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IN THIS ISSUE – “It’s Beyond Crazy”
- Legislature Prepares a Pandemic State Budget: “It’s Been A Good 10-Year Run…”
- Even Behind Face Masks, Senators Visibly Frustrated With Newsom; Seek More Financial Detail on COVID-19 Management
- COVID-19 Determines Newsom’s Legacy & Ambitions
- Newsom Impresses National Pundits…From Showhorse to Workhorse
- Big Data’s Public Health Promise – Or Threat to Civil Liberties?
- Food & Farmworker Crises Intertwined
- Wildfire Season Looms
- Volatile Petroleum Market Rides “Space Mountain Oil Prices”
FOR THE WEEK ENDING APRIL 17, 2020
Capital News & Notes (CN&N) harvests California legislative and regulatory insights from dozens of media and official sources for the past week, tailored to your business and advocacy interests. Please feel free to forward.
Stay current daily! For our focused updates via Twitter: @jrgualco / @robertjgore / @gualcogroup
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SENATE STORY
Legislature Prepares a Pandemic State Budget: “It’s Been A Good 10-Year Run…”
Sacramento Bee
The state’s economy has slowed to a near standstill since Gov. Gavin Newsom issued an indefinite stay-at-home order on March 19, ending nearly overnight the expansion California had enjoyed over the the last decade.
“It’s been a really good, 10-year run,” said Assembly Budget Chair Phil Ting, D-San Francisco. “What we didn’t anticipate, and obviously given the size of the pandemic, was how it doesn’t just affect a piece of California, but every part of California and everyone in the country.”
That run reached its peak in January, when Newsom proposed a $222 billion state budget that projected economic growth for at least a couple of more years.
Unlike the last recession, California is heading into the downturn with significant reserves. California’s stash includes $17.5 billion in reserves in February, according to a recent Legislative Analyst’s Office report.
How that safety net will protect Californians from the long-term economic havoc, however, is an open question.
It also might not buy much time.
Independent budget analysts at the Public Policy Institute of California and the Legislative Analyst’s Office in the past two years published reports suggesting California had almost enough funds to weather a mild recession without significant spending cuts.
In the mild scenario, California would lose about $5 billion a year over two years, and total revenue would come in about $46 billion below what the state could expect to collect in a growing economy, according to a November 2018 report by the Legislative Analyst’s Office.
In a severe recession, California’s revenue would plummet by $173 billion to $185 billion over five years, eating through reserves and forcing significant spending cuts, according to a May 2019 report by the Public Policy Institute of California.
So far, the coronavirus downturn has the makings of a severe recession, say some lawmakers.
“Everything I worried about happening has just happened,” said Sen. John Moorlach R-Costa Mesa. “Maybe even worse than I anticipated it would.”
“It’s like someone took a Monopoly game board and in the middle of the game, took the board and threw it,” said Moorlach, who in the 1990s worked on Orange County’s bankruptcy reorganization as the county’s treasurer.
In the last month alone, 2.5 million Californians have filed for unemployment. Newsom has asked House Speaker Nancy Pelosi for $1 trillion to help states and local governments during the pandemic, and discarded his initial January billion budget proposal as “inoperable.”
The governor’s initial blueprint considered a modest recession that Department of Finance spokesman H.D. Palmer said projected an economic retraction somewhere between the “Dot-com bust” of 2000-2001 and the Great Recession of a decade ago.
Each day of the pandemic, Palmer said, pushes California closer to the 2009 model.
“Things are not looking swell,” he said. “Clearly there are severe and ongoing economic consequences of the coronavirus pandemic from not only the public health aspect of it, but the economic effects of it worldwide.”
Senate Majority Leader Bob Hertzberg, D-Van Nuys, said the coronavirus is unlike anything he’s worked through as a legislator, including his tenure as Assembly speaker during the 2000 energy crisis that landed California with a $42 billion electricity bill.
“It’s beyond crazy how big this is,” Hertzberg said.
It’s hard to compare the coronavirus downturn to the 2009 recession, when the state faced a $60 billion deficit and endured a months-long budget impasse before lawmakers and former Gov. Arnold Schwarzenegger finally made a deal. To close the gap, lawmakers from both parties agreed that the $119 billion 2009-2010 budget would have to include severe cuts to services, tax increases and borrowing.
For COVID-19, it’s a guessing game as to how long restaurants and businesses stay closed and people remain unemployed. But the longer the shutdown continues, the deeper the economic crisis becomes and the more “we don’t know what the future holds,” Ting said.
Newsom extended the state’s tax filing deadline to July 15, meaning lawmakers will have to wait several more months for a clear picture of revenue.
