We are doomed - update
One of Anthony's readers pointed me to this article in the
Wall Street Journal:
Mark Mills: California Could Be the Next Shale Boom State
Could 2013 find California lawmakers and Gov. Jerry Brown finally making the connection between fiscal challenges and energy markets? The Golden State is well positioned to become an exporter of hydrocarbons and enjoy a gusher of oil revenues. While many Californians will find that hard to contemplate, ideology bends more easily than the laws of physics and the imperatives of economics.
The $6 billion a year in additional income taxes Gov. Brown convinced Californians to approve in Proposition 30 last November won't begin to solve the state's fiscal problems. Last year's State Budget Crisis Task Force, co-led by former Federal Reserve Chairman Paul Volcker, estimated the state's long-term debt at no less than $370 billion.
But California has Saudi Arabia-scale oil resources, notably in its largely untapped Monterey shale field, which stretches northeast for more than 200 miles from Bakersfield in central California. New technologies, especially smart, horizontal drilling and hydrofracturing, aka "fracking," make that oil accessible, and cleanly. The U.S. Energy Information Administration estimates that the Monterey shale field alone holds 15.4 billion barrels of oil, rivaling America's total conventional reserves.
More:
Do the math: The overall economic benefits of opening up the Monterey shale field could reach $1 trillion. One can only imagine the impact on California's education system, social programs, infrastructure, and even energy-tech R&D. Moreover, with that kind of revenue, Sacramento tax collections could wipe out debt and deficits.
There is a precedent for this. Technologies of the early 20th century unleashed oil fields from Long Beach to Bakersfield. Beverly Hills sits atop a legacy field still in production, its surface hardware hidden artfully off Pico and Olympic Boulevards in large windowless buildings. Black gold, not the gold rush, funded many California businesses for the first half of the 20th century.
In the heyday of the 1960s, when the state's education system was first in the nation, California's oil production ranked second nationally, at about 400 million barrels annually. Now with production down 50%, California has dropped to No. 4 in oil production, behind Texas, North Dakota and Alaska. North Dakota's embrace of the shale-oil revolution vaulted it to No. 2 and has led to low unemployment, no deficit, and university funding on the rise.
Sounds like a win/win to me -- will the California bureaucrats stand up to the environmentalists and drill or will they cave.
Posted by DaveH at January 19, 2013 2:05 PM