By Marita Noon
Sunday, June 16, 2013
If there is anyplace the gang green can expect to get its
way, it would surely be California. The state has the highest renewable energy
standards in the country, the legislature is currently dominated by a liberal
supermajority, and Governor Jerry Brown’s environmental record runs deep.
When the Energy Information Agency reported that
California’s Monterey Shale potentially contains more than 15 billion barrels
of oil—a supply three times greater than North Dakota’s Bakken and the Texas
Eagle Ford formations, environmental groups ratcheted up their efforts to keep
the resource in the ground. The weapon of choice? Demonize the technology that
allows the oil and gas to be released from the sedimentary rock: hydraulic
fracturing—commonly called “fracking.”
California’s legislature had nearly a dozen different bills
designed to impede, restrict, or ban fracking. With lawmakers on their side,
environmentalists grew cocky. When the bills made it out of committee, Patrick
Sullivan, of the anti-fracking group Center for Biological Diversity claimed:
“There’s huge momentum in the legislature to halt this dangerous practice.”
Imagine their shock when the rank and file Democrats
revolted and defeated AB1323, 37-24—with 12 Democrats voting with 25
Republicans. Another 18 abstained. According to the Wall Street Journal (WSJ),
“It’s a good bet they were ‘no’ votes who didn't want to publicly cross their
leadership.” The WSJ called the vote: “a rare rout for The Sierra Club and
other greens.”
It seems that California’s “politicians are beginning to
wonder if cultivating greenie obsessions has been worth stopping economic
development,” writes Mark Whittington for Yahoo.com. “The environmental lobby …
has seen the limit of its power.”
This is especially interesting in light of the columns
I’ve been writing lately. Remember Environmentalists Endangered and, more
recently, Renewable Energy’s Reversal of Fortune? Then, last week, in my column
The Sierra Club Exposed, I referenced a Sierra Club director who claims that
Latino voters care more about conservation than energy drilling. Yet, who are
the Democrats who split with their party to block the fracking bans that would
“throw thousands of Californians out of work?” Those representing poor and
minority areas with unemployment rates of 12% or more. Six of the seven black
and most of the Latino assembly Democrats refused to vote for the ban, while
wealthy, mostly white Democratic coastal districts voted for it. Whittington
says the vote is “dividing the state’s all powerful Democratic party, pitting
rich against poor, white against minorities and coastal California against
central California. … powerful rich elites who have pushed an environmentalist
agenda at the expense of the common people.”
Fracking has been used in California for 60 years, and is
used in about a third of California’s active wells. Since the start of 2011,
974 California wells have been fracked. Catherine Reheis-Boyd, President of the
Western States Petroleum Association, asserts: “California has never recorded a
single documented instance of fracking wastewater leaking out and contaminating
the surrounding groundwater supply.” Meanwhile, environmentalists, such as Adam
Snow of Food and Water Watch claim “there’s no safe way to frack.”
Fracking foes want a complete ban. But, California can’t
afford not to frack.
The Global Energy Network & Price School of Public
Policy, the University of Southern California, and The Communications Institute
recently collaborated on a study called “Powering California: The Monterey
Shale & California’s Economic Future.” The study found that Development of
oil from the Monterey Shale using hydraulic fracturing and other recovery
technologies could result in:
· The creation of
512,000 to 2.8 million new jobs,
· Personal income
growth of $40.6 billion to $222.3 billion,
· Additional local
and state government revenues from $4.5 billion to $24.6 billion, and
· An increase in
state GDP by 2.6% to 14.3% on a per-person basis.
In a state with $167.9 billion in long term
liabilities—not counting pensions and retiree health benefits, those numbers
can’t be ignored. Fresno Assemblyman Jim Patterson wants to “unleash this
magnificent potential for jobs.”
