STAFF STUDY OF IMPACT OF ENERGY SHORTAGES ON LOS ANGELES INTRODUCTION Subcommittee investigators monitored the energy situation in Los Angeles during the month of January 1974 The situation in Los Angeles is not at the crisis stage. In fact, while as recently as December of 1973 the energy picture was approaching emergency proportions, the outlook now is considerably improved. Local leadership, widespread community support for conservation measures and the city's willingness and ability to pay as much as $25.00 a barrel for residual oil have enabled Los Angeles to deal effectively with energy shortages. In short, as of this writing the city is coping with its fuel problems and there is no crisis. However, if gasoline shortages should develop this spring and summer, economic and social paralysis will set in. Los Angeles City and County and much of the rest of Southern California will be faced with a crisis of unprecedented scope. In addition, new problems in residual fuel could develop in the fall of 1974 because reserves on hand and commitments for future delivery are sufficient, at this time, only through next October. Two considerations make the energy situation in Los Angeles unique. First, the people of Los Angeles City and County, more than any other population in the nation, depend on the automobile for transportation. The car has an almost exclusive hold on transportation in Los Angeles and should the gasoline supply be depleted this region would be rendered inoperable. Second, owing to the sharp decline in the availability of natural gas in recent years, Los Angeles has come to rely on foreign oil, most of it from the Middle East, for about half its utility energy supplies. Now, because of the Arab embargo, that supply has been cut off to a large extent. This development has led city officials to impose an Emergency Energy Curtailment Program, a series of actions and contingency plans to reduce power consumption by home owners, industries and commercial enterprises. The curtailment program is working well. Mayor Thomas Bradley and other city officials have urged that the Federal Government take steps to improve the Los Angeles energy situation. Among their proposals are recommendations to (1) have the Congress open up the nearby Elk Hills Navy petroleum reserve for limited use by Los Angeles; (2) have the Federal Energy Office begin using its authority to more equitably distribute oil supplies under the mandatory allocation law; (3) expand Federal support of urban mass transit, including subsidies to on-going systems; (4) have the Federal Government take action to place price ceilings on imported oil; and (5) improve the lines of communication between the Federal Government and the city in energy affairs. In trying to respond to the prospect of energy shortages, Los Angeles has been hampered by an inability to obtain data on the nature and scope of the problems which shortages could cause and are causing. Insufficient planning for the possibility of shortages left the city ill-equipped to define the shortages and their impact and measure their size. The city has now begun to gather data to gain a comprehensive assessment of the present situation and make long-term projections. Accordingly, no data yet exists on the impact of the energy situation on more vulnerable groups such as the working poor and the marginally employed. Most observers point to the fact that economic slowdowns caused by energy shortages will result in layoffs for the working poor and the marginally employed, workers who traditionally are the last to be hired and the first to be fired. However, beyond this generally accepted view, little knowledge has been gained as to how families at the bottom of the social and economic scale are suffering, or will suffer, from energy shortages. Finally, employment statistics in connection with energy shortages are not complete. On the basis of workers filing claims for unemployment benefits. State officials reported on January 4, 1974 that 10,000 persons had lost their jobs due to the energy crisis. On January 23, 1974, State officials said 19,000 persons were unemployed due to energy shortages. A California State Department of Employment Development projection, made public January 4, foresees a 6.7 percent jobless rate statewide by summer. Labor leaders say this estimate is too low. Other economists are unsatisfied with the figure and agree that the jobless rate may be higher. In addition, some experts say a downturn would have occurred this year anyway, with or without energy shortages. The consensus of experts from Government, industry and labor is that the economic situation is uncertain. Nobody is able to predict what might happen. This very uncertainty could trigger an economic slowdown. THE AUTOMOBILE IN LOS ANGELES Serious shortages in gasoline have not developed in Los Angeles but supply is slowly tightening. In early January of 1974, for example, no long lines of cars waiting for gas were seen in front of Los Angeles stations. But now such lines are common on Saturdays and at some stations near freeway on-ramps. A recent survey conducted by the Automobile Club of Southern California found that 31 percent of Southern California gas stations are limiting sales, mostly to 10 gallons per customer. Some 16 percent of the stations are closing on Saturdays, the Auto Club study showed. City officials believe that serious gasoline shortages, if and when they occur, will hit hardest in the driving seasons of the spring and summer. Federal Energy Administrator William E. Simon has set the figure of 35 gallons a month which should be the maximum gasoline usage for each driver under rationing. City officials dispute that figure for their region, asserting that the average commuter in the Los Angeles area uses 38 to 40 gallons of gasoline each month for work trips only and that additional fuel is required for other essential trips such as grocery shopping and visits to the doctor. Norman H. Emerson, Ex ecutive Assistant to the Mayor, says the need for more gasoline in Los Angeles is a result of the relatively long distances which Southern Californians drive to and from their jobs. Reflecting a realization at the Federal level of the reliance of Los Angeles commuters on the automobile, John Sawhill, Deputy Energy Administrator, said that if gas rationing is implemented special consideration will be given to Los Angeles and the monthly allotment there per licensed driver would be 41 gallons. Mr. Emerson cited figures from the city's Traffic Department which demonstrate, he said, that 41 gallons a month "for the average Los Angeles driver would be totally inadequate." Mr. Emerson said there are 2,989,000 commuters in Los Angeles who drive to work. If they were limited to 35 gallons of gasoline a month, he said, 1,225,490 people would be unable to get to work without car pooling, purchasing a smaller car or obtaining additional rations. Under a 41-gallon per month rationing system. that figure would drop to 956,000 commuters who would have to find another means of travel or receive more ration stamps, Mr. Emerson said. Los Angeles Mayor Thomas Bradley campaigned for office with a pledge to expand mass transit. He is asking the Federal Government to give direct subsidies to on-going transit systems. Officials are also experimenting with projects to encourage more use of the Southern California Rapid Transit District's bus system. On Sunday, January 20, 1974, for example, fares were cut to 10 cents to acquaint more people with the convenience of bus travel. The Los Angeles Herald-Examiner reported that the one-day experiment was a "tremendous success,” as passenger loads nearly tripled, according to transit district officials. Even though it rained in Los Angeles on "Sunday Sample Day," thousands of passengers left their cars at home and took buses, prompting the Transit System General Manager Jack Gilstrap to say, "It's way beyond our expectations. We'll try to make it a Sunday fixture." The next "Sunday Sample Day," January 27, was an even bigger success as passenger loads went up 100 percent over the previous Sunday. The Southern California Rapid Transit District operates 1,648 regular buses over 169 lines in 180 communities in the counties of Los Angeles, Orange, Riverside and San Bernardino. One-way fares range from as much as 70 cents for a 20-minute ride from the San Gabriel Valley to downtown Los Angeles to the low charge of a dime on minibuses in the city. The district also offers a program in which any 45 commuters can get together and subscribe to their own reserved-seat bus. However, mass transit in the Los Angeles area is inadequate. and leaders are planning short-term and long-range improvement projects. MIDDLE EAST OIL SUPPLIES The Arab oil embargo created an emergency shortage of residual oil for the Los Angeles Department of Water and Power, a municipally-owned utility. The Department had estimated a 1974 requirement of 24 million barrels of residual (No. 6) oil for its electrical generators. This projection was based in part on an estimated increase in the demand for energy of 4.9 percent. With the realization that oil shortages would occur, the Department predicted a shortfall of residual oil of 28-300-74- -2 |