Here’s a bold prediction.
The world is not coming to an end in 2035.
Gas stations aren’t going to plummet to their death.
When they do it will be a slow economic death as most today are being built on parcels of high future development value.
It is why companies are all moving toward the groundbreaking of new gas stations in Ceres.
The year 2035 is when Gov. Gavin Newsom put the world on notice no new vehicles can be sold in California unless they are zero emission.
Greenhouse gas activists have since been questioning the wisdom of California cities — including Ceres — of approving additional gas stations or even allowing existing locations to add more pumps.
They have succeeded in getting some local bans on new gas stations passed in cities such as Petaluma.
The death of gas stations has been greatly exaggerated.
Alright, so they will eventually go the way of most blacksmiths and livery stables.
But the timeline they will go quickly as the dinosaurs did — an ironic analogy if there ever was one — is wishful thinking.
There were 18.5 million registered vehicles in California in 2021. Of those 563,070 were “light-duty” electric vehicles.
Original owners are now keeping their vehicles an average of 12 years. Then they are resold and driven for more years.
The odds are there will easily be upwards of 5 million vehicles zipping around California that are fossil fueled in the year 2045 if everything goes according to plan.
That’s more than three times the number of registered vehicles last year in Colorado.
It will still represent a sizeable market.
Then there are the economic realities of gas stations and commercial lending to consider. Gas station retailers — as opposed to oil companies — do not get rich from each gallon of gas they sell. The margin is a penny and sometimes less on each gallon sold. That is determined after factoring in the wholesale price they pay for gas and a little detail called overhead — employees and related payroll costs, business loans, power bills, property taxes, building maintenance and upkeep plus more. Gas stations today make their money from selling the motoring public other things from coffee, soda, and beer to candy and chips that have higher profit margins.
As far as commercial loans go, they are almost all significantly shorter than the typical 30-year house mortgage. Like a house loan with a locked in rate, the monthly payment doesn’t change. Take that reality against the return of higher inflation and loans to construct and open new gas stations the percentage of gross retail dollars to pay back the loans shrinks with each passing year.
The bottom line is financing new gas stations for those making the loans isn’t a bigger risk with the 2035 deadline California has imposed to stop selling new vehicles in the state that are powered by fossil fuels.
There is also the detail that most gas stations being built in California today are on prime real estate on corners of heavily traveled arterials.
That means the real estate they are sitting on has a high chance of still being prime — and significantly more valuable even in constant 2022 dollars — as the years unfold. That would make the economics of removing gas tanks and such pencil out for most, if not all, instances.
In Ceres, those questioning the sanity of more gas stations being built have asked at Planning Commission meetings why stations aren’t including EV charging stations. It comes down to economics. You can fill a gas-powered vehicle in minutes. With today’s technology it takes at least 30 minutes to fully charge an EV.
The amount of land needed for one gasoline pump means on one side you can easily fuel 20 or more vehicles in an hour. That same amount if land would at best fully charge two EVs in the same hour.
Given the price of land in penciling out projects whether they are housing or commercial, it doesn’t make sense.
It is why the state of California requires new commercial centers to pre-wire “X” amount of parking spaces for future charging stations.
The technology is likely not to get to a point where a vehicle can be fully charged in five minutes. That means consumers parking their cars to shop will be plugging in and paying for partial charging in order not to run out of juice.
It is why EV stations popping up today independent of new construction are doing so in strategically located underused parking lots such as the charging station planned for the Ceres Community Center.
The exceptions, of course, are Tesla charging stations in the middle of nowhere such as in Kettleman City off of Interstate 5. Without Tesla making those investments given they don’t pencil out for anyone else to do them, it would diminish the appeal of buying their EVs.
Now for the political and economic reality.
The drop-dead deadline for phasing out fossil fuel powered lawn equipment was pushed back a number of years because the market and technology couldn’t move fast enough for the state’s edict.
A sign that is likely to happen to vehicles surfaced this month.
Newsom is relaxing the mandate that electricity used in California can’t be generated by fossil fuels.
It reflects the economic reality that the power market isn’t there yet and may not be for years even with incentives.
It also would be bad optics if one is pondering a run for the White House and 2 million or so homes a day suffer blackouts this summer as the state’s own experts warned would happen under current green rules.
It is why Newsom a few months ago floated the idea of extending the operation of PG&E’s Diablo Canyon nuclear power plant.
It doesn’t burn fossil fuels but it is right up there on the climate activist hit list.
None of this is to say the move away from fossil fuels isn’t needed and shouldn’t happen.
It’s just that people who think just because the government issued a decree that fossil fuels will disappear overnight or even be weaned off in the manner the state hopes to start doing by 2035 are only looking at just part of the overall picture.
This column is the opinion of Dennis Wyatt, and does not necessarily represent the opinions of The Courier or 209 Multimedia.
