State law bans the Fresno Democrat from lobbying his former colleagues for one year following his tenure in the state Assembly. Yet, the state’s ban on influence-peddling hasn’t stopped the Pharmaceutical Research and Manufacturers of America from hiring Perea as a senior director of state advocacy. Perea, according to published reports, began talking job prospects with the industry group in September.

Beginning on January 4, Perea will direct political operations in California, Arizona and Nevada for the group known around the Capitol by the acronym PhRMA. The group represents the country’s biggest pharmaceutical and biotechnology companies, including Allergan, Amgen, AstraZeneca, Bayer, Bristol-Myers Squibb, Celgene, Eli Lilly and Company, GlaxoSmithKline, Johnson & Johnson, Merck & Co., Novartis Pharmaceuticals Corporation and Pfizer.

“They innovate, they discover cures, they represent a lot of California employers,” Perea said in an interview with the Los Angeles Times. “The debate in health care, especially after the Affordable Care Act, is going to be very robust over the next decade or two and I look forward to being a part of that.”

PhRMA’s Robust Lobbying Operation

Since Perea’s first term in the state Assembly in 2010, the Pharmaceutical Research and Manufacturers of America has spent big money to lobby the governor, state lawmakers and other state government officials.

A CalWatchdog.com analysis of state lobbying disclosure forms found that Perea’s new employer has spent more than $2.59 million in state lobbying over the past five years. That half-million dollars per year in annual lobbying fees doesn’t include money spent by PhRMA’s member organizations.

Just one PhRMA member, the multinational pharmaceutical giant Pfizer, spent more than $3.18 million in lobbying over the same period, according to CalWatchdog.com’s review of disclosure reports.

Perea’s Campaign Contributions from PhRMA

The pharmaceutical industry’s robust lobbying operation in Sacramento has frequently crossed paths with Perea. Over the course of his career, Perea has accepted $157,144 in campaign contributions from the industry, according to FollowtheMoney.org’s analysis of campaign contributions. That ranks him 119th of every politician in the country and, according to FollowtheMoney.org, means he’s accepted more pharma money than Senate President Pro Tem Kevin de León, Speaker of the Assembly Toni Atkins and former Senate President Pro Tem Darrell Steinberg.

During the 2011-2012 legislative session, the pharmaceutical industry contributed more than $74,000 to Perea’s campaign accounts, making it the second largest industrywide contributor to Perea’s campaign, according to an independent analysis by the transparency group MapLight.

Perea’s multiple campaign committees also appear frequently on campaign finance disclosure reports and political action committee summaries filed by pharmaceutical companies. Earlier this year, his campaign committee for a 2018 Insurance Commissioner campaign accepted $2,000 from Amgen. In 2014, Pfizer gave Perea $3,500 and counted his re-election among its important wins.

“We continue to face significant legislative and regulatory challenges and each election cycle is critical to our industry,” Sally Susman, chair of Pfizer PAC, wrote in its 2014 Pfizer PAC annual report, a 102-page report detailing the company’s effort to build “positive public will.”

Perea’s history of luxury gifts, trips

Although Perea has refused to disclose his new salary, it’s likely to be more than the $97,197 annual salary and $33,000 in annual tax-free per diem payments he received as a member of the state Legislature.

Over the course of his career, Perea supplemented his income with tens of thousands of dollars in luxury goods, entertainment and travel, according to his economic disclosure reports.

In 2011, Perea accepted $9,397 worth of lodging, meals and transportation for a junket to Italy sponsored by the California Foundation on the Environment and the Economy, “a San Francisco-based nonprofit made up of oil companies, utilities and environmental groups.” Two years later, Perea again accompanied the group on its junket to Eastern Europe – a trip valued at $9,984.

