The Petroleum Industry in Green California

Jerry Brown’s California takes pride in its quest for mitigation of climate change. Legislators pass laws that encourage everyone to walk, bike, or take the bus; live in efficiency dwellings adjacent to the roar of BART trains; and wipe out the dream of new families ever owning a single-family home with a back yard – all in the name of climate change.

However, clouding this picture are the oil wells in Kern County, San Joaquin Valley, and the Los Angeles Basin

Although California’s energy sectors are in flux, ostensibly moving from reliance on fossil fuels to “renewables,” the state’s petroleum industry is way too big to simply disappear within the time frame envisioned by legislators without draconian legislative mandates and economic upheaval.

How Big is California’s Petroleum Industry?

Let’s consider the significance of California’s petroleum industry. These statistics are from a report produced in 2017 by The Los Angeles County Economic Development Corporation (a private, nonprofit, public-benefit organization).

* Governor Jerry Brown’s administration issued more than 20,000 new drilling permits to oil companies.

* California is the fourth largest oil-producing state in the U.S., behind Texas, North Dakota and Alaska.

* Petroleum industry’s direct output is estimated at more than $111 billion. It generates more than $148 billion in direct economic activity and contributes 2.7% of the state’s GDP.

* The industry generates $26.4 billion in state and local tax revenues and $28.5 billion in sales and excise taxes.

* The petroleum industry is a major employer, responsible for 368,100 jobs, or 1.6 percent of California’s employment.

* User industries of refined petroleum products, like transportation, manufacturing and agriculture represent 1.7 million jobs in California, with an associated $111 billion in labor income. User industries account for 8.4 percent of the state’s GDP.

Moving to Renewables

California legislators have been cranking out climate change bills since the seminal Assembly Bill 32, the Global Warming Solutions Act of 2006. Since then, Californians have been dealing with moving targets in CO2 reduction policies, stack & pack supposedly to reduce miles traveled, proliferating potholes as taxpayer money is diverted to public transit, and irate bird lovers who want a solution to wind turbines shredding innocent birds.

However, it appears that from the woes listed above the only policy that significantly contributed to the decrease in CO2 reported on July 2018 by the Air Resources Board are the wind turbines, which help generate electricity.

Electricity generation had the largest decline among the sectors. Emissions from this sector declined 18 percent in 2016, reflecting continued growth in renewable energy – such as solar, wind and geothermal – as a result of the state’s Renewables Portfolio Standard, and a corresponding drop in natural gas generation. Solar electricity in all forms, including rooftop generation, grew 33 percent, while natural gas fell more than 15 percent.

The transportation sector, the state’s largest source of greenhouse gases, saw a 2 percent increase in emissions in 2016 because of increased fuel consumption.

Emissions from the industrial sector – including refineries, oil and gas extraction, cement plants, and other stationary sources – fell 2 percent from 2015 levels, though emissions from refineries increased slightly. Climate Pollutants Fall Below 1990 Levels for First Time.

One could interpret from the Air Resources Board report that climate change policies had no effect on how people need to travel, but nevertheless success was derived from ways California generates electricity.

Exporting our CO2

The Air Resources Board report mentioned above quotes three especially interesting statistics: emissions from transportation increased, extraction of petroleum products decreased, and emission from refineries increased. This chart might explain the enigma.

California crude oil sources

Foreign oil largely compensated for the decrease in California crude oil extraction. Does this strategy qualify as exporting our pollution while taking credit for greening our state? Or does it qualify as acceptable globalization where countries produce and sell what they are best at producing and selling.

Environmentalists’ Plan of How to Get Rid of California’s Petroleum Industry

Environmentalist and progressives are proud of Green California. They are also painfully aware of the state’s significant petroleum industry, and call for shutting down oil wells. In a May 2018 report, Oil Change recommends ceasing issuing permits for new oil and gas extraction wells, developing a plan for the managed decline of the entire fossil fuel industry, and developing a transition plan that protects workers affected by the decline including raising dedicated funds via a Just Transition Fee on oil production.

To its credit, the Oil Change report does mention oil imports that replace domestic production.

By establishing complementary oil supply and demand transition measures, California can show global leadership while reducing its own oil imports over the long-term. If the state meets its goal of cutting oil use in vehicles by 50 percent by 2030 and enacts the policies described in this report to limit production, California can significantly reduce its imports of oil by 2030 as well.

California’s petroleum industry is an embarrassment to environmentalists and progressives, and they would like to see the industry vanish.

There is room for concern about air quality, especially in counties where private vehicle usage is high and in counties where petroleum extraction and refining takes place. Residents sharing that concern might want to encourage legislators to focus on the way electricity is produced, since that is what contributed to the state’s reduction in harmful emissions. Such strategy places action where action has proven most effective, rather on efforts that appear to have had no effect on private automobile use.