Slide rule
Dear ER:
E&B projects 35.6 Million barrels of Oil can be recovered in Hermosa Beach. The City’s Cost Benefit Analysis (CBA) used an Oil Price of $95 per barrel. The total value of E & B’s oil volume claim was $3.4 billion dollars.
Union 76 posted on January 1 that our local oil price (called Midway-Sunset) is only $38.75 per barrel. The total oil value for E & B’s Oil Volume is $1.4 Billion today. This is a drop of over $2 billion in just a few months.
The CBA did not agree with E&B’s volume and explained in public session to the City Council that the CBA Low Volume of 10.9 million barrels had a probability of 90 percent. This volume is only 30 percent of E & B’s claims.
Based on the 90 percent probability volume, the gross oil value dropped from $1 billion down to $422 Million.
Hermosa Beach’s spendable slice of the pie is 4.66 percent. Our unrestricted share, which must be used to build a new city yard has just shrunk from $48.3 Million to $19.7 Million. The City could lose millions of dollars spending $30 million to $60 million in drilling-related expenses.
Visit HbOilFacts.com for more information.
Tom Morley
Redondo Beach
Looking north
Dear ER:
I find it incredible that the leaders of Manhattan Beach would consider muddying the water by taking a formal position on a matter that is before the voters of Hermosa Beach. This is a precedent setting action that could have far reaching consequences. Council comments about, ‘not getting any benefits, while taking all the risks’ are not appropriate or professional.
Like any major project, risks are never zero and must be weighed against the benefits. Hermosa Beach was at risk of losing a decade long legal battle with Macpherson Oil, which may have resulted in bankruptcy.
As far as our risk affecting Manhattan Beach, that is way too speculative, considering that just to its north lies El Segundo, a fine city and a good neighbor. Since 1911, they’ve been refining oil at their facility. Today they offload 260,000 barrels of crude oil every day, using over 1,100 miles of pipeline. The pipeline proposed in Hermosa is a mere .39 mile.
Perhaps, most of the oil in those tankers comes from countries not friendly to us.
Gary W. Brown
Hermosa Beach
Looking south
Dear ER:
Unfortunately, being a resident of Manhattan Beach I cannot vote in the coming Measure O election. However my late husband Jack Belasco and I fought hard to keep oil out of Hermosa some years back and here we go again. We are led to believe all this drilling will be safe. I bet BP also said the oil drilling they did off of Louisiana would be safe. The South Bay is all connected, folks. What goes on in Hermosa will affect Manhattan Beach, Redondo and all the way to Malibu.
Keep Hermosa Hermosa. Vote No on March 3.
Pat Woolley-Belasco
Manhattan Beach
Patrol pay
Dear ER:
A community oriented policing (COPS) approach in Hermosa Beach, including officers on foot and bike to patrol the Pier and The Strand fits Hermosa. We are more Mayberry than Gotham and I’d like to see our officers able to approach their jobs with less Batman and more Andy Griffith.
Unfortunately, our city lives paycheck-to-paycheck and lacks funding to dedicate foot or bike patrols where appropriate. Instead, every officer on duty has to cover the full breadth of Hermosa in minutes.
As a journalist, I covered the USDOJ COPS program and was struck by the positive impact of approachable policing. It is not the officers’ fault that the primary experience with local police is punitive. They are budget-stuck in their imposing SUVs.
The Hermosa Beach oil recovery project on a postage stamp industrial lot could provide needed revenue, allowing the city to think more strategically about public safety in Hermosa. Tidelands Funds could pay for dedicated Strand/Pier patrols, freeing up dollars to increase public safety coverage for the rest of town. It is true that construction presents a temporary inconvenience to all residents. Still, the long term benefits of a fully-funded police department are significant and the long-term risks from the project minimal.
Thank you Officer Ramirez and the Hermosa Beach Police Officers Association for promoting fiscally sound city policy by saying, “…voting yes on Measure O is in the best interest of the citizens of Hermosa Beach and the city’s financial future.”
Raymond Dussault
Hermosa Beach
And patrol pay
Dear ER:
Hermosa Beach Police Department Patrol Sergeant Jaime Ramirez’s support of Measure O is grossly misguided by blind faith that the greedy oil men who have infiltrated our beautiful beach community could shower our police department with untold riches. How does Officer Ramirez think his salary isn’t competitive when he made over $283K, including benefits, in 2013? It’s $24K more than his counterpart in Manhattan Beach and $45K more than his counterpart in Redondo Beach for the same year [Source: TransparentCalifornia.com
Once again, we see the carefully placed verb “could” show up in E & B’s deceptive advertising. If their project was so good for our city, it would sell itself and they wouldn’t need slick PR firms who specialize in damage control.