Perea’s biggest haul came last year, when he accepted $16,090 from the group, including a $10,221 trip to Chile. He also traveled to: Maui on a $2,148 trip paid for by the Independent Voter Project, Israel on a $11,550 trip paid for by the American Israel Public Affairs Committee, and Central America on a $1,500 trip paid for by the government of El Salvador.

3rd lawmaker resignation since 2013

Perea will become the third California lawmaker in two years to quit in the middle of a term in order to take a job with a Capitol interest group. In 2013, Democrat State Senator Michael Rubio abruptly quit his position to take a job with Chevron’s government affairs unit. That same year, Republican State Senator Bill Emmerson quit mid-term for a high-paying job with the California Hospital Association.

Perea’s resignation will trigger a 2016 special election that is expected to cost Fresno taxpayers several hundred thousand dollars. The March 2014 special election to fill Emmerson’s seat cost Riverside County taxpayers $415,000, according to the Press-Enterprise.

Two candidates had already announced their intentions to run for the 31st Assembly District: Democrat Joaquin Arambula and Republican Fresno City Councilman Clint Olivier.

Some states’ main retirement systems may be in worse shape than the California Public Employees’ Retirement System or the California State Teachers’ Retirement System. But at the local level, there are more government bodies facing ruin in the Golden State than anywhere in the U.S.

And the political influence of the pension status quo-ists is stunning. Gov. Jerry Brown may tout himself as a pension reformer, but the union allies he put in charge of the state Public Employment Relations Board are so militant that they attempted to block a city of San Diego pension reform measure before it even got on the ballot. There are many examples of such reform monkey-wrenching around the Golden State.

Fossil-fuel ‘divestment’ comes with a price

This doesn’t change the basic fact that with all the strain that underfunded pensions are causing cities, counties and school districts, it is more crucial than ever that pension funds focus like a laser on generating healthy returns.

But this is California. Smart, responsible governance is for others, not for us.

And so we see the state’s emergence as Ground Zero for a movement dedicated to pension fund divestment in a consistently lucrative sector of the economy.

The Contra Costa Times has the details:

“In the 1980s, hundreds of American cities, states and universities sold their investments in South African companies as part of a protest against that country’s former apartheid government.

“Now, environmental groups are trying to duplicate that effort, but with global warming polluters in the role of villain. And, just as with South African divestment a generation ago, the Bay Area is at the head of the parade again, prompting cheers from environmentalists and jeers from skeptics who say the whole effort amounts to little more than empty symbolism.

“On Tuesday night, the Santa Clara Valley Water District, a government agency based in San Jose, is scheduled to vote to drop its investments in fossil fuel companies. If the measure passes, as expected, the water district will become the first Silicon Valley governmental agency to join the movement. It also will join Berkeley, San Francisco and Richmond — along with Seattle, Portland and other cities — among a small, but growing group of local governments that have taken similar stands in recent months.”

Bailing on oil, gas firms just as they boom

But what makes this especially ludicrous is that the world is going in the opposite direction — toward expanded use of natural gas and oil — despite fears about climate change. That’s thanks to the stunning technological breakthroughs that have made energy exploration much more efficient. Don’t take that from me. Take that from The New York Times, which devoted a special section to the new energy world on Oct. 26, 2011. Its key takeaway:

“From the high Arctic waters north of Norway to a shale field in Argentine Patagonia, from the oil sands of western Canada to deepwater oil prospects off the shores of Angola, giant new oil and gas fields are being mined, steamed and drilled with new technologies. Put together, these fuels should bring hundreds of billions of barrels of recoverable reserves to market in coming decades and shift geopolitical and economic calculations around the world.” …

“’Use whatever hackneyed phrase you want, like tectonic shift or game-changer,’” Edward L. Morse, global head of commodity research at Citigroup, told the Times. ‘These sources will dramatically change the energy supply outlook, and there is little debate about that.’”

So environmental zealots are trying to force pension funds to abandon fossil-fuel companies just as they approach a bonanza, courtesy of fracking, horizontal drilling and other newly productive exploration strategies. This is crazy.

