Martha Logan predicts that E & B’s proposed oil project will generate millions of dollars for both the City of Hermosa Beach and the Hermosa Beach School District (ER Letters December 18, 2014). The reality is that E & B’s project will provide very little if any money for the city or the schools. E & B’s own financial projections state, “In sum, when calculating the royalties that the City and the School District may receive, we assume that the recovered oil will sell for an average price of $105/barrel.” As of December 18, the price of crude oil had fallen to under $56 per barrel, and it’s widely predicted to fall below $50, perhaps as low as $40 by late February 2015. The decline is even more significant than it appears at first blush as E & B’s costs must come out of money it makes from the sale of the oil. At current prices, E & B undoubtedly would lose money on every barrel it produces. Without profits, E&B would have no money for the city or the school district.
R. Douglas Collins
WHAT CAN WE DO IN HERMOSA BEACH?
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