Seven years ago, the California unemployment rate was virtually the same as the national rate — under 5 percent. The Golden State had seen some downs during the broad economic growth enjoyed across America since the 1980s, especially after the end of the Cold War hollowed out the defense industry in the early 1990s. But by and large, California generally fared well for a generation, its economic health paralleling that of the U.S.
Now, in 2013, the state unemployment rate remains well above the nation’s for the fifth straight year — 8.9 percent in August vs. the U.S. rate of 7.3 percent. Using a joblessness measure that is based on those who want full-time work but can’t find it, California has the second-worst rate in the nation: 18.3 percent. Between elevated unemployment and the high cost of living, the Golden State now has the highest effective poverty rate of any state.
This explains why state leaders have for years spoken in a general sense about the urgent need to create good middle-class jobs. Nevertheless, Gov. Jerry Brown, Senate President Darrell Steinberg and Assembly Speaker John Pérez have not championed any initiatives or passed any legislation that offered broad hope of helping the state’s economy.
Until this month. On Sept. 20, the governor signed SB 4, a bill meant to comprehensively regulate hydraulic fracturing, better known as “fracking,” in energy exploration.
Fracking uses underground water cannons to blast away rocks blocking access to oil and natural gas reserves. It has been a staple of energy exploration for 60-plus years. In the past decade, however, energy companies have made the process vastly more efficient. They’ve come up with better formulas for the small amounts of chemicals added to the water cannons to loosen up rock formations; they’ve paired fracking with horizontal drilling techniques that enabled access to previously inaccessible reserves.
However, the most transformative change in hydraulic fracturing has come courtesy of the information-technology revolution. Energy explorers are now able to take the equivalent of massive MRIs of vast swaths of underground. This enables far more precise drilling.
SB 4 and related legislation mandate that permits be approved before fracking can be used and that the environmental effects of fracking, particularly on groundwater, be monitored.
Given that fracking has occurred for decades without any disaster remotely equivalent to Three Mile Island, oil companies had cause to criticize SB 4 as unnecessary regulation. Instead, their opposition was muted, reflecting their eagerness to get on with fracking in California.
That’s because fracking has the potential to vastly boost oil companies’ bottom lines while transforming California’s economy. The Golden State is home to enormous oil reserves in sedimentary rock formations thousands of feet below ground known as shale. The Monterey Shale formation, beneath the Central Valley and a coastal and offshore chunk of the Los Angeles Basin, contains more than 15 billion barrels of oil that can be accessed using fracking, according to a 2011 U.S. Energy Information Administration analysis. That’s nearly two-thirds of the total oil shale reserves in the entire nation.
A University of Southern California study released in March concluded that were energy companies allowed to develop the Monterey Shale in the central part of the state and an area east of Santa Barbara, it could lead to a vast economic boom. By 2020, fracking could create up to 2.8 million jobs, increase the state’s total economic output by up to 14.3 percent, boost state and local tax revenue by $24.6 billion annually, and increase aggregate state personal income by up to 10 percent. Even a relatively tentative foray into fracking could generate hundreds of thousands of middle-income jobs that don’t require college degrees.
This amounts to a geologic gift to all Californians, a chance for the state to regain its economic vitality and rebuild its middle class. But to realize this opportunity, it’s likely that Democratic leaders like Brown, Steinberg, Perez, Lt. Gov. Gavin Newsom and Sen. Dianne Feinstein will have to stand up to environmentalists within their party who continue to depict fracking as the equivalent of strip mining. Even though SB 4 was billed as the most comprehensive fracking regulations adopted by any U.S. state, the Sierra Club and other groups wanted it vetoed in favor of a full moratorium on the process.
Their most consistent claim — that fracking is a profound risk to water supplies — runs against common sense. Fracking typically occurs a mile or more beneath the surface, thousands of feet below the water table.
The warning from greens that is arguably most credible — raising the possibility that fracking releases dangerous amounts of methane, a far more concentrated greenhouse gas than carbon dioxide — was undercut by a peer-reviewed study released this month that was jointly sponsored by the Environmental Defense Fund and nine petroleum companies.
Decades of supporting evidence explain why Democrats like Colorado Gov. John Hickenlooper, former Pennsylvania Gov. Ed Rendell and President Barack Obama see fracking as just another heavy industry — one with risks that can be addressed with regulation.
If California environmentalists wanted to have a demagoguery-free debate on fracking, that would be helpful. It would focus on their traditional view that the world should leave fossil fuels behind as rapidly as possible because of climate change and broader pollution concerns. Such an argument retains the central flaw of laws like AB 32, which are premised on the idea that the rest of the world will follow the Golden State’s lead in switching to cleaner-but-costlier energy. Still, it would certainly beat the debate that greens want to have that builds on a premise rejected by the Obama administration — fracking is the devil — and a “fact” that’s just not true — fracking is new and unknown.
But if their concerns can’t be addressed, much less resolved, then the Golden State’s leaders have a fateful decision ahead of them. Do they vigorously pursue the oil bonanza that is just around the corner? Or do they let a powerful faction of the state’s dominant political party — affluent urban greens — use courts and delay tactics to prevent the creation of hundreds of thousands of middle-class jobs?
The fracking economic miracle is real and on full display in North Dakota, Montana, Texas, Ohio, Pennsylvania and Colorado — without the accompanying degradation warned of by greens. If this basic fact is given the weight it deserves, millions of struggling California families can finally catch a break.
But that’s a big “if” — even after our state’s years of doldrums.
Chris Reed is an editorial writer for U-T San Diego. Before joining the U-T in July 2005, he was the opinion-page columns editor and wrote the featured weekly Unspin column for The Orange County Register. Reed was on the national board of the Association of Opinion Page Editors from 2003-2005. From 2000 to 2005, Reed made more than 100 appearances as a featured news analyst on Los Angeles-area National Public Radio affiliate KPCC-FM. This article originally appeared in the San Diego Union-Tribune and is republished here with permission.