Most of the world understands that this new era is coming. This spring, I did a 13-part blog series on all the different nations that have jumped on the fracking phenomenon — Germany, China, Russia, Saudi Arabia, Brazil, Canada, Argentina, Mexico, South Africa, Poland, Algeria, Indonesia and Great Britain.

Energy giants won’t suffer — just Californians

But California greens would rather just pretend none of this is happening. And so we’ll see pressure on pension funds to divest holdings in fossil-fuel companies even as they solidify their standing as one of the safest, smartest investments for decades to come. Even as they occasion paragraphs like the following from The Economist:

“Exxon Mobil, with a market capitalisation of $417 billion, vies with Apple as the world’s most valuable listed company. Royal Dutch Shell is the most valuable firm on the London Stock Exchange. Chevron employs 62,000 people; Total operates in more than 130 countries. In BP’s case the big numbers are more calamitous—it may end up paying out $90 billion in fines and compensation stemming from the Deepwater Horizon disaster. But its ability to do so and stay standing is a perverse sign of the company’s underlying strength.”

Losing a few investments from California pension funds isn’t going to hurt these behemoths in the slightest.

Instead, the pain from that decision will have to be borne by Californians dealing with chronic pension shortfalls as a new and near-permanent fixture of local governance.

Great. Just great.

By Chris Reed

This week in Sacramento, environmentalists’ push to block hydraulic fracturing — fracking — in California has a crucial first test. On Monday, AB 1301, which would halt in-state fracking, comes before the Assembly Natural Resources Committee. As I noted Saturday, fracking has been scrutinized by the Obama administration, which concluded it was just another heavy industry. Groundwater contamination claims are goofy, given that fracking occurs thousands of feet under the water table. But it’s all green groups have to slow down the brown energy revolution. Another fact I didn’t mention Saturday: Fracking has been around 60 years-plus. Greens never griped about it until it got much more efficient because of three-dimensional underground surveying that makes it easier to precisely aim underground water cannons.

Starting with Saturday’s post on Germany, I will blog each day about a nation that sees how fracking threatens to give the U.S. a huge economic advantage — cheaper energy — and wants a piece of the action. What is my point? That sane people making reasoned long-term decisions embrace fracking, whatever California’s Legislature does.

Fracking sanity chapter No. 2: China

America’s arch-rival is pursuing fracking on a crash course after an unprecedented invitation to Western oil giants to help them out. This is from a March post on China Digital Times that amounted to a round-up of recent reporting on hydraulic fracturing’s arrival in the world’s second-biggest economy:

“Estimates of China’s shale gas resources differ. China’s Ministry of Land and Resources estimates reserves of 886 trillion cubic feet (tcf), while the U.S. Energy Information Administration puts the country’s resources at 1,275 tcf. The upper estimates would mean China sits atop more shale gas than the U.S. and Canada combined. According to China’s 12th Five-Year Plan, by 2015 China should be extracting 6.5 billion cubic meters of shale gas per year, with a view of producing 100 billion cubic meters by 2020. China’s goal is to meet 10 percent of the country’s energy demands from shale gas the same year. ……

“The opening of a recent tender to foreign companies demonstrates the extent to which the often go-it-alone Chinese Communist Party feels it needs to secure a rapid and successful energy boom. Royal Dutch Shell, Chevron, Exxon Mobil and British Petroleum are all jointly surveying the key provinces of Sichuan and Guizhou with local companies. As part of the new tender, other joint ventures are expected to follow.”

Bloomberg News reports Royal Dutch Shell’s partnership with China is well under way, not just gearing up:

“Royal Dutch Shell Plc (RDSA) will spend $1 billion a year developing China’s unconventional gas reserves, including shale deposits, according to Peter Voser, the company’s chief executive.

