California could be on the brink of one of its biggest corporate defections yet with the signs that McKesson Corp. – the pharmaceutical giant that is

Apple is the only California company that’s bigger than McKesson, which has 75,000-plus employees and had $198 billion in annual revenue last fiscal year.

McKesson saw its profile increase greatly in 2017 after a joint investigation by the Washington Post and CBS “60 Minutes” alleged that the company had played a central role in the national opioid epidemic by failing to report “suspicious orders involving millions of highly addictive painkillers.” Yet it’s long been considered one of the 10 biggest companies “you’ve never heard of” by the InvestorPlace website and other business trackers.

Firm sold San Francisco headquarters

Now, according to a connect-the-dots report by the San Francisco Business Times, its days in the Golden State may be numbered. McKesson officially denied it was looking to move. But the newspaper noted a number of seemingly linked developments:

• The remarks of an official with Irving Economic Development Partnership that hinted McKesson was considering an expansion of its already “major commitment” to Irving. McKesson’s $157 million regional headquarters opened in 2016 in the business-friendly suburb of Dallas that already has the headquarters of such corporate giants as ExxonMobil, Fluor Corp and Kimberly-Clark. The state of Texas provided $9.75 million in subsidies to encourage McKesson’s decision.
• The announcement that CEO John Hammergren will retire on March 31, 2019, and be succeeded by McKesson executive Brian Tyler, who lives in Las Colinas, a posh Irving neighborhood. His possible relocation was not directly addressed.
• McKesson’s 2017 decision to sell its San Francisco headquarters for more than $300 million in favor of an arrangement in which it leased offices at the facility.

Given how much cheaper it usually is for a company to own rather than lease a large headquarters, the sale looks in retrospect like a warning sign to city leaders that their richest company was preparing to move.

McKesson would be hardest hit by new ‘homeless tax’

Nonetheless, besides Mayor London Breed, the city’s political establishment offered relatively little pushback to a successful tax measure on San Francisco’s Nov. 6 ballot that will take its single biggest toll on McKesson – at least if the company stays in the city.

To fund increased programs for the homeless, Measure C imposes a gross receipts tax on San Francisco-based companies which have $50 million or more in annual revenue. With $198 billion in fiscal 2017, McKesson is by far the highest-grossing San Francisco-based firm. Measure C is expected to generate $300 million a year, boosting the $380 million that City Hall now spends on homelessness.

If McKesson does leave, it will join the more than 1,700 companies whose decisions to abandon the Golden State have been documented since 2008. The traditional corporate complaints about California having high taxes and heavy regulations have been expanded in recent years to include concerns about the high cost of housing making it difficult to attract and retain workers.

Among the most prominent departures: Toyota moved its U.S. headquarters from Torrance to the Dallas suburb of Plano; energy giant Occidental Petroleum moved its headquarters from Los Angeles to Houston; and the Nestle USA food conglomerate moved its headquarters from Glendale to Rosslyn, Virginia, in the Washington suburbs.

It is an amazing commentary on the servility of the media that they buy the White House spin that Republicans sticking to their principles and opposing bigger government is obstructionist; since when has the opposition party had an obligation to enact the agenda of a president of another party?

But if we accept the premise that Obama only deserves blame for the economy if he can get legislation he wants through Congress, when will the parallel California premise be acknowledged? Democrats have had full control of Sacramento for more than three years. Shouldn’t they get blamed for the state’s bad performance relative to the national economy?

“In 2006, California’s unemployment rate dipped to 4.9 percent and its underemployment rate — the number of job-seekers who want full-time work but can’t find it — was 9.1 percent. Both numbers were about the same as the figures for the nation.

“Since then, California has plunged in comparison with the rest of the U.S. Only three states have a worse unemployment rate. Only one state has a higher percentage of people who want to work full time but can’t find such jobs. According to revised Census Bureau measures of poverty that include the cost of living, California has by far the nation’s highest rate — 24 percent.”

