By John Seiler

The California fantasy is that energy magically will flow in abundance from windmills and solar panels, even when there’s no wind and at night.

The reality is that it’s old-fashioned “fossil” fuels that will continue to generate almost all our power for the next century. New discoveries in America and around the world are bringing online an abundance of new oil and natural gas supplies.

When they can, other American states are taking advantage of that, enjoying massive growth in jobs and tax receipts. North Dakota has been in the news because of its lucrative Bakken Formation.

But the Wall Street Journal notes today that Texas quietly has doubled energy production since 2005, maintaining its position as the top state oil producer. Meanwhile, California has stagnated, dropping to third place behind Texas, North Dakota and Alaska. Here’s a great chart:

Wall Street writes:

“More than 400,000 Texans are employed by the oil and gas industry (almost 10 times more than in California) and Mr. Smitherman says the average salary is $100,000 a year. The industry generates about $80 billion a year in economic activity, which exceeds the annual output of all goods and services in 13 individual states.”

And remember that living is a lot cheaper in Texas, and there’s no state income tax. Does California have better weather? Only along the coastal areas. But the new job growth, assuming our state ever gets its act together and starts drilling, would be in the inland areas that have crummy weather — and currently unemployment rates in some areas above 30 percent.

“More than 400,000 Texans are employed by the oil and gas industry (almost 10 times more than in California) and Mr. Smitherman says the average salary is $100,000 a year. The industry generates about $80 billion a year in economic activity, which exceeds the annual output of all goods and services in 13 individual states….

“A large part of the explanation for the Texas boom and the California bust is the political culture. Despite their cars, California voters have elected politicians who consider fossil fuels to be “dirty energy.'”

Right now, California state revenues unexpectedly are surging. But that won’t last once the Legislature gets to splurging.

Eventually, the California Teachers Association and other public-worker unions will give the marching orders: “We don’t care about the environment. We need the tax money for our pensions. Drill! Drill! Drill!”

By Katy Grimes

California could become the next oil boom state. Will Democratic Gov. Jerry Brown and a Democratic supermajority in the state Legislature seize the day — and the tax revenue that would come with drilling and fracking? Or will excessive environmental concerns block the development, the jobs and the revenues?

I’ve been saying for months now, if Gov. Brown doesn’t want to go down as the leader responsible for driving the silver stake into the heart of the state of California, he has one option: he can always turn to oil fracking and save the state. Just the mere mention of this dramatic policy change would impact financial markets.

California oil = jobs + tax revenues

California sits on two-thirds of America’s shale oil reserves.  The Monterey Shale Formation is four times the size of the Bakken Shale Reserve in North Dakota, which is now the largest oil producer in the country behind Texas.

Along the Western side of the San Joaquin Valley in the middle of the state, the Monterey Shale Formation encompasses several hundred miles, where water has dried up and unemployment is the highest in the state.

North Dakota has a monthly oil output of nearly 20 million barrels, and accounts for 11 percent of U.S. oil production. But California quickly could produce 15 million barrels a month more using today’s technology. Many experts estimate as much as 400 billion barrels of oil are in the Monterey Shale Formation.

The oil boom in North Dakota spurred the state’s $3.8 billion surplus and is responsible for the declining unemployment rate, currently at 3.2 percent, the lowest in the nation.

California’s unemployment still hovers at 9.8 percent, and is tied for the worst rate in the nation with Nevada. “Over the last 20 years, 3.6 million more Americans have moved out of California than have moved in, and 130,000 more Americans have moved from Hawaii than to it,” reported “Rich States, Poor States,” authored by Arthur Laffer, Stephen Moore and Jonathan Williams.

This is what’s known as a teaching moment.

California has implemented no real reform policies in recent years to promote jobs. Currently, Brown has not seemed to be interested in making any of these pro-growth economic moves as he pushes high-speed rail and the implementation of AB 32’s radical climate change policies.

“However, if Brown merely adopted the tax reform policies of Kansas, California would see immediate improvement in the business sector, job growth and unemployment rate,” I wrote recently.

“Kansas flattened the income tax, dropped three tax brackets to two, lowered the income tax rate from 6.45 percent to 4.9 percent, and eliminated personal income tax for small business owners,” explains “Rich States, Poor States.”

In lieu of the pro-growth policies in Kansas, oil revenues would be fruitful.

Oil jobs

California’s financial house is a mess. But the Golden State is sitting on a lot more oil and jobs than the state has seen in decades.

“Gov. Jerry Brown yields to no one in his enthusiasm for green energy, but he knows black gold when he sees it,” Investors Business Daily recently wrote. “Witness his remarks last Wednesday at an event announcing three new renewable energy projects: ‘We want to get the greenhouse gas emissions down, but we also want to keep the economy going. That’s the balance that’s required.’”