“Shell has won government approval for its production sharing contract with China National Petroleum Corp., the nation’s biggest oil and gas company … . Shell and CNPC had drilled 24 wells by November and planned a further 14 this year …”

If the state branch of the Sierra Club and the Natural Resources Defense Council get their way, California will see its last manufacturing job exit in less than a decade. Cheaper energy is an immense competitive advantage in the global economy. Nearly the entire world understands this, as my series will show.

Fracking watch

No. 1: Germany

By Chris Reed

Bloomberg News, which is doing an increasingly good job covering California of late, had an important article Wednesday about likely problems in developing the Golden State’s massive shale reserves. Those reserves could transform the state’s economy, according to a University of Southern California study that said drilling for the energy reserves could generate as many as 2.8 million jobs and $24.6 billion in state and local tax revenue by 2020.

Why was it important? Because its downbeat tone mostly didn’t come from the expected sources: the green cultists who hate fossil fuel and who constantly dispense lies about hydraulic fracturing, the improved drilling process behind the brown energy revolution in the Dakotas, Montana, East Texas, Ohio and Pennsylvania. The skepticism instead came from credible people.

From Wall Street:

“’The Monterey shale was supposed to be the greatest thing since sliced bread, but so far has not lived up to the hype,’ Fadel Gheit, an oil and gas analyst at Oppenheimer & Co. in New York, said in a telephone interview. ‘It’s not conclusive that the emperor has no clothes. So far, it has not shown any big sign that this is going to be another Bakken or Eagle Ford.'”

From Chevron:

“’Based on our drilling results, our view is that the oil has migrated out of the formation and is now found in pockets outside of the Monterey shale,’ said Kurt Glaubitz, a spokesman for San Ramon, California-based Chevron Corp. (CVX), the second-biggest U.S. oil producer. ‘We don’t believe it’s going to compete for our investment. We have other opportunities that are more economical for us to develop.’”

And from a scientist who explained what’s behind the skepticism:

“The Monterey shale is more expensive to explore than the Bakken shale that’s yielded an oil boom in North Dakota and the Eagle Ford shale in Texas, said Amy Myers Jaffe, executive director of energy and sustainability at the University of California, Davis.

“’The Eagle Ford is like a pound cake,’ Jaffe said in a telephone interview. ‘The Monterey shale is like a nine-layer chocolate cake and to get all the layers straightened up and put in all the frosting every place we wanted — that’s going to be more complicated and it takes more skill.'”

Betting — and betting big — that the skeptics are wrong

But the company that’s got the most invested in drilling the Monterey shale is far more confident than the skeptics. As I wrote in November, Occidental Petroleum Corp., the Los Angeles-based energy giant, “estimates the shale reserves on California land it already controls to have over 20 billion barrels of potential oil –- a claim that the company says is made in accordance with the Securities and Exchange Commission’s rule that only ‘economically producible’ reserves can be cited in SEC filings.”

That last point is not a small one at all. Energy companies have a history of being cautious in their stock prospectuses and in representations to shareholders and regulators. Oxy has been eying the Monterey shale for a long time and believes it is up to the challenge.

And the context is crucial to remember here. It wasn’t long ago that the Bakken and Eagle Ford shale formations were considered impossible to develop. But then along came the information-technology revolution. The reason hydraulic fracturing, or fracking, is so much more efficient than it used to be doesn’t have to do with crude factors. It’s not the drillers using more powerful streams of water or larger water cannons to fracture rock underground. Instead, IT now allows drillers to use the equivalent of MRIs of vast swaths of underground areas, and to use this information to know where to precisely aim their water cannons.

NYT: ‘New Technologies Redraw the World’s Energy Picture’

And hydraulic fracturing is getting more refined and more efficient with every year. So if Occidental believes it can access California’s Monterey shale, it has good reason to be optimistic.

The question, alas, remains whether California’s political class will allow fracking’s magic in the Golden State. Even as fracking increasingly gives the U.S. a huge competitive advantage over Europe — detailed here — the environmentalists who dominate the state Democratic Party continue to pretend the brown energy revolution isn’t happening.

