California Air Resources Board Oxygenated Blend (CARBOB). With the "Oxygenated Blend", refiners must mix a complex gasoline and ethanol concoction to cut down on emissions. CARBOB gasoline coupled with a seasonal change from a winter to summer-grade gasoline blend have tightened supplies and therefore raised the price at the pump. But rising gasoline prices also contribute to state and local government treasuries as well and are taking in a share of the increased prices at the pump.

Only time will tell if the petroleum industry has learned a lesson from their past mistakes.

Tuesday, April 7, 2009

"Springtime for Oil Refineries and the US"

The van der Valk Gas and Diesel Price Advisory for 4-7-09

This is in deference to Mel Brooks for using the title of his play as a parody on what is happening in the world of petroleum products. But the springtime recovery of the US economy will be directly responsible for having the rest of the world's economies follow us as well.

That goes for the world of petroleum products as well with demand for gasoline remaining relatively flat compared to last year. In fact we have returned to 2004 levels on the demand levels on gasoline. On-road diesel demand is down the worst with an about 20% decrease in the same time period as last year.

Gasoline prices on the West Coast are remaining over $2.30 per gallon with diesel at $2.45 per gallon today. Yesterday's dip in the wholesale spot market prices for fuel did not have any immediate affect on pump prices. That market looks to be flat again today perhaps down 1-2 cents per gallon. Gasoline pump prices are expected to reach $2.50 per gallon by the Memorial Day weekend given the usual circumstances with ever tightening supplies of summer grade gasoline.

California has seen its average gasoline price jump up 7 cents per gallon since last week Wednesday. About 3 cents of that was the 1% increase in their state sales tax rate. That rate is now as high as 9.25% in some counties in California.

Along with that the wholesale rack and dealer tank wagon prices for gasoline on the West Coast have increased 10 cents per gallon. In California the sales tax is applied a tax on the total cost of the product including federal and state road taxes. In other words 10 cents per gallon increase represents another penny increase in the price for gasoline as well.

This is the usual time of the year when gasoline prices will spike up on any signs that supply will not meet demand. The completion of the cycle, in switching over of inventories of gasoline from winter to summer gasoline, will be April 15th for the West Coast and May 15th for the remainder of the country.

Tomorrow morning the Department of Energy will be releasing its weekly inventory report, which has shown growing builds for stocks of crude oil and gasoline in the past months. At 359 million barrels crude oil stocks are about 40 million barrels or 10% over year ago levels. That alone should keep the WTI crude oil price hovering around the $50 mark. That price is down about $1.50 from yesterday's settle of $51.05 a barrel

Lately crude oil is reacting more to the equities market than basic fundamentals. The oil production cut backs by OPEC are being adhered to at an about 80% rate of the assigned quotas by member countries. The firming for the price of crude oil is also reacting to the weakening US dollar as more money is being printed by the Treasury Department to stimulate the sagging US economy. Crude oil is used as a hedge against inflation by savvy investors.

Summer driving season will be a key indicator of how much the economy is hurting although more people may choose to stay local and drive rather than fly to vacation spots
Refinery glitches and weather related issues such as hurricanes will happen and with supply tightly meeting demand those will be having its usual bumping up affect on prices for crude oil and their finished products. Price of gasoline is expected to go to $3 per gallon in the middle of summer than settle back down to $2 per gallon before the end of the year.

Monday, April 6, 2009

Crude Oil and Fuel Prices Won't Back Down

The van der Valk Gas and Diesel Price Advisory for 4-6-09

The average prices on the West Coast went over $2.30 per gallon for gasoline and $2.45 per gallon for diesel as of today. These prices reflect the latest increases in the wholesale spot market prices for both of those products since the first of the year. This morning the spot market pipeline prices actually did come down 2 cents per gallon for gasoline and diesel but that may not last given the current geo-political conditions in the world.

With all the bad news there is also have some good news "Gas and diesel prices are lower this year". In fact they are about $1.25 per gallon for gasoline and $1.75 per gallon diesel lower than they were at this same time last year.

After setting a record setting average price of $4.764 per gallon in mid-July, the diesel price average is now at $.2264 per gallon, per the AAA fuelgaugereport, falling for 33 out of the 38 weeks by April 6, 2009. Crude oil prices have increased from $33.98 on February 12th to $52.51 a barrel on April 3rd, for an about 60% increase in seven weeks. For every dollar per barrel variance in the price of crude oil, fuel will increase or decrease 2.4 cents per gallon accordingly.

Per AAA the average price for gasoline in the US today is $2.039 per gallon, up from December 29, 2008 when it hit a five-year low of $1.613 per gallon. The average price for gasoline has increased by 42.6 cents per gallon, for about 27% and it has increased in the last 13 of 18 weeks. Still, that price is $1.244 below the same time a year ago.

