Here in North Dakota the politicians like to say we’re the envy of the nation. And there’s a lot of truth in that. Not only is our state budget balanced, it’s running surpluses because oil development and production is driving a booming economy that is, in turn, driving big tax revenues into state coffers.
California, on the other hand, is not the envy of the nation. The state’s finances are in woeful condition. They have a budget deficit measured in the billions of dollars that policymakers are trying to solve with massive tax hikes, and their unfunded obligations to state pensions are out of control. The state’s economy isn’t doing so great either, with unemployment still lingering in the double digits.
Setting aside the debate over California’s spending (too much) and taxes (too high), they are sitting on what could be a gold mine for the state in terms of growing the economy and producing more tax revenues without having to raise taxes. You see, under southern California lays the Monterrey Formation, which could hold as much as four times more oil than the world-famous Bakken formation in North Dakota:
According to the EIA, the Monterrey Formation, which covers an enormous chunk of Southern California and terminates near Santa Barbara, has 15.4 billion barrels of recoverable crude — four times as much as the Bakken formation in North Dakota. On Dec. 12, the Bureau of Land Management will begin auctioning off more than 17,000 acres in the formation.
California’s problem? State lawmakers have foolishly created a mandate for at least 33% of the energy produced in the state to come from expensive, unreliable “green energy” sources:
The problem is, California has committed to getting a third of its energy from renewable sources by 2020, the paper writes. So the state risks getting left behind as the rest of the world dives into shale, it says.
California has a lot of problems they need to fix in terms of spending and taxes. But something they could do to help without even touching on those stick problems is to clear the regulatory path for shale oil development in the state.
But, California being California, they probably won’t.