Ting said the Legislature could pass a baseline budget by the state’s June deadline that extends current spending levels. Then in August, when some of the dust settles, the Legislature can decide whether to add money or slash expenses.
Ting said that could mean moving from “a budget where we were adding things and increase spending on key priorities,” to one that “we would have to cut back on these priorities.”
Hertzberg takes heart in the reserves California accumulated through spending reforms adopted by former Govs. Schwarzenegger and Jerry Brown.
“Thank God we did that,” Hertzberg said.
Lawmakers are not scheduled to return until at least May 4, and will quickly face legislative deadlines and have to pass a budget. Democratic leaders have asked members to shave the number of bill proposals and consider how much their ideas could cost.
The emphasis this year will be on COVID-19 cleanup legislation, wildfires and the state’s growing homelessness crisis, said Assemblywoman Lorena Gonzalez, a San Diego Democrat and chair of the Appropriations Committee. Everything else faces the chopping block.
“It’s tough to be in a position where we know there’s not a lot of extra money. And I’ve heard a ton of stories, from previous Appropriations chairs that served in fiscal times that were tougher, how mean of a job it was,” Gonzalez said. “We’ll experience this year and next year, some belt tightening.”
The budget approval process also will be streamlined. Normally, Senate and Assembly subcommittees hold weeks of hearings on spending proposals before passing a budget in June.
This spring, many of those meetings are expected to be swapped for bipartisan oversight hearings of how Newsom’s administration is spending the $1.1 billion in COVID-19 emergency funds the Legislature unanimously authorized in mid-March.
“Managing the COVID-19 crisis has brought unprecedented change into all of our lives and in the way we are conducting the people’s work here in California,” said Senate President Pro Tem Toni Atkins, D-San Diego. “Everyone in this state, from families to our courageous medical professionals, has had to adjust, and so will our government.”
https://www.sacbee.com/news/politics-government/capitol-alert/article241906161.html?#storylink=cpy
Even Behind Face Masks, Senators Visibly Frustrated With Newsom;
Seek More Financial Detail on COVID-19 Management
CalMatters
With California in a pandemic-induced recession that will hammer the state budget, lawmakers grilled officials about Gov. Gavin Newsom’s $1.4 billion deal to buy masks and other protective gear — but got few answers during their first hearing on the state’s effort to stem the spread of coronavirus.
The meeting — with two senators in the Capitol and seven participating via videoconference — marked the Legislature’s first hearing since lawmakers left Sacramento in mid-March to work from home because of the pandemic. Senators wore face masks and the few reporters in the hearing room had their temperatures taken before they were allowed to enter. Lobbyists phoned in their comments rather than lining up behind a mic as they normally do. And the meeting started late because of a series of technical hiccups as the old-fashioned institution adapted to the internet age.
Behind their face masks and in front of their webcams, senators were visibly frustrated that the governor still has not released the contract he made with a Chinese company that is supposed to manufacture hundreds of millions of facial masks. Newsom announced the agreement more than a week ago on national TV.
“That’s a big deal, and many of us are going to be very insistent on seeing the terms of that contract. I must confess I have not much confidence in them being delivered,” said Sen. Jim Nielsen, a Republican from Gerber.
“There is not an expectation, but a demand that that contract become available,” he said.
Republicans were not the only ones pushing for answers. Democratic Sen. Richard Pan of Sacramento asked if Newsom’s administration would “be transparent about where the supplies are going” so Californians can be assured the gear is being properly distributed.
Christina Curry, chief deputy director of the Governor’s Office of Emergency Services, said that information would not be made public because the protective gear is in so much demand around the world.
“The concern with providing all of that information publicly is… (personal protective equipment) is very high value, highly desired, and it could potentially open up issues with questioning decisions or creating a process outside of what we have,” she said.
The contract would be made public, Curry said, after state officials “have assurance that the supply is going to be arriving and with the requirements we have set forth.”
It was a different answer than another Newsom aide provided earlier this week when asked when the contract would be released. On Monday, Mark Ghilarducci, Newsom’s director of the Office of Emergency Services, said the contract was “in the final negotiation phases” and would be released when the language was complete.
Newsom, speaking on the Rachel Maddow show on April 7, said the contract had already been “inked.”
The contract was not the sole focus of the hearing but was the clearest flashpoint between the Legislature and the governor’s staff. Though both branches of the state government are controlled by Democrats, it’s not unusual for them to quibble about how to spend taxpayer dollars as part of the annual budget process. What is unusual this year is that the Legislature ceded enormous power to Newsom, passing a coronavirus emergency measure that gave him power to spend up to $1 billion “for any purpose” related to the pandemic.
Newsom officials said at the hearing that they anticipate a need to spend another $6 billion on coronavirus response, but acknowledged they didn’t yet have a proposal for exactly how the money should be spent.