Normal gasoline and diesel demand will not be recovering anytime soon from the blows dealt by the high prices from last summer. That was right after that the double whammy, with the spreading economic and banking crisis problems, hit us like a ton of bricks.

After a brief rally in September, when hurricanes hit the US Gulf Coast, gasoline was actually selling at below the value of crude oil for much of the fourth quarter in the US. Summer pump prices rising above $4 per gallon prompted many Americans to drive less, but now that prices are back down to $2 per gallon, demand has remained relatively flat from a year earlier.

Tom Petty wrote the following song lyrics applicable to what is happening in today's petroleum market:
Well I won't back down,
no I won't back down,
You can stand me up at the gates of hell,
But I won't back down

Friday, April 3, 2009

The van der Valk Gas Price Advisory for 4-3-09

Gas Station Owners Delt Blow on CARB's Enhanced Vapor Recovery Phase II Rules

This advisory calls for the Governor to ask for the resignation of Mary Nichols, Chairwoman of the California Air Resources Board, for her intransingence in dealing with the current EVR Phase II debacle, which is threatening to permanently close at least 10% of the California gas stations.

I sent the email below to John Myers, commentator for PBS radio stations in California, after hearing his pod cast this morning. I was listening to his broadcast in which he discussed the actions taken by CARB in an attempt to tone down the rhetoric created by station owners talking to the media about the predicament in which they have found themselves.

Most of the service stations owners are willing to comply with the regulation but have been unable to obtain the financing in time. Subsequently the equipment needed is now on back order and installers have been also been backed up with installation requests. The owners are now being written up with orders of violation that includes fines or worse yet being shut down by their local air management districts.

Sent: 4/3/2009 12:11:05 P.M. Pacific Daylight Time
Subj: CARB Enhanced Vapor Recovery Phase II - Open Letter to Gov. Schwarzenegger


I have been keeping updated with happenings in Sacramento on your Capitol Notes web site and have listened to your pod casts as well. During your discussions about this subject it was mentioned that non-compliance, with the EVR Phase II CARB imposed deadline, would be treated like a jaywalking ticket in New York City.

Instead the experience station owners are encountering is more like a cop handing out a ticket after someone goes through a red light. The violator is then told to take it to the judge if he wants to argue about whether the light was still green or orange when the car went through the intersection.

Some California air management districts will also see this as an opportunity to cull the herd of their miscreants by using selective enforcement on those who dare to protest their treatment.

CARB Chairwoman Mary Nichols that she would urge the use of restraint in enforcement by the Air Quality Management District in her April 1, 2009 press release. That CARB press release was issued by Dimitri Stanich apparently in response to last Friday's letter from Governor Shchwarzenegger to Mary Nichols seeking her to delay the EVR Phase II implementations date.

On April 2, 2009 the Ventura County Air District enforcement personnel did not use any restraint in their approach on enforcing the new regulation. They were out in force issuing misdemeanor orders of violation to station owners not yet fully in compliant with the EVR Phase II program.

The station owners were asked to sign an agreement with a date certain by which they would be compliant or face having the County close down their station in 10 business days. Personnel in that district have apparently not made aware or told to use restraint in their enforcement.

Two stations in Ventura County cited are independently branded and owned by my brother Andre van der Valk. Andre also leases two stations from Shell in the San Fernando Valley that are in compliance. In addition he owns a 76 station in Santa Monica that is not yet in compliance. He has all intentions to be and keep compliant at all of his stations.

The system installed at his two Shell stations since August last year is having numerous maintenance issues with breakdowns of the new nozzles and the scrubber system installed on the underground tanks. He is under warranty for one-year on the EVR Phase II equipment but becomes responsible for their upkeep after August 2009. The problem he is encountering is with replacement parts that are on back-order with the manufacturer for as much as six weeks leaving dispensers out of service for that duration.

I hope this information will assist you in getting a better picture of what is actually happening on the ground. Please feel free to contact either myself or Andre at jalidat@aol.com phone number (818) 970-9037 about this very important issue for the service station business community.

Below is my letter to Governor Schwarzenegger beseeching him to take immediate action.


Bob van der Valk
(971) 678-2975

From: Tridem OilTo: governor@governor.ca.govSubject: Open Letter to Governor Schwarzenegger - EVR Phase II CARB Mandate

April 1, 2009 - 7:00 AM PST

Bob van der Valk to Governor Arnold Schwarzenegger – Capitol Building – Sacramento, CA

Today anywhere from 1000 to 4500 gas station owners will have to make a decision to close down or pay hefty fines to their local air quality management districts. They did not meet the deadline imposed by the California Air Resources Board (CARB) mandate, which requires all service station owners in California to install new enhanced vapor recovery (EVR) nozzles and scrubbers to capture 98% instead of the current 95% gasoline vapor emissions, April 1, 2009.