Apparently, Democrats, even with a supermajority, have
accepted defeat on a fracking ban and are now moving toward taxes. A driving
force in California environmentalism, State Senator Noreen Evans (D-Santa
Rosa), author of SB 241—which would impose a tax on harvesting oil and
gas—says: “California is poised to allow fracking on a monumental scale in the
Monterey Shale, and if we don't enact an oil severance prior to the time we do
that, then we're allowing … California's resources to be extracted without
taxing it.”
It is easy to see where lawmakers like Evans are going.
Texas has no state income tax, but the state does tax oil and natural gas:
• Oil production
tax: 4.6% (.046) of market value of oil.
• Regulatory Tax:
3/16 of a cent ($.001875) per barrel.
• Regulatory Fee:
5/16 of a cent ($.003125) per barrel for report periods prior to September
2001. For report periods September 2001 and later, 5/8 of a cent ($0.00625) per
barrel Reduced Oil Production Tax Rates for Certified Exemptions:
• Enhanced Oil
Recovery Exemption (EOR) 2.3% (.023) of market value of oil; Two Year Inactive
Well Exemptions 0.0% (.000) of market value of oil.
With a potential of more than 15 billion barrels of oil
in the Monterey shale, saying no to fracking means saying no to California’s
economic salvation.
No wonder Governor Jerry Brown has yet to take a position
on fracking. In fact, he sounds like he is willing to abandon his solid green
credentials—angering environmentalists who are staging protests outside his
office. Like the Sierra Club pushing President Obama to use his executive order
pen to designate national monuments and block oil and gas development,
California’s greens are demanding that Brown short-circuit the democratic
process and ban fracking. The Center for Biological Diversity’s Rose Braz claims:
“Fracking pollution threatens our air and water and Gov. Brown’s legacy as an
environmental leader.”
The green state is going brown.
In March, Brown said “The fossil fuel deposits in
California are incredible, the potential is extraordinary. But between now and
development lies a lot of questions that need to be answered.” Last month, he
seemed to move even closer to supporting fracking: “This is not about just
saying, ideologically, yea or nay. It’s about looking at what could be a
fabulous opportunity. . . . And if you remember about oil drilling, oil
drilling in Long Beach, which was really pioneered I think when my father was
governor, poured I don’t know how many billions into higher education.”
California Senate Republican Leader Bob Huff supports
developing the Monterey Shale. "While everyone is giddy about the on-time
budget just passed, it does not do anything to pay down the state's unfunded
pension and health care system for state employees. If we had the revenues from Monterey Shale we
could pay down that debt and truly build a high class education system to
continue what Governor Brown's father began."
While Brown doesn’t take the doom-and-gloomers all too
seriously, most of the state sees through the fear mongering, too. A recent poll
found that 60% of Californians were in favor of properly regulated hydraulic
fracturing. Only 30% said they prefer a ban. Generally Democrats opposed
fracking while Republicans support it; those on the coast and in the San
Francisco Bay area oppose it while support was highest in the central valley
and in Southern California counties outside of Los Angeles. Support increased
if it could be shown that fracking would reduce energy and gasoline prices. Dan
Schnur, director of USC's Unruh Institute of Politics, states: “It's clear that
a majority of voters is comfortable with the procedure, as long as they believe
appropriate regulation is in place.”
Of the flurry of bills aimed at either explicit or de
facto moratoria on fracking, one did make it out of the Senate after the author
agreed to remove the fracking moratorium provision to get the bill to the
Assembly. SB 4 originally called for comprehensive regulations and a fracking
moratorium until January 1, 2015—by which time the guidelines would be in place.
The bill’s author, Senator Fran Pavley (D-Agoura Hills)—usually an
environmentalist ally, describes the bill: “This is not a bill to ban, prohibit
or regulate hydraulic fracturing. It’s to provide transparency to the public.”
Investors are now buying up property in the regions
surrounding the Monterey Shale, knowing that development will mean economic
recovery and a need for new housing and services. The gang green is losing to
greenbacks.
Once again, energy could make California great.
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