Senator Lena Gonzalez shows what is happening in California
I have a saying: if you listen to people long enough, they’ll tell you what’s really going on. If you want to know what’s going on in California, read the full interview Senator Lena Gonzalez (D-Long Beach) gave to Capital and Main, a left-leaning publication. Also note that the website has not touched on the topics that I will cover here.
Gonzalez sponsored SB 1173, which, in the language of the bill, “would prohibit the boards of directors of the public employee retirement system and the state teachers’ retirement system from making new investments or renewing existing investments of public employee pension funds in a fossil fuel company”. And “would require boards to liquidate investments in a fossil fuel company no later than July.”
Among the six reasons the bill gives for these actions are:
“(2) Climate change affects every aspect of California’s economy and environment, and the Legislature has passed numerous laws to mitigate greenhouse gas emissions and adapt to climate change. …
“(4) The production of fossil fuels and the effects of climate change resulting from the use of fossil fuels all result in disproportionate negative impacts on low-income communities and communities of color.
“(5) A transition from fossil fuels to clean energy will create more jobs, support the economy and improve public health.”
The article states that the bill was supported by “more than 100 environmental and climate-focused groups and others, including the State Treasurer’s Office, the City of Los Angeles and the California Federation of Teachers”.
SB 1173 passed the Senate, but was killed in the Assembly because Public Employment and Retirement Committee Chairman Jim Cooper (D-Sacramento) dropped it before it could. be put to the vote.
Gonzalez huffed, “So Cooper just decided he wasn’t going to hear it. Which I think hampers the democratic process.
In fact, what Cooper did was “the democratic process”. Any Democratic body larger than a New England town hall will have committees to investigate many issues and then vote on bills. A committee chair will always wield great power. Democracy is not about catering to the whims of a single senator from Long Beach.
Note the origin of this invoice. When asked how the bill would have served his constituents, Gonzalez said, “The bill came from a constituent of mine. He was a member of the Sierra Club. He’s an environmentalist back home in Long Beach, and he wrote an op-ed in the local Long Beach newspaper saying we should get fossil fuels out of CalSTRS and CalPERS pensions. And if anyone can do it, Lena Gonzalez can do it.
It is natural for a legislator to get ideas for bills from his constituents. When I was press secretary to Senator John Moorlach from 2017 to 2020, voters always gave him ideas, some of them pretty good. He was limited to 20 bills a year – just eight in the year of COVID 2020 – so he had to pick his best shots. But these ideas helped the process.
Gonzalez’s description shows the kind of voters she listens to, in this case environmentalists. (Who are notorious for exaggerating the threats the fossil fuel industry poses to the environment.) Regular voters in his district, who will pay for this bill as described below, are an afterthought, if that.
As you can see by walking through its neighborhood of Long Beach, the area has a large refining district. This is where the gas comes from to pump into your vehicle. Unless you’re well off and can afford a Tesla. Destroying this industry would put out of work tens of thousands of its constituents who bring home good middle-class paychecks to support their families.
Here’s a great quote from her in the interview explaining why she sponsored the bill: “Second, finance – with the war in Ukraine and oil prices being very high – I’ve been told by many economists and experts that the time to get it is now.
If she can predict the oil market, why isn’t she a billionaire? And who are these economists and experts? The oil industry is notoriously volatile, especially in times of war.
Just over two years ago, the price of oil was just $20 a gallon in April 2020, at the start of the pandemic. Did she predict this? And in April 2020, did she predict that the price would quadruple to $104 in July 2022?
Then I just read this in Fortune: “JPMorgan Chase analysts warn that global oil prices could hit ‘stratospheric’ $380 a barrel if Russia were to retaliate against G7 sanctions by cutting oil production. crude oil. But “Citigroup is signaling that crude oil could crash to $65 a barrel by the end of the year and possibly even drop to $45 by the end of 2023, if a recession leads to destruction of energy demand”.
The problem of divestment
This is why divestment is so dangerous. If a pension fund loses money because it is forced to avoid a good investment, the shortfall must be made up either by reducing the payout to retirees or by increasing taxes, probably the latter. Eventually, the fund could go bankrupt.
That’s why CalPERS, CalSTRS and the other big funds employ well-paid investment analysts. They are experts in these areas. Of course, they can also make mistakes, like CalPERS losses resulting from speculative real estate investments.
In 2001 CalPERS divested from the tobacco companies. According to CIO.com, CalPERS “lost $3.581 billion in investment gains from divesting tobacco stocks, which represents approximately 1% of current assets, over a period of more than 17 years ending on June 30, 2018, shows a new report from Wilshire Associates, the general pension system investment consultant.
Meanwhile, CalPERS’ account is only 80% funded; and CalSTRS is only 67% funded, according to the latest reports.
It makes no sense to further harm these funds by divesting from the world’s largest commodities industry.
Just a drop in the ocean
Gonzalez downplayed the significance of the divestment: “We’ve seen other portfolios that have been divested in a year, portfolios with far more fossil fuel investments than what we have in our own public pension funds, which amounts to 11 billion dollars.”
So why does she think this will sway global markets other than being another signaling moment of California virtue that actually hurts our people?
Its $11 billion divestment would be just a drop in the ocean of a $2.1 trillion global oil and gas sector in 2021. Any divestment in California would obviously see stocks recover quickly. by other global investors.
Will Vladimir Putin be impressed by such a posture? And Saudi Crown Prince Mohammed bin Salman? They are raking in record oil profits.
In Europe, they face a long, cold winter due to the Russian energy war boycott, even though they cannot entirely cut off their supply from Moscow. Meanwhile, first Germany, and now Holland and Austria, are going back to using coal, the dirtiest source of energy.
I spent three winters in Germany in the US Army from 1979 to 1982. I can point out that although it is not as freezing as my native Michigan, Northern Europe can get extremely cold. Global warming has yet to turn Amsterdam into Gonzalez’s sweet Long Beach.
What this tells us
What does this trip to California tell us? This shows us that a powerful state senator represents a sector of the state’s political establishment that has become totally cut off from reality. They believe their posture will curb Azerbaijan’s oil drilling at the Bakken fields in North Dakota.
But there are a few members of this Democratic majority machine with a bit of savvy, like Senator Cooper. When one party dominates so much, inevitably cleavages develop. This is happening now.
Because the state’s massive budget surpluses have covered up the divides by spreading the money over everyone — except the taxpayers who pay for everything — those divides have been only partially visible so far. But the impending recession will open these fault lines like the Grand Canyon.
The opinions expressed in this article are the opinions of the author and do not necessarily reflect the opinions of The Epoch Times.