Perhaps they should read The New York Times.

By Joseph Perkins

Employees at Chevron’s San Ramon corporate headquarters received an unexpected email yesterday. It notified them that a quarter of their jobs are being moved from California to Texas.

The oil giant, the Golden State’s largest corporation, offered no detailed explanation for the mass transfer. But I suspect it had something to do with California’s decidedly unfriendly business climate.

Indeed, Forbes magazine this month ranked California one of the 10 worst states for business based on six factors: business costs, labor supply, regulatory environment, current economic climate, growth prospects and quality of life.

“California is littered with problems,” the magazine decries.

It ranks last, Forbes noted, in Pollina Corporate Real Estate’s study of the states with the best financial incentive programs and state economic development efforts. Moody’s rates California’s bonds A1, the second lowest of any state. And a study by the Mercatus Center, “Freedom in the 50 States,” ranked California’s regulatory climate the fourth worst among the states.

Meanwhile, California has the fourth-highest tax burden, according to a study by the Tax Foundation. And energy costs here in the Golden State are 33 percent above the national average.

What amazes is that lawmakers in Sacramento don’t think the state’s business climate so bad. They actually think that California is a great state for business.

Chevron obviously disagrees. That’s why it’s transferring 800 jobs from San Ramon to Houston. And the oil giant’s move is no aberration. Corporations are fleeing California for states that don’t view big business as a necessary evil.

Leaving

Indeed, Forbes noted that Comcast shut down its Northern California call centers this year, citing “the high cost of doing business in California.” Some 1,000 workers lost their jobs.

It also mentioned Campbell’s Soup, which padlocked its Sacramento factory, displacing some 700 workers. The company decided to move production to Texas, North Carolina and even Ohio of all places.

That’s not to say there are no benefits to doing business in the Golden State. Indeed, Forbes lists several.

The state has a $2 trillion economy, the world’s ninth largest, which is projected to expand 3.6 percent annually over the next five years (Lord willing and the creek don’t rise).

Some 10 percent of the nation’s 1,000 largest public and private companies are based in California. And they are staffed at the highest levels by very well educated workers, many of whom are products of the state’s first-rate universities.

Venture capital

California’s venture capital community continues to spur innovation, investing some $36 billion in promising home grown companies over the past three years, four times the total of any other state.

And, of course, California has the best weather in the country.

Those attributes keep many California corporations from following the examples of Chevron, Comcast, Campbell’s Soup and numerous others that have moved some or all their operations to more business-friendly states.

But even those California loyalists may eventually decide to flee if Sacramento continues to raise taxes, impose regulations and otherwise pursue policies that make it prohibitive to do business in the Golden State.

By Wayne Lusvardi

In a scene reminiscent out of the mid-1970’s oil shortages, it is being reported that independent gas stations are being shut down in California due to a shortage of supply and a resulting spike in wholesale gasoline prices.

Bloomberg news is reporting Costco has closed its gas stations in the Los Angeles and San Francisco areas.

San Diego Fox News Station Channel 5 is reporting that gas stations in the San Diego area may be shutdown by Sunday.

Reuters news service is also reporting that Valero Corporation has had to withdraw from the Los Angeles wholesale refined products spot market to assure supplies to its own retail stations.

At $4.90 per gallon for the wholesale price of gas vendors are reporting that there is no profit margin left even if they have gas.

This is reportedly an unexpected short-term crisis due to another one of California’s infamous “perfect storms” of events:

* California refineries are going through their seasonal Kabuki dance of converting to a different blend of fuel for the coming winter months to comply with clean air regulations.

* A fire at Chevron’s Richmond refinery also has compounded the supply problem.  The Richmond refinery is the largest in Northern California and has had to run at reduced production levels since a fire on August 6.