A bi-partisan group of California legislators has already called on CARB and you to extend the deadline for compliance by one year to April 1, 2010.

The unfairness in the current CARB edict is that the technology had not yet been refined to meet this newly required standard when the mandate was passed the legislature in 2000. Then those same people decided that by delaying implementation until April 1, 2009 the petroleum equipment industry would eventually solve the problem for them and it would result in finding a solution to meet the stricter requirement.

Major oil companies and other service station owners, with the financial ability to do so, retrofitted their pumps with EVR Phase II nozzles and vapor scrubbers expending about $11,000 per dispenser.

Along with the rush to supply the demand product quality problems have been encountered including shoddy workmanship of the new EVR nozzles. Nozzle spouts can be twisted off by hand and nozzles malfunctioned causing the system to close down. The nozzles and scrubber system are under warranty for one year but after that the station owners are responsible for repairs or replacement of defective parts.

CARB needs to review the concepts of "benefit cost analysis" and "diminishing returns" when these EVR nozzles capture just another additional 3% of the gasoline vapors escaping while filling up our tanks. In this case the costs should also include shutting down businesses and workers losing their jobs.

Governor Schwarzenegger push is now coming to shove and about one-third of the station owners of the over 11,000 stations in California did not comply by the April 1st deadline for one reason or the other. It is estimated by conservative standard that an estimated 1,000 service stations in California will not be able to comply with the mandate at all. This will result in some, including those with major oil company brands, to shut down permanently and not be re-opened.

California Assembly Member Anthony Portantino sent you a letter on February 23, 2009 requesting that you issue an executive order directing CARB to extend the deadline for EVR Phase II compliance deadline date until April 1, 2010. This letter was sent on behalf of the Assemly Member’s constituents including independent service station owners.

That resulted in you belatedly sending regulators and legislative leaders a letter on March 27, 2009 urging a six-to-12-months delay in Enhanced Vapor Recovery (EVR) Phase II enforcement.

You wrote: “I am not writing to argue against the value or soundness of the measure,” to California Air Resources Board (CARB) Chairwoman Mary Nichols. “But I am writing to suggest that more time is needed before it can be successfully enforced without significant negative effects on our state's economy.”

The CARB board, appointed by you, pledged in response to “work closely with the air districts throughout the state to extend the April 1 enhanced vapor recovery enforcement deadline while still striving to meet our collective air quality goals."

On March 12, 2009 Senator Roderick Wright wrote in his letter to you that the result of this action will be that minority and inner city areas will be especially hit hard. Specifically:

· Closure of service stations serving the Inner City: Stations, who cannot meet the deadline, will be forced to shut down - creating a major a void in inner-city communities and resulting in dramatic prices increases at a time when our hardworking families can least afford new costs.

· Loss of revenue for the State and increased unemployment that is already shooting towards 12%: Service station closures will further hurt our struggling economy and aggravate an already dismal budget situation by putting more individuals out of work and reducing critically needed tax revenue - resulting in less money for the State's general fund and ultimately lead to further decreases in badly needed community, health and educational programs.

· Increased blighted areas and increased pollution: Station closures will become community eyesores, set back our efforts to revitalize our inner city community's and most ironically, likely result in increased pollution as individuals drive more to find an open gas station - undermining the original intent of the regulation.

· Hardship on minority owned small businesses: Major oil companies have divested some of their service stations to minority, disabled veterans, women and others individuals over the last several years. Without an extension of the compliance deadline, these small business owners will be financially ruined and their dreams of a better life for their families vanquished.

Governor Schwarzenegger it is time for you to cut this bureaucratically created Gordian knot by issuing an executive order to CARB to delay implementation of the EVR Phase II program. A thorough study should be made about the way this issue has been handled by an intransigent board appointed you and request Chairwoman Mary Nichols’s resignation for her intransigence in dealing with this very important issue.

The solution to avoid this crisis is very simple – issue the executive order extending the deadline by one year and give everyone a chance to catch their collective breaths.

You may contact me at: bvan@4refuel.com or phone (971) 678-2975

Bob van der Valk is the fuel pricing and petroleum industry analyst with 4Refuel LLC in Lynnwood, WA. 4Refuel provides on-site fueling and fuel management systems to businesses and governmental agencies in the State of California.