“The course of this pandemic is uncertain… so we ask for your patience on that,” said Vivek Viswanathan, a chief deputy director at Newsom’s Department of Finance.
Senators also questioned Newsom’s efforts to shelter homeless people who are vulnerable to catching and spreading the coronavirus. Newsom has given local governments $100 million to open new shelters and enhance social distancing measures at existing shelters, and is spending $50 million on hotels, motels, and trailers.
But a lot of cities with large homeless populations are not getting the money, Sen. Nancy Skinner said, because the formula for distributing funds favors big cities.
“There are still significant numbers of unsheltered people not getting access to these hotel rooms,” said Skinner, a Berkeley Democrat.
The broader context for the hearing — and a subject that is certain to consume most of the Legislature’s attention in the coming months — was the dire financial situation that California is facing because of the economic devastation caused by the pandemic. Unemployment claims suggest that between 12% and 15% of Californians have lost their jobs in recent weeks, Legislative Analyst Gabe Petek said. The state is now in recession, he said. So the government faces not only a drop in revenue from taxpayers but also greater demand for government services such as health care and food assistance.
“It’s very likely that the state has gone from an anticipated surplus and is now likely facing a budget problem and potentially a significant one,” Petek said, before clarifying what that means: For the first time in several years, the state will likely have less money than it’s committed to spend. Cuts, it appears, are on the horizon.
COVID-19 Determines Newsom’s Legacy & Ambitions
CalMatters commentary
It may seem that the coronavirus crisis has been with us forever, but it’s been less than a month since California’s officialdom began imposing a quasi-quarantine to reduce the toll on human life.
It’s also been a few weeks since the Legislature recessed indefinitely and entrusted Gov. Gavin Newsom to do whatever he deemed necessary to protect the state’s 40 million residents.
So how has Newsom performed? After a couple of early miscues, he’s done extremely well, demonstrating a deft touch in persuading Californians to avoid personal contacts, even though it rapidly plunged the state into a deep economic recession.
Newson has, to use one of his favorite phrases, “met the moment” and it appears that Californians’ changes in personal behavior are, to use another Newsomism, “bending the curve” enough to sharply reduce the toll and avoid the terrible fate that’s befallen New York and other states.
Newsom has coupled defense with offense, tapping the state’s budget reserves to aggressively find protective shelter for the homeless, expand hospital capacity and acquire more sorely needed medical equipment — most recently an initiative to buy many millions of protective face masks.
“We decided enough is enough,” Newsom declared as he announced the latter. “Let’s use the power of the purchasing power of the state of California as a nation-state … and in the next few weeks, we’re going to see supplies at that level into the state of California — and potentially the opportunity to export some of those supplies to states in need.”
“Nation-state” is another of the Newsomisms to emerge, a constant reminder — even an implicit boast — that California is big enough to act where the federal government has failed.
Newsom has always sought the spotlight, trumpeting “big hairy, audacious goals” such as unilaterally implementing same-sex marriages as mayor of San Francisco and promising as governor to build 3.5 million new houses.
The coronavirus pandemic is an opportunity to act decisively on the biggest goal of all, saving thousands of lives, and Newsom has risen to the occasion with a tempered maturity, even throttling his penchant for attacking President Donald Trump to maintain a working relationship with the White House.
That said, it’s still been less than a month, California still has not seen the pandemic’s peak and even when its medical threat has receded, we will face the economic consequences for many months, even years. As tax revenues plummet and reserves melt away, the “big hairy, audacious goals” that Newsom had been seeking will take a back seat to crisis management.
From a purely political career standpoint, that’s not all bad, even though Newsom, of course, professes no political motivation. “This is not political, this is not in any way, shape or form usurping or undermining,” he said of his medical mask initiative. “This is all in the spirit of all of us stepping into this moment and doing what we can.”
However, Newsom didn’t reveal the action during one of his daily webcast briefings, but rather during a nationwide appearance on MSNBC’s “Rachel Maddow Show,” whose audience is overwhelmingly left-of-center Democrats. And he also garnered national media attention when he dispatched 500 ventilators to other hard-stricken states, such as New York.
Newsom’s Maddow appearance, coming one day before Sen. Bernie Sanders dropped out of presidential contention, had an immediate political effect as a #PresidentNewsom hashtag began trending on Twitter.
There’s no doubt Newsom harbors presidential ambitions. As well as he’s performed to date, however, he faces years of crisis that will decisively fix his place in California political history and thus determine how far he can go.
https://calmatters.org/commentary/california-gavin-newsom-coronavirus-pandemic-challenge/
Newsom Impresses National Pundits…From Showhorse to Workhorse
CNN Political Insider
Gavin Newsom has often been dismissed as a showhorse, not a workhorse.
