California Is Addicted To Oil From The Amazon

Editor OilPrice.com
Mon, December 6, 2021

California is by far the most ambitious U.S. state when it comes to things like emission standards, EV sales, and renewable energy. California is shutting down its nuclear power plants to double down on wind and solar.

It is also importing more oil from the Amazon rainforest than any country in the world.

Ecuador accounted for a little over 24 percent of California’s oil imports as of 2020. That equaled 55,219 barrels daily, according to the California Energy Commission. Interestingly, this is a substantial increase from the previous year, when Ecuador accounted for 18.22 percent of California’s oil imports, and from the year before, when Ecuador accounted for 14 percent.

This oil from Ecuador, according to a recent investigation by NBC News, comes from the Amazon rainforest—an area that is the target of massive conservation efforts and yet remains one of the most exploited parts of the world because of its natural resource wealth.

Ecuador is home to the Yasuni National Park, which contains some of the most diverse ecosystems globally, including two uncontacted indigenous tribes. For these tribes, the government even approved a so-called Intangible Zone—a border not to be crossed in order to protect these tribes. But that was before 2019. Two years ago, the government of Ecuador approved a plan to open up Yasuni National Park to oil and gas drilling.

Ecuador is a frequent reference in oil news, but the South American country has proven crude reserves estimated at 8.3 billion barrels, which makes it the third-largest oil country in Latin America, after Venezuela and Brazil. Yet, it doesn’t produce anywhere close to what Brazil pumps and what Venezuela did before the U.S. sanctions. Its average for 2020 was 483,000 bpd, according to the Energy Information Administration. But this is changing.

The president of the tiny South American nation, who took office this May, pledged to double the country’s oil production and is working on this through some major reforms aimed at facilitating the participation of private companies in Ecuador’s oil industry. According to Argus Media, the rush aims to monetize the country’s oil assets before the energy transition kills demand for the fossil fuel. Yet judging from California’s appetite for Ecuadorian oil, this killing might take a while.

According to the NBC investigation, which was based on a report by Stand.earth and Amazon Watch, 66 percent of the oil produced in Ecuador is exported to the United States, and most of that ends up in California. As the two environmentalist groups put it, 1 in 7 tanks of gasoline, diesel, or jet fuel sold in California came from the Amazon rainforest. And that’s not all.

Some of the biggest corporate users of Amazon oil in California are PepsiCo, Costco, and Amazon. All three have made emission-related pledges, with PepsiCo vowing to reduce absolute greenhouse gas emissions by 40 percent from 2015 levels by 2030 and net-zero status by 2040 and Amazon promising billions in investment to become a net-zero emitter by the same year.

“This is no longer one of those things where we’re supposed to have sympathy for a crisis that’s happening somewhere else,” Angeline Robertson, a senior researcher at Stand.earth and the lead author of the report, told NBC. “It’s occurring in California, and it’s linked to Amazon destruction.”

It is also the latest proof that moving away from oil and gas is a lot easier said than done. For all of its anti-oil rhetoric, California is a major importer of the commodity. Before Ecuador became its top source of the commodity, it was importing most of its oil from Saudi Arabia and Iraq and smaller amounts from Colombia, Mexico, Nigeria, and Angola. California, therefore, is very much like any other oil importer in the world with one difference: while other importers simply do not have the domestic production to use, California is purposefully squeezing its oil industry.

There are plans in place to ban fracking by 2024, with Governor Newsom saying in May that “As we move to swiftly decarbonize our transportation sector and create a healthier future for our children, I’ve made it clear I don’t see a role for fracking in that future and, similarly, believe that California needs to move beyond oil.”

This move would necessitate weaning the state off the more than 200,000 bpd of foreign oil it imports on top of more than 460,000 bpd in local production. It’s going to be difficult. There is also a proposal to ban offshore drilling after an oil spill in October added fuel to arguments about whether oil had a future in California or not.

In Ecuador and in the Yasuni National Park, oil definitely has a future, unlike an attempt by a previous government to save its unique ecosystems by calling on the international community to provide $3.5 billion for conservation efforts. NBC recalls the government of Rafael Correa abandoned its plan to protect its share of the Amazon six years with international donations after it only managed to raise a tenth of what was needed. And then it lifted the drilling moratorium for Yasuni, with President Correa saying, “The world has failed us.”

By Irina Slav for Oilprice.com