This letter was submitted to the Governor of California on his official web site at: http://gov.ca.gov/interact
Letter from State Senator Roderick Wright to Governor Schwarzenegger:

CAPITOL OFFICE -STATE CAPITOL, ROOM 5064SACRAMENTO, CA 95814(916) 651-4025FAX (916) 445-3712DISTRICT OFFICEONE MANCHESTER BLVD., SUITE 600INGLEWOOD, CA 90301(310) 412-0393FAX (310) 412-0996E-mail:senator.wrightl@sen.ca.govwww.sen.ca.gov/wrightCalifornia State SenateSENATORRODERICK D. WRIGHTTWENTY-FIFTH SENATE DISTRICTRepresenting the Communities of Alondra Park, Athens, Compton,Gardena, Florence-Graham, Hawthorne, Inglewood, Ladera Heights,Lawndale, Long Beach, Los Angeles, Palos Verdes Peninsula, SanPedro, Watts, Westchester, Westmont, and WillowbrookGOVERNMENTAL ORGANIZATION CHAIRBUDGET & FISCAL REVIEWBUDGET SUBCOMMITTEE #4on State Administration, General Government and CorrectionsENERGY, UTILITIES AND COMMUNICATIONSPUBLIC SAFETY SELECT COMMITTEES:CALIFONRIA’S WINE INDUSTRYCALIFORNIA’S HORSE RACINGINDUSTRY - CHAIREARTHQUAKE AND DISASTER PREPAREDNESSJOINT COMMITTEE ON RULES

March 12, 2009

The Honorable Arnold SchwarzeneggerGovernor, State of CaliforniaState CapitolSacramento, CA 95814

Dear Governor Schwarzenegger:

The California Legislative Black Caucus represents and advocates for the interests of Black people throughout California. Among our many valued and principled objectives is our commitment to reducing inequities and creating employment opportunities and economic security for African Americans. It is for that reason that we are writing to you to share our serious concerns about a pending regulation by the California Air Resources Board (CARB) that we believe could have major impacts on inner-city and minority communities.

The issue involves the looming enforcement by the CARB of the Enhanced Vapor Recovery Systems (EVR). It is our understanding that several years ago CARB adopted regulations requiring gas stations to install EVR upgrades by April 1, 2009 to help reduce air pollution levels – a goal we strongly support. However, our concern lies with that fact that due to major bureaucratic delays by CARB in approving products for use by station owners, coupled with extremely high fees and onerous regulations by local jurisdictions. Only 1 in 5 stations have to date been able to install these systems. With just 30 days until the enforcement deadline, more than 78% of California’s 11,000 gas stations will not be able to meet the standard and will be forced to shut down.

The result of this action will be that minority and inner city areas will be especially hit hard. Specifically:\
-Closure of Service Stations Serving Inner City: Stations that cannot meet the deadline will be forced toshut down – creating a major a void in inner-city communities and resulting in dramatic prices increases ata time when our hardworking families can least afford new costs.
-Loss of Revenue for the State and increased unemployment: Service station closures will further hurt ourstruggling economy and aggravate an already dismal budget situation by putting more individuals out ofwork and reducing critically needed tax revenue. This would result in less money for the State GeneralFund and ultimately lead to further decreases in badly needed community, health and educationalprograms.
-Increased blighted areas and increased pollution: Station closures will become community eyesores, setback our efforts to revitalize our inner city communities. Most ironically, it will also result in increasedpollution as individuals drive further to find an open gas station – undermining the original intent of theregulation.
-Hardship on Minority Owned Small Businesses: Major oil companies have divested most of their servicestations to minority, disabled veterans, women and others individuals over the last several years.

Without an extension of the compliance deadline, these small business owners will be financially ruined and their dreams of a better life for their families vanquished.

It is for all these reasons why we are respectfully requesting that you intervene on this critical issue.Specifically we request that you direct CARB to allow for a two year extension of the EVR installation mandate.

This request is consistent with Senate Bill 155 (Cox), which you signed. SB 155 granted rural gas stations a two year extension, postponing enforcement of EVR until April 1, 2011. Your support would allow urban gas stations the same consideration given to rural gas stations. Urban station owners should also have until April 1, 2011 to make these necessary upgrades. Without an extension thousands of stations going out of business resulting in major impacts to communities that can least afford to deal with all of the negative consequences.


Senator Roderick D. Wright

CC: Members of the Senate and Assembly Black Caucus,Ms. Susan Kennedy, Chief of Staff to Governor Arnold Schwarzenegger, Ms. Mary Nichols, Chairwoman of the California Air Resources Board, Honorable Gil Cedillo, Chair of the Latino Caucus, Honorable Tony Mendoza, Vice-Chair of the Latino Caucus