As the mayor of San Francisco and even following his election as governor of California, Newsom’s two defining features — in the eyes of many — were his central casting political look and his unvarnished political ambition.
That view may be changing after Newsom’s performance in his state’s fight against the coronavirus pandemic in the past two months.
Despite California being the most populous state in the country (by a lot) and containing at least two densely packed cities (Los Angeles and San Francisco) where the coronavirus was initially spreading like gangbusters, there have been fewer than 900 total deaths to date in the Golden State. And the number of deaths per 100,000 residents is just two — one of the lowest numbers in the entire country.
Newsom deserves a lot of credit for those numbers. For starters, he was very much ahead of the curve when it comes to issuing a stay-at-home order for the state. Newsom issued the directive on March 19, making California the first state in the country to do so. (On the day Newsom announced the order, California had 675 cases and 16 deaths from coronavirus.)
“This is not a permanent state, this is a moment in time,” Newsom said in explaining his decision at the time. “We will look back at these decisions as pivotal.”
He was 100% right — in both his early decision to keep Californians at home and in the impact that move had.
On March 15, according to figures from the COVID Tracking Project, California had 293 cases and five deaths. New York, on that same day, had 729 positive cases and three deaths. By April 15, the two states were on radically different trajectories. New York had 213,779 cases to 24,424 for California; More than 11,500 people had died in New York as compared to 821 in California.
(Worth noting: The comparison is not apples to apples of course — due, at least in part to the density of new York City and the overwhelming numbers of cases for the state that come out of the city.)
Newsom was also very aggressive — early on — in seeking to acquire masks and ventilators that public health professionals told him would be required to stay ahead of the curve in terms of treatment of the virus. As CNN’s Ray Sanchez, Dan Simon and Jenn Selva wrote earlier this month of California:
“The state’s so ahead of the game on ventilators that it began sending 500 of its ventilators to hot spots in Illinois, New Jersey and New York on Tuesday. Based on the advice of federal emergency officials, ventilators will also be loaned to Washington D.C., Delaware, Maryland and likely Nevada, Newsom said.”
And Newsom drew positive headlines earlier this week with his comprehensive set of criteria required to re-open the state in the post-pandemic phase of the virus. “There is no light switch here, it’s more like a dimmer,” Newsom told reporters. “I know you want the timeline, but we can’t get ahead of ourselves and dream of regretting. Let’s not make the mistake of pulling the plug too early, as much as we want to.”
It’s tough to look at the past six weeks and say any governor in the country has done a better job of flattening the curve of the coronavirus — and doing it quickly via public policy decisions — than Newsom. And yet, Newsom has been drastically overshadowed by the likes of New York Gov. Andrew Cuomo and Maryland’s Larry Hogan — to name two. Whether that’s because Newsom is on the West Coast or because he lacks some of the everyman appeal of both Cuomo and Hogan is difficult to say. But it’s a reality.
Here’s the thing though: Newsom’s performance in this most trying of times will be part of his biography — and the historical record — forever. If California’s coronavirus cases and deaths remain low — as a percentage of its massive population — the state (and Newsom) will almost certainly be seen as a shining example of how to handle a crisis.
Which, whether or not he is getting much national attention right now, will be a major talking point for Newsom if and when — OK, let’s be honest here, when — he runs for president in either 2024 or 2028. As Democratic strategist Doug Herman told Politico’s David Siders in earlier this month:
“When you’ve got governors with stratospheric approval ratings for their handling of the crisis and ratings that are 20 and 30 points higher than the president’s and you have governors from states like California and New York and Illinois leading the crisis response — all big-name, major-league governors — you’re going to see that leadership reflected in polls for the presidency in future election years.”
That’s absolutely right. And Newsom will be at or near the front of that line due to the size and influence of his state and his ambitions. And those ambitions are clear to anyone paying attention. As legendary California political columnist Dan Walters wrote back in January:
“It’s pretty obvious that the governor of California wants to be president of the United States someday. Willie Brown, the former Assembly speaker and Newsom’s political patron and predecessor as mayor of San Francisco, says in an interview with Politico, ‘he is still on track (for the White House), he’s doing what he needs to do…'”
There’s no shame in ambition. (If there was, no one would ever be president — or run for it.) But what appeared to be the biggest knock on Newsom before the coronavirus pandemic — all ambition and no accomplishments — might have just disappeared over the past few months. And that’s a very big deal if Newsom wants to have a chance at being president one day.
Big Data’s Public Health Promise – Or Threat to Civil Liberties?