We will work together as a community to defeat this asinine project. We will be at the polls in record numbers and will uphold our ban on oil drilling. Then, finally, we will move forward as a community with limitless potential…on our own terms.
Please vote responsibly.No on O
Ron Siegel
Oil econ 101
Dear ER:
While no one can predict the future price of oil, one thing we can predict with certainty is that today’s oil prices will change. Betting on oil prices to stay down is as bad a bet as counting on the stock market never rising and as bad as betting that interest rates won’t rise either. Opponents of Hermosa Beach Measure O argue that even if you believe the project is safe, the recent drop in oil prices is proof the City will not gain much. Hard facts explain why they are mistaken. Respected business writer James Surowiecki warns in a December 2, 2014 Yorker Magazine article that commodities are more volatile than other asset só the price of cop er fluctuates a lot more than that of a television set and oil has historically been more volatile than most other commodities. A 2007 study found that in the U.S. it was more volatile than 95 percent of other products. In other words, expect oil prices to continue going up and down. Even if prices stay low, Hermosa Beach will receive tens of millions of dollars. That ís a lot of money and huge shot in the arm for our city, our schools and property owners. It ís the best hedge we have against tax increases and cuts in city services. For these reasons, today’s price of oil has no impact on my view that Measure O is a good deal for our community. Let’s not throw away this great opportunity.
Jim Sullivan
Hermosa Beach
Debatably undebatable
Dear ER:
Notwithstanding disputed contentions about health and environmental impacts and projected economic benefits of Hermosa Beach Measure O, there are some aspects that are not subject to debate.
Hermosa Beach is one of the most densely populated cities in the state of California (17th out of 1,517) and the proposed oil project site is currently zoned for light industrial uses, compatible with adjacent residential neighborhoods. Oil drilling is defined as a heavy industry business with significant impacts (including noise, traffic and pollution) on the environment and surrounding locale.
Voter approval of Measure O will not relieve the City of the need to repay the $17.5 million loan to E & B. The obligation is only extinguished if and when the City issues a drilling permit. Even then, E & B has sole discretion to terminate the project if preliminary test wells indicate a lack of commercial production. The public benefits offered by E & B will only be paid if a drill permit is issued and, for the most part, are advances subject to offsets against future royalties received by the City if the project is economically feasible.
Experts agree that the amount of oil recoverable from Hermosa (most of which will come from its tidelands) can’t be determined with any certainty. All royalties from the tidelands are divided between a Special Tidelands Trust Fund (62.5 percent) and the City’s General Fund (37.5 percent). Trust Fund royalties can only be used for projects associated with maritime commerce (which do not include beach or recreational purposes). Approximately one-half of the General Fund royalties will be paid to Macpherson Oil Company pursuant to its grant deed. The City will incur expenses associated with the project (including relocation of the city yard and loss of storage facility revenue) totaling at least $16 million.
Upon reviewing the facts, it’s clear that no one can know with any degree of certainty whether the project will be dangerous or whether it will provide a financial benefit to the City. We do know what’s at stake if the 80 year ban on oil drilling is lifted. While everyone puts a different value on what it means to live in Hermosa Beach, I hope voters consider all the ramifications of how this project will affect our entire community and then decide if it’s really worth it.
Lael Stabler
Hermosa Beach
It’s all about timing
Dear ER:
It’s easy for former Mayor J.R. Reviczky to claim that when he served on the City Council “that the city never faced bankruptcy while I was on the City Council” (ER Letters Jan. 8, 2015). That’s because the potential penalty phase of the trial and the City’s mock juries that returned huge verdicts of $285 million happened after he was long gone.
In 2011, the Los Angeles Superior court issued “several rulings to shape the Macpherson Oil Company breach-of-contract which, officials say, could bankrupt Hermosa Beach” (Easy Reader). Faced with a judgement that most certainly would have bankrupted our city, E & B offered to broker a deal to end the litigation and threat of bankruptcy. E & B negotiated a deal that took Macpherson out of the mix, loaned Hermosa our share of the settlement payment and received the lease for oil recovery in return. And E&B agreed to drop the penalty phase of the trial for good, lifting the threat that if the oil measure fails, the City would not be faced with hundreds of millions in judgment.
So yes, E & B did a good thing for the City. It can’t be so hard for opponents of Measure O to admit that. E & B ended the litigation that was costing our little city so much time and money. You don’t have to admit they saved us, but you have to admit they did a very good thing for Hermosa Beach.
Martha Logan
Hermosa Beach
Dear ER:
Anyone who thinks putting 30 oil wells in a relatively small space will have no negative impact needs to visit the site and think. It is not for nothing that the League of Women Voters of the Beach Cities has taken a position against drilling based on League environmental positions. Let’s look beyond the immediate financial gain and think about what we want long-term for our city.
Ronald and Joan Arias
Hermosa Beach