When will Dem policies be blamed for CA’s miseries?

That’s from my U-T San Diego editorial that had as its focus the question, “When will Democrats acknowledge the policies they’re implementing aren’t working?”

The question that goes hand in hand with that one is this: When will the California media use the same standard as the inside-the-Beltway set in judging Jerry Brown’s economic stewardship?

Maybe when they finally develop some economic literacy.

I once had a prominent California journalist on my old KOGO radio show a few years ago — at a time when state unemployment was north of 10 percent — and he basically said the Golden State’s economy ebbed and flowed according to its own rhythms, irrespective of actions by the state government.

Yes, I’m sure Occidental Petroleum’s leaving California for Texas was a business decision that happened in a vacuum, irrespective of the policies advocated by the state’s dominant Democrats.

Sheesh.

Alas, it’s not just journalists. State Sen. Mark Wyland, R-Solana Beach, told me in 2010 that he would encounter Democratic lawmakers and staffers in the Capitol who were surprised to learn the state was in a deep recession.

If they didn’t think we were in a recession then, it’s unlikely that they’ll see the need for a course correction now.

“Occidental Petroleum, the longtime Los Angeles-based energy giant, announced Friday that it would move its headquarters to Houston and spin off its California assets into a separate company.

“The latest move is part of the company’s strategic overhaul as it seeks to bolster its profitability and share price after falling behind competitors in recent years.”

No doubt profitability will improve in Texas’ low-tax, pro-business environment, in contrast to California’s high-tax, anti-business climate. Texas has no version of AB 32, the Global Warming Solutions Act of 2006 and other regulatory absurdities.

It’s pretty ironic. Occidental long was headed by Armand Hammer, who made business deals with the socialist Soviet Union of Lenin and Stalin to keep the gulag and the whole socialist slave society going; it lasted 74 years until 1991, a year after he died.

Now, instead of propping up California socialism, Occidental is fleeing it.

By Chris Reed

The escalating battle over using hydraulic fracturing — better known as fracking — for highly promising oil and natural gas exploration in California isn’t just another front in the state’s long-running war between environmentalists and business interests.

For the journalists who cover the bid of oil giants such as Occidental Petroleum to develop California’s enormous oil shale resource, it’s a test of their honesty.

The stakes are vast for the Golden State. If fracking were allowed, our state’s ravaged economy could enjoy the sort of boom that is lifting the Dakotas, Ohio and other areas around the U.S., a boom that has freed up immense new supplies of natural gas, driven down its cost by 70 percent and helped reduce carbon-dioxide emissions to 1992 levels. California has by far the largest oil shale resource in the U.S. Thankfully, the initial fracking regulations released last week by Gov. Jerry Brown’s administration appear both neutral and thoughtful.

But because the brown energy revolution is so much of a threat to their global push for renewable green energy, environmentalists are feverishly fighting back — even if having much more natural gas in the U.S. energy could help in the fight against global warming.

The narrative that the Natural Resources Defense Council, the Sierra Club and Democratic operatives push is that it is dangerous and entering uncharted new territory to use high-powered streams of water mixed with sand and chemicals to blast away underground rock and reach previously inaccessible oil and natural gas resources. They warn of profound risks to groundwater supplies and of triggering earthquakes.

‘Massively’ used in 1970s

But the truth is fracking has been around since 1947, and according to a University of Texas study, has been used in the drilling of 1 million wells — yes, 1 million. (In a twist that will only further inflame those on the left who see it as an unholy plot, it was pioneered by Halliburton.)

And not only has it been around for 65 years, five presidents ago, fracking was regularly described as being in “massive” use. This is the first few graphs from an 5,300-word article headlined “Massive frac treatments tapping tight gas sands in Uinta basin” in the Jan. 16, 1978, edition of the Oil & Gas Journal:

“Massive hydraulic fracturing (MHF) is giving favorable results in the low-permeability Wasatch- Mesaverde sands in Utah’s Uinta basin where earlier conventional completions gave marginal gas wells.