Wired
The pandemic has spurred interest in big data to track the spread of the fast-moving pathogen and to plan disease prevention efforts. But the urgent need to contain the outbreak shouldn’t cloud thinking about big data’s potential to do more harm than good.
Companies and governments worldwide are tapping the location data of millions of internet and mobile phone users for clues about how the virus spreads and whether social distancing measures are working. Unlike surveillance measures that track the movements of particular individuals, these efforts analyze large data sets to uncover patterns in people’s movements and behavior over the course of the pandemic.
In the US, mobile advertising companies are reportedly working with the Centers for Disease Control and Prevention and state and local governments to analyze how people’s movements have changed and where they are still congregating based on cell phone location data. Google has launched Community Mobility Reports based on the location data of Google Maps users to provide insights into how Covid-19 measures such as social distancing are working. Under its revamped Disease Prevention Maps initiative, Facebook is providing its research partners with data on population movement and friendship patterns to predict disease spread and compliance with public health measures.
As attractive as these projects might seem, companies and governments should ask whether they will deliver the public health benefits they promise, or misdirect government efforts in ways that endanger the rights of the poorest and most vulnerable people.
The 2014–2016 Ebola epidemic in West Africa offers a cautionary tale on big data. During the outbreak, Harvard-based computational epidemiologists obtained the call records of mobile phone users across the region in a bid to predict the spread of the virus and help public health authorities better target disease-prevention measures. However, this analysis may have been based on the wrong assumption that people’s movements were the primary vector of Ebola transmission, when in fact the virus was primarily spread through caring for the sick and during funeral preparations.
Research on cell phone usage patterns also casts doubt on the theory that call detail records are reliable for tracking people’s movements, even at an aggregate level. In West Africa, many cell phone users own multiple phones to manage various professional, social, and personal roles, and they may share them widely with family, friends, or even entire neighborhood.
These miscalculations illuminate a broader problem: Big data can obscure or misrepresent complex social realities, with dangerous consequences for both public health and human rights.
In the US, lower social media and cell phone penetration rates among older people and rural populations may distort efforts to divine people’s movements from mobile data, and end up providing a flawed basis for understanding how disease spreads within communities and the measures required to slow transmission. Environmental factors that degrade the accuracy of location data, such as the presence of high-rise buildings, could further undermine this analysis.
Mobility patterns captured by such data also reveal little about why people are moving despite shelter-in-place orders and other restrictions on movement. While it may be tempting to tighten the enforcement of social-distancing measures in low-income areas with stubbornly high levels of traffic, this might disproportionately penalize those looking for shelter, traveling to food banks, or seeking reprieve from dangerously cramped quarters.
https://www.wired.com/story/big-data-could-undermine-the-covid-19-response/
Food & Farmworker Crises Intertwined
CalMatters
Last week, Isabel Solorio turned away five families from the Lanare food bank serving farmworkers in rural Fresno County.
There just wasn’t enough food to feed the 215 families who showed up. It was twice the number of families that needed food a week earlier, she said.
But that same week, on a farm just 20 minutes away, at least two fields of fresh lettuce were disced back into the ground, left to rot as the restaurants that buy the produce struggle to stay afloat. Solorio’s husband works on that farm and suggested that the farm donate the lettuce to a food bank.
“But who is going to pick it?” she asked.
The coronavirus has forced the entire world into disarray, but the food industry in particular. With restaurants closing or reshaping business models around slimmed-down take-out menus, the dominoes are starting to fall for the farmers who suddenly have nowhere to take their food.
And, at the same time, as more people find themselves out of work, food banks are teeming with hungry families. But getting food from fields to the hungry families that need it isn’t as simple as it sounds, industry experts say.
Farmers disc lettuce, dump milk
Much of the food grown for restaurants, which constitutes about half the market for produce, is nearing the end of its perishable life cycle. Researchers expect to see a $688.7 million decline in sales for farmers from March to May 2020.
Lettuce growers have been among those hardest hit in Fresno County as the economy grinds to a near halt.
Longtime farmer John Harris, of Harris Farms, was growing 204 acres of lettuce for Salinas-based Taylor Farms, one of the giants in the industry. But that all changed when the restaurants they supply turned off their stoves. Last week, Harris’ workers plowed under nearly 13 acres of fresh lettuce that had nowhere else to go.
“It is a very unfortunate situation, but the demand all of a sudden was just falling apart,” Harris said.
For many farmers, it’s more cost-effective to let crops rot in the fields. They can’t afford to harvest it if there is no market for it, and food banks can’t cover the full cost of labor.
“The food system was built to make sure every single Outback Steakhouse and Chili’s has access to every single food item,” said Cannon Michael, president of Bowles Farming Company in Los Banos. “To have a system like that means that if the demand collapses, there’s a ton of waste that happens.”