* An Oct. 1 power failure at Exxon Mobil Company’s Torrance refinery.

* Chevron’s Kettleman-to-Los Medanos Pipeline from refineries in the Central Valley to the San Francisco Bay area has been shut down since mid-September after elevated levels of organic chloride were discovered in the oil.  Organic chloride was formerly used by oil producers as a wax dissolver and is considered to be a contaminant. Organic chlorides can cause damaging corrosion to oil processing facilities in a matter of weeks.

* Phillips 66 has a scheduled shutdown of its processing units at its Rodeo and Los Angeles refineries.

“It’s a series of unfortunate events,” said Tom Kloza, chief oil analyst for Oil Price Information Service.  “This is not something that is going to last for months. This is something that is going to last for days or weeks.”

A waiver has been requested from state regulators to expedite the fuel conversion process for winter-grade gasoline.

By Joseph Perkins

Well, that didn’t take long. No sooner did Chevron douse the fire this week at its Richmond oil refinery before a couple thousand folks, claiming some sort of personal injury or another, started looking for a way to get paid.

More than a thousand “victims” of the Richmond fire, complaining of coughs, nausea, scratchy throats and even “psychological trauma,” according to the San Francisco Chronicle, somehow managed to make it to the law office of Nick Haney, despite their supposed debilitating ailments.

Why Haney? Because the all-too-opportunistic Richmond trial lawyer placed two large signs in his office windows urging prospective plaintiffs, “File Chevron Claims Here.” So many folks qued up outside his office he sent five of his assistants out into the streets to handle paperwork.

Of course, the fire at the Chevron refinery’s crude distillation unit (CDU) was not quite the public health catastrophe it was made out be in some news accounts.

While there were scary reports of “toxic fumes,” of public warnings issued to residents of Richmond and neighboring cities to stay indoors, of some 1,700 people visiting emergency rooms (but almost none actually admitted to the hospital, the San Francisco Chronicle noted), the Bay Area Air Quality Management District determined that air quality was safe following the Richmond fire.

It wasn’t Chernobyl, where the 1986 meltdown of the Soviet nuclear plant killed as many as 50. It wasn’t Bhopal, where a 1984 gas leak at a pesticide plant owned by Union Carbide’s Indian subsidiary caused the deaths of 4,000 to 8,000 thousands (according to who’s counting).

It wasn’t even Marin County, where South San Francisco construction company JMB damaged a sewage line in 2010, spilling 2.5 million gallons of wastewater. No one died. But it sure did smell pretty foul.

So why, then, skeptics ask, did Chevron set up shop this week in a downtown Richmond storefront to handle the 1,000 or so people complaining of fire-related ailments who contacted the San Ramon company directly?

Because Chevron hoped to head off Haney and other contingency-fee lawyers who view  the Richmond refinery fire as an opening to round up potential plaintiffs with which to extort a payout from Chevron.

Indeed, in no other state does a deep-pocket corporation like Chevron face a greater risk of being hit with a class action lawsuit than here in the Golden State. It is one the biggest reasons why corporate CEOs consider California one of the worst states in the country in which to do business.

In 2010, to cite an especially disquieting example, a Los Angeles County Superior Court jury returned an astronomical $208.8 million judgment against CertainTeed Corporation, a manufacturer of building materials.

The plaintiff in the case said her husband worked at the L.A. Department of Water for 20 years cutting pipe made by CertainTeed that contained asbestos. Her claim was that, by washing his clothes, she became ill from indirect exposure to asbestos fibers. Never mind that hubby, himself, remains very much alive and well after years of direct exposure

Now if an L.A. jury saw fit to award a single plaintiff more than $200 million on a rather questionable claim, what might a jury in the no less liberal San Francisco-EastBay award 1,000 plaintiffs?

That’s why Chevron just might be willing offer a few hundred bucks to those who show up at itsRichmondstorefront claiming fire-related medical expenses.