Oil and natural gas industry activity in California generated $152. 3 billion of economic activity in 2017, representing 2.1% of the state’s gross product, according to a statewide study sponsored by the Los Angeles County Economic Development Corp. (LAEDC).
The study used the most recent annual data, and found that producers generated $21.6 billion in state and local tax revenues, including $96 million in assessments that went to the Department of Conservation’s Division of Oil, Gas and Geothermal Resources.
In terms of jobs, wages, tax revenues and contributions to the state economy, the oil and gas sector “makes a significant contribution,” said LAEDC Senior Economist Shannon Sedgwick, the lead author of the 160-page report prepared by the Institute for Applied Economics.
“Many other California industries rely upon the state’s oil and gas industry and its production, downstream processing and products as an input in their production and provision of services,” Sedgwick said.
The report’s authors also acknowledged the challenges still facing the industry today, such as price volatility, regulatory overreach, economic growth changes dampening demand, environmental activism, community support, geopolitical unrest and emerging alternative sources of energy.
California has some of the most aggressive decarbonization goals in the country. It’s also established a 100% alternative energy mandate that requires utilities to procure all their electricity from zero-carbon sources by 2045. Some cities are even banning natural gas.
The report examined “user industries” that are dependent on the oil and gas industry. Those companies will be “vulnerable to reduction of the supply of petroleum-based products,” impacting the state’s economy even further, the study said.
Regarding jobs in California, 152,100 are provided directly by the oil and gas industry, and another 365,970 jobs are supported indirectly. Wages in the sector totaled $12 billion, and another $26 billion was paid to workers in the industries supported by oil and gas.
Economic impact statistics are just one part of the continuing story of the oil and gas industry, said Catherine Reheis-Boyd, president of the Western States Petroleum Association (WSPA). The rest has been written by “the state’s hard-working men and women who are deeply rooted in the industry and in making their communities thrive,” she said.
The LAEDC report reinforces WSPA’s arguments against climate change advocates urging the state’s leaders to phase out fossil fuel production. WSPA spokesperson Kara Greene added that the report underscores the fact that outlawing fossil fuels would have “a tremendous impact on access to energy and the economy, causing a loss of jobs and higher costs from consumers.”
The study also found that the average oil and gas job pays more than $80,000 annually. Half of the sectors workers in the state are ethnically diverse, while 63% don’t have a college degree and a third have an education level of a high school diploma or less.
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