Milk also poses a serious challenge.
Dairy farmers in the San Joaquin Valley, the center of the state’s dairy industry, were forced to dump thousands of gallons of raw milk in recent weeks because restaurants, schools and exports have all but dried up.
“We’re producing 10% more than we can process,” said Anja Raudabaugh, CEO of Western United Dairies. “That’s a lot of milk.”
Restaurant dairy processors can’t simply redirect their cheese and butter to retail because they cut huge slabs the grocery store can’t take. And in part due to restrictions on buying dairy at major grocery stores, the industry isn’t seeing enough demand to stay afloat.
Why not donate all that unused milk to food banks? Federal regulations require that milk be processed first, and that costs money dairy farmers don’t have right now. Raudabaugh said Western United Dairies has nonetheless been working hard to donate excess to food banks, which should start next week.
The state has now directed farmers to stop dumping and instead either dry the cows, so they don’t produce more dairy, or beef them, according to Raudabaugh. But both options pose tremendous costs to farmers.
And by producing more meat, “we are creating a reciprocal crisis on the beef market,” she said.
Food loss and scarcity have long been a problem in the central San Joaquin Valley, a region that leads the nation in agricultural production and hungry families. About 13.5% of the valley, or 352,000 people, struggles to afford the food they need, according to Feeding America.
The coronavirus has intensified the issue.
Pre-pandemic, the Central California Food Bank served around 280,000 families per month. Anecdotally, agencies have reported anywhere between a 40% to 100% increase in clients accessing services, according to Chief Operations Officer Natalie Caples.
Typically, they stock plenty of canned food, rice, pasta and beans to give needy families, but struggle to find fresh fruits and vegetables. But the coronavirus has also turned the food bank world upside down.
The state Department of Food and Agriculture has been urging farmers to donate their surplus produce, with success. Last week, they moved 100 truckloads of food on top of the 150 loads they typically ship to food banks across the state, according to Steve Linkhart, director of Farm to Family at the California Association of Food Banks.
“On April 1, we booked 4 million pounds in one day,” he said. “I thought my team was making an April’s Fools Day joke.”
For the first time in 10 years, food banks are getting avocados, Linkhart reported. He had just gotten off the phone with a dairy that donated ten pallets of high-end cheese.
Now, the Central California Food Bank is overflowing with lettuce, berries, oranges and melons, according to Jaclyn Pack, food acquisitions manager, but rice and beans are running low. Wait times on orders have doubled to as long as eight weeks.
Pack said the food bank would have to ration their funding, as they could run out of money to purchase those pantry staples.
The food bank has also lost almost 70% of its volunteers while communities stay home, making it even more challenging to move produce out of their warehouses and onto dinner tables before it goes bad. Most of their volunteers were seniors, she explained, who experts have said are more at risk for severe complications to COVID-19.
“We need people to donate money, food and we need volunteers to show up and give their time,” Pack said.
The state food bank is lending a hand. The Central California Food Bank expects to receive 2,200 boxes of pantry items next week, up from 1,000 this week, to distribute at locations struggling to find volunteers. The boxes are pre-packed and require less work on the ground.
The state has also offered to deploy the National Guard, which has been active in Bay Area food banks, but plans haven’t been finalized.
National Public Radio
California is bracing for what could be a crisis within a crisis — that’s if a wildfire, flood or other emergency takes place during the coronavirus pandemic.
CapRadio listeners are wondering about how this could impact people that live in wildfire zones. Gillian Biedler, from Sacramento, asked CapRadio: “We are supposed to have a fierce and early fire season this year. How can we contain the virus while evacuating people?”
Wildfires and housing the people who are evacuated from them isn’t new in California. But what is new is this double whammy of a global pandemic and potential fires or other disasters, said Kim Zagaris, with the California Office of Emergency Services.
Snowpack statewide is measuring at about 63 percent of normal for this time of year. Even with late season storms keeping the Sierra Nevada moist California could see fires early as grasses dry this spring.
“It’s kind of hard to predict what the fire season is going to look like,” said Leroy Westerling, a UC Merced professor and expert on management issues and climate change. “It’s gonna be a combination of how hot it gets and whether or not we get any more storms.”
One agency paying attention to all these ingredients that determine how intense fire season could be is the California Department of Forestry and Fire Protection, or CalFire. The agency is already taking extra precautions with COVID-19 at play. Crews are using masks, sanitizing equipment often and limiting the number of people per vehicle.
But Scott McLean, CalFire’s deputy communications chief, says there’s still uncertainty because “we’re still a few months away for the potential of any major fires to break out. So, we really don’t know where this virus is going to be at as far as spread at that time either.”