A recent study found that exploiting Monterey shale could generate up to 2.8 million new jobs and add 14 percent to the state’s GDP by 2020, near the peak of production.

The University of Southern California researchers and the Communications Institute, a Los Angeles-based think tank, found those new jobs would include many outside the actual shale formation. But most of the new employment would be near the drilling — in the counties that have some of the highest unemployment in the state.

High-speed rail false jobs

Brown knows where jobs are needed the most, and high-speed rail won’t provide these. Oil can and will do far more for the Central Valley and state than Brown’s train, where the only jobs are going to well-connected union contractors and public relations firms.

If the California Environmental Quality Act can be exempted to build sports stadiums, California’s politicians should use their power for good, and tell the environmentalists to sit back and enjoy the economic oil boom.

By Chriss Street

This is a crucial development for California, which recently slipped to fourth among the 50 states in oil production. Texas remains first, followed by North Dakota and its lucrative new Bakken formation, then Alaska in third place.

The United States is on track to achieve independence from imported Middle East oil within the next seven years due to the boom in domestic and North American energy development.  Consequently, the United States would have eventually ratcheted down our huge military presence in the Middle East defending oil imports.

But just like television scenes of the attack on the United States embassy during the 1968 TET Offensive destroyed public support for the Vietnam War, last week’s television images of protests against American embassies has devastated public support for a continuing military presence in the Middle East.  The American public will soon demand a crash program to exploit domestic energy resources to facilitate a Middle East withdrawal.

American Exceptionalism’s military and economic triumphs in the first half of the 20th Century were directly attributable to secure domestic access to immense amounts of oil. President Coolidge wrote in 1924 after WW I, “the supremacy of nations may be determined by the possession of available petroleum and its products.”

World War II

During World War II, the United States’ domestic gasoline output for the military grew 18 times and the production of aviation fuel jumped by 80 times.  Half the total weight of supplies shipped overseas to U.S. allies during the war consisted of petroleum products.

Following defeat of Germany’s Afrika Korps in 1943, Middle East oil resources were rapidly commercialized.  After the war, massive new volumes of cheap Middle East oil froze the world price of oil at between $2.77 and $3.60 a barrel from 1948 to 1972.  During that period, American domestic production withered and the bulk of U.S. oil refining capacity was relocated to coastal ports on the Gulf of Mexico and the Atlantic and Pacific oceans.

On December 2, 1970, just as oil prices were about to climb, Congress created the Environmental Protection Agency, which had a huge negative financial impact on the domestic oil industry.  The number operating oil refineries in the U.S. fell from 301 in 1970 to 134 today.  Land-based oil production fell from 9.6 million barrels a day in 1970 to only 5.1 million in 2005.

Even with new off-shore production in Alaska and the Gulf of Mexico, total U.S. domestic oil production fell from 10.8 million barrels a day in 1980 to 8.3 million barrels in 2005.  To cover the shortfall as demand continued to grow, imports rose from 1.3 million barrels a day in 1970, providing 12 percent of supply, to a peak of more than 12 million barrels in 2005, accounting for 63 percent of all U.S. oil supply. 

Fracking

But since 2008, fracking and other new drilling technologies have fostered a domestic 25 percwent surge in oil production and a 40 percent jump in natural gas production.  Demand for imported oil has fallen to less than 45 percent of supply, the lowest level since 1997.  Cheap new supplies from Canadian tar sands drove down imports of Middle East oil to less than 10 percent of U.S. supply.

Radical Islam’s coordinated attacks against American embassies across the Middle East have fractured the region’s respect for U.S. military power and emboldened our enemies.  Taliban forces this weekend brazenly penetrated the perimeter of a the joint U.S. and British air base in Afghanistan, blew up 6 Marine Harrier “jump jets” and killed one of the Marines’ highest decorated Air Squadron leaders.  After NATO forces suffered their 51st murder by Afghan government forces, the U.S. military suspended all operations patrolling with Afghan troops.

In 1968, President Lyndon Johnson claimed a military victory as American and South Vietnam forces slaughtered 10 times as many Viet Cong as Americans were lost in the TET Offensive.  But bloody television images of the battle at the U.S. embassy in Saigon convinced Americans that the Vietnamese could never be pacified.  Similar television images of anti-American violence in the Middle East has convinced the American public that the Middle East cannot be pacified.

The American public will soon politically coalesce around a major increase in domestic energy exploration and development in order to facilitate the elimination of reliance on imported Middle East oil.  Fortunately, America has the technology and resource potential to rapidly make this initiative a reality.

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