“As many as 24 sands over a 3,500-ft gross interval are fractured with up to 1 1/2 million lbs. of sand in one continuous treatment using staged or limited-entry techniques.

“Over 90% of the sands perforated are effectively stimulated. The treatments have given an average sevenfold increase on the nine wells stimulated to date.”

An 1,800-word Newsweek article from Oct. 30, 1978, headlined “The New Gas Bonanza,” places fracking at the center of one of the big energy stories of the late 1970s:

“Deep beneath southeastern Louisiana lies a 125-mile geological formation called the Tuscaloosa Trend. Several monstrous drilling rigs soar above the surface, probing nearly 4 miles into the earth for deposits of natural gas. The cost of drilling so deep is enormous — about $5 million for each well — and many producers have been discouraged from making the gamble by the low price of any gas they might find. But when he signs the new energy bill Jimmy Carter may give new life to the Tuscaloosa Trend project and scores of other potentially vast gas discoveries. ‘The gas industry,’ says American Gas Association president George Lawrence, ‘is entering an entirely new era.’

“Such enthusiasm marks a dramatic departure from the mood only eighteen months ago. Then, the Administration’s proposed energy program virtually discounted natural gas as a significant source of energy in the future — a conclusion reached in the light of declining reserves and consumption, falling production and chronic winter shortages. As a result, the Carter strategists recommended that the U.S. continue to cut consumption, that industry switch from gas to coal and that natural gas be saved for the highest-priority consumers.

“But the legislation that finally emerged from Congress earlier this month placed natural gas at the center of the nation’s energy efforts — and during the months of debate, even Administration officials have turned 180 degrees on the issue. Under the new law, Federal price ceilings on newly discovered gas will be lifted by 1985. In anticipation of higher prices, gas men are already drilling at record levels. And the real bonanza may lie in exotic new sources. As gas prices rise, experts say, both independent drillers and major energy companies seem more likely to commit the huge investments required to tap gas trapped in deep basins or in tight sand, rock and coal formations.”

What was used to tap some of these exotic new sources? You guessed it.

“In many parts of the Northwest, large deposits of shale laid down in the Devonian age contain quantities of gas estimated at 10 trillion to 600 trillion cubic feet. The advantage of the Devonian deposits is that their gas is close to the surface of the earth — and also to gas-starved markets. Their big disadvantage is the tight grip the dense shale holds on its gas, frustrating attempts to make it flow fast enough for economical production.

“Experiments are under way to enhance the flow through advanced hydraulic fracturing. Coarse sand, bauxite pellets or glass beads are mixed with fluid pumped into the shale under high pressure to crack the rock and wedge the cracks open to allow the gas to escape.”

A ‘moderate’ risk turned out not to be

As these articles make obvious, fracking was utterly routine decades ago. And were environmentalists terrified by the practice? No, not at all. A study by the U.S. Energy Department cited in a July 21, 1979, National Journal article found that environmental concerns associated with “massive hydraulic fracturing — using water and various chemical compounds at high pressure — [were] ‘moderate’ … They include the degradation of air quality during site preparation and fracturing activities and the risk of surface water contamination.”

These “moderate” concerns never turned into a major issue. Fracking has been common for more than 30 years. So why all of sudden is it now depicted as an evil assault on Mother Earth by environmentalists? Because in the past decade, dramatic gains in its efficiency and effectiveness have made it a game changer, allowing drilling to access immense oil and natural gas reserves in North America that heretofore were considered either unreachable or prohibitively expensive to reach.

What’s the key to this radical improvement in efficiency? To hear how environmentalists carry on about the immense danger posed by fracking, one might assume it’s the use of much more dangerous chemicals in the high-powered water streams used to break up rock formations limiting the access to reserves.