When a fire ignites and forces evacuations, McLean says crews will follow Center for Disease Control and Prevention guidelines, like washing hands, using sanitizer and maintaining a six-foot distance from others. He says that also goes for the public as they evacuate.
There have been over 700 wildfires in 2020 so far in California, but they’ve only burned around 1,200 acres. That could change fast if a major wildfire begins.
But when a wildfire does rage, groups like the American Red Cross are already preparing how to set-up evacuation centers.
“We are very concerned that people will hesitate to evacuate because they’re worried about the pandemic,” said Trevor Riggen, senior vice president of disaster cycle services for the group.
If there is a massive evacuation, Riggen says evacuees will need to go through temperature and symptom checks while adhering to CDC guidelines. As a last resort, Riggen says the group would temporarily house people in shelters like gyms, but spread six feet apart. Also, the group has stopped taking bulk donations because of contamination risk.
“The time and resources it would take to clean each individual item could be overwhelming,” said Riggen. “Our first priority is always going to be the safety of the people in our care, whether it be clients or volunteers and so we’re trying to minimize as much of that as possible.”
Volatile Petroleum Market Rides “Space Mountain Oil Prices”
Wall Street Journal excerpt, no link
No one expected 2020 would unleash a world-wide oil-production cut led by the U.S., Saudi Arabia and Russia. But since the new coronavirus hit, the world’s thirst for oil has vanished, creating an unprecedented crisis for one of the planet’s most powerful industries.
With billions of people in lockdown to avoid the virus, crude-oil demand has collapsed as people stop driving and airplanes are grounded.
There is too much gasoline and jet fuel on the market, so refineries that turn crude into fuel are slowing oil purchases. Oil-storage facilities from Asia to Africa and the American Southwest are filling up. Producers have begun to shut in wells whose oil has nowhere to go.
The result is a breakdown of parts of the supply chain that delivers one of the world’s most important commodities. “The global oil industry is experiencing a shock like no other in its history,” said Fatih Birol, executive director of the International Energy Agency.
Over the weekend, a coalition of nearly two dozen of the world’s largest oil-producing countries agreed to withhold 9.7 million barrels a day from markets. It is unclear if this level of coordinated cuts is enough to erase the glut. Mohammed Barkindo, secretary-general of the Organization of the Petroleum Exporting Countries, has described the fundamentals in the oil market as “horrifying.”
Global demand for crude is normally around 100 million barrels a day. Estimates of the decline vary widely and change daily, but most put current demand at 65 million to 80 million barrels a day. In volume and percentage, the fall exceeds the collapse of 1979 to 1983. It occurred over four weeks, not four years.
“Since humans started using oil, we have never seen anything like this,” said Saad Rahim, chief economist at Trafigura Group Pte. Ltd., a Singapore commodity-trading company that estimates demand at 65 million to 70 million barrels a day. “There is no guide we are following. This is uncharted.”
For weeks, the industry has been producing more than $500 million a day of crude no one wants to buy. The U.S. benchmark oil price, West Texas Intermediate, fell to just above $20, an 18-year low, at the end of March. It closed Monday at $22.41, down 63% from the year’s start.
Prices in some other hubs are substantially lower. In western Canada, oil closed Monday at $3.16 a barrel, down 84% from a month earlier.
“If you buy a cargo today, as a trader, you are not sure you will ever find a buyer for it because everyone has too much oil,” said Torbjörn Törnqvist, chief executive of Gunvor Group Ltd., which trades energy products in more than 100 countries. He worries that, in a couple of weeks, global energy markets will become “dysfunctional.”
Behind it all is the decision by governments to order or urge citizens to stay home. Normally, about 60% of the world’s oil goes toward making transportation fuels. Now, traffic counters and satellite images show a world immobilized.
Outside Milan, the normally jostling crowds at the Carosello mall were replaced by a smattering of shoppers, according to Paris-based satellite-data company Kayrros. In late March, vehicle crossings at San Francisco’s Golden Gate Bridge fell 71% from a year earlier, a bridge spokeswoman said. The global aviation industry’s number of seats for sale as of April 13 was a third that in January, according to OAG, an aviation industry data firm.
Oil producers have been slow to react. It can be difficult and expensive to turn off an oil field and turn it back on. No one wants to be first to cut, and cede market share, so a global game of chicken is playing out.
In South Africa, the giant Saldanha Bay oil-storage terminal is full, said Trafigura’s Mr. Rahim. The government agency operating the tank farm didn’t respond to inquiries.
Earlier this year, Kevin Foxx’s four cylindrical tanks capable of holding a total 700,000 barrels of crude in the Cushing, Okla., area—the main pipeline-and-trading hub in North America—were less than half full. Now, the chief executive of Barcas Pipeline Ventures LLC said he expects them to be filled by this month’s end.
When Cushing fills, pipelines from the Permian Basin and Gulf Coast will have to order shippers to stop adding crude.
The system, Mr. Foxx said, will reach its limit. “Nothing is available,” he said. “If there’s nowhere to go in Cushing, if the pipelines are full, now we’re backed up to the producer.”
Colonial Pipeline Co., whose 5,500-mile conduit carries gasoline from Gulf Coast refineries into the Washington, D.C., and New York metro areas, issued a stern reminder in mid-March: Shippers couldn’t put gasoline into the nation’s largest fuel-conveyance system if they didn’t have contracted buyers. Operators like Colonial don’t want their pipelines to become parking lots for fuel.
While the pandemic has battered many industries, repercussions are likely to be long-lasting for global oil. Demand had plummeted during an existing oversupply, exacerbated by a price war between Russia and Saudi Arabia that broke out as the coronavirus was taking hold. Last month, Saudi Arabia increased production, saying it would raise output more than 2.5 million barrels a day to 12.3 million, before reversing course earlier this month.
The only time the combination of falling demand and a supply increase was even close to the current situation was in the 1930s with the discovery of the giant East Texas oil fields during the Great Depression. Crude fell to 24 cents a barrel in August 1931, a little more than $4 adjusted for inflation; demand declined gradually over several years.
In response, the Railroad Commission of Texas started regulating output, beginning decades of government interventions in global oil markets. Texas hasn’t curtailed oil production for more than a half-century, but the state agency served as the model for OPEC. Texas regulators say they are debating whether to cut state output again.
Optimists such as energy economist Philip Verleger believe the industry will be able to regain its footing once virus-related lockdowns are lifted and people begin to move again.
“The current downturn is harsh, but probably not the worst ever, especially if the global economy rebounds as many expect,” he said. Still, he believes one has to go back to the 1930s to find anything comparable. “We haven’t seen a demand shock like this in 90 years,” he said, adding that the 2020 contraction has been much quicker than during the Great Depression.
Prices remain below what most companies need to operate existing wells without losing money. In a recent Federal Reserve Bank of Dallas survey, oil operators estimated it cost them $26 to $32 to produce a barrel from an existing well in the Permian Basin of West Texas and southeastern New Mexico.
At $20, operators across the basin would lose a combined $200 million a week, an analysis of data that producers reported to the Dallas Fed suggests.
Whiting Petroleum Corp. filed for bankruptcy protection this month, the first major producer to fall this crisis. Energy analytics firm Rystad Energy said that at $30 oil, more than 70 U.S. oil-and-gas producers could have trouble making interest payments on their debt this year; at $20 crude, it would increase to about 140 companies.
“It’s a Grand Canyon of a supply-demand void,” said Matt Gallagher, chief executive of Parsley Energy Inc., a major Permian oil producer. Parsley, along with many other Permian producers, is shutting down uneconomic wells and has cut its planned capital expenditures this year to conserve cash. Mr. Gallagher is urging the U.S. government to impose a two-to-three-month embargo on importing some overseas crude, which would effectively reverse several decades of U.S. policy encouraging the free flow of global oil.
Mr. Gallagher has reason to worry: As part of its battle to capture market share, Saudi Arabia has a flotilla of cut-rate crude en route to the U.S. and Europe. The world’s largest oil exporter, it went on an early-March ship-hiring spree in Singapore, where many giant tankers called Very Large Crude Carriers, or VLCCs, were unchartered amid collapsing demand. Within days, it had leased 24 supertankers, said Anoop Singh, head of tanker research in Asia at Braemar ACM Shipbroking Ltd. “They wanted it first,” he said, “they wanted it quick.”
Several VLCCs are now sailing toward Houston and could further inundate the U.S. market.
In a world of excess supply, controlling storage is power, and Saudi Arabia has become king of it. Oil stored inside the country rose by 8 million barrels to 79 million in 2½ weeks before March 26, according to satellite firm Kayrros.
The Saudis booked remaining capacity in an Egyptian storage facility, according to Saudi officials and traders. Still, demand fell faster than it could lease storage. In late March, as India entered lockdown, Indian Oil Corp., the country’s largest oil refiner, cut its output one-third. A Saudi energy-ministry spokesman didn’t return requests for comment.
If Saudi Arabia isn’t able or willing to return to its role as the globe’s central bank of oil—cutting output when the market is oversupplied, adding when undersupplied—then an untethered and volatile market will dictate prices.
“We are just going to have to buckle up,” said Bob McNally, a former energy adviser to President George W. Bush and author of “Crude Volatility,” a study of oil’s boom-and-bust cycles, “and learn to run the world with Space Mountain oil price cycles.”