That’s not remotely the case. Instead, it’s raw computational power and technological ingenuity combined with growing knowledge of how to best break down different types of undeground rock.

The high-tech revolution in drilling

The March 2012 World Oil trade publication’s description of the sophistication of modern fracking has a science-fiction feel:

“It’s not a stretch to suggest that we are now witnessing the latest technology worthy of joining the geoscience canon of innovation. Who, after all, would have thought of laying out hundreds or even thousands of passive seismic receivers over many square miles to set up what is, in effect, a giant microphone, thousands of feet above a shale oil or gas reservoir. This microphone allows geoscientists to record and map the exact location of the cracks created by hydraulic fracture operations in real time.

“It turns out that this technique offers an exceptionally economic method for monitoring hydraulic fracturing operations across a whole shale oil or gas field. Reservoir engineers can optimize reservoir depletion in a way previously not possible, thereby significantly increasing the return on a company’s asset. Just as important, the microseismic monitoring system is able to provide the factual evidence necessary to deflect environmental objections to hydraulic fracturing; for example, the perceived threat of contamination to public water supplies.”

That latter part is crucial: The vast data-crunching that makes fracking so much more productive than it used to be also will insulate it from the alarmism that fossil fuel haters are trying to sow.

But will California’s environmental journalists bother to read beyond the NRDC press releases? Will they talk to the experts who say not only is fracking environmentally safe, but its increasing sophistication is also making it steadily cleaner? Will they share with their readers that fracking has been “massively” used since the 1970s without the catastrophes we’re now warned about? Will they acknowledge that if the Golden State chooses not to join the revolution, it is likely to be an outlier, because states and nations where green energy is less of a religion are lining up to take advantage of the fracking revolution?

We shall see.

One good thing — if you can call it that — about Gov. Jerry Brown’s proposed $7 billion tax: It is revealing who is the “Establishment,” both Democrat and Republican, that really runs this state.

With the Republican Party basically moribund, Democrats are the only show in town. So the Establishment will funnel to them campaign cash, for candidates and favored initiatives.

That doesn’t mean the donors favor a particular donor or initiative, or Democrats in general. It means they’re buying influence with the powerful.

So it is with Brown’s tax. It’s unlikely to pass. Opponents will paint it as funding the cushy pensions of government retirees and the ridiculous High-Speed Rail boondoggle. Brown will insist, “No! It’s just going to schools! It’s guaranteed!” But few will believe him. All government money is fungible.

But the Establishment wants to be in good graces with Brown. Although the measure won’t pass, funneling money into it is a signal of membership in the Establishment. It’s ironic how Brown, who for decades has portrayed himself as a maverick, quirky “outsider,” has in his dotage become the ultimate Establishment “insider.”

Brown’s group is called, Californians to Protect Schools, Universities and Public Safety. It should be called, “Californians to Gouge Taxpayers to Fund Lavish Pensions.”

Here are some of the Establishment donors to the tax-gouging initiative, as reported by the Mercury-News:

* $500,000: California Association of Hospitals and Health Systems; now I know why a friend went to have his appendix carved out, and it cost $40,000 for a three-day stay: the hospitals are splurging on political influence peddling;
* $250,000: state building trades; now we know why housing, despite the recent decline, remains so unaffordable in Taxifornia; the money is splurged on stuff like this;
* $100,000: Blue Shield of California; my health insurance; thanks a lot for jacking up my insurance rates to pay for jacking up my taxes; that’s just sicko;
* $300,000: four Indian tribes; time to free the Indians and make them separate nations; then they’ll become tax havens like the Cayman Islands, instead of backing higher taxes;
* $250,000:  Occidental Petroleum Corporation; Lenin pal Armand Hammer’s old outfit.
* $250,000: the American Beverage Association; how about a booze tax, fellas? Or maybe we should bring back Prohibition? Where is Carrie Nation when we need her?

Feb. 1, 2012