Developing California’s oil-bearing Monterey Formation could mean up to 195,000 new jobs, more than $22 billion in personal income and $6.7 billion in new taxable sales for the San Joaquin Valley, according to a new study by economists from California State University, Fresno.
The study, commissioned by the Western States Petroleum Association, was presented by Dr. Antonio Avalos and Dr. David Vera Friday at the West Kern Petroleum Summit sponsored by the Taft College Foundation.
Avalos’s and Vera’s research provides forecasts of economic growth opportunities for the San Joaquin Valley, including income figures, sales and job gains for the region’s eight local counties. Findings included analysis of a reasonably expected resource extraction rate along with alternative scenarios based on the future pace of development of the Monterey Shale Formation.
Findings showed that the petroleum industry currently is linked to $4.08 billion in local annual labor income while generating $23.6 billion in business sales, $365 million in sales taxes, and $386 million in property taxes. While much of San Joaquin Valley’s shale oil resources remain untapped, the region already represents 75 percent of California’s current oil and gas production.
According to the United States Energy Information Administration, the Monterey Shale Formation holds more than 15 billion barrels of oil. The shale deposit, one of the largest in the U.S., resides almost entirely within San Joaquin Valley’s Fresno, Kern, Kings, Madera, Merced, San Joaquin, Stanislaus, and Tulare counties.
The Fresno state University report says Kern County can expect the biggest payoff, perhaps more than a $1 billion increase in taxable sales.
“This report highlights a major opportunity for growth at a time when Kern and other counties are fighting for real economic recovery,” said Kern County Supervisor David Couch, who attended Friday's conference. “In addition, this effort proves that by supporting the Valley's energy sector we can strengthen California's economy.”
While California’s economy has experienced a slight resurgence in 2013, the San Joaquin Valley counties have continued to struggle. Unemployment rates have consistently topped 12 percent in the last six months. Indeed, five of the Valley’s cities rank among the nation’s ten metro areas with the worst unemployment.
“Unlike much of the rest of the state, my constituents are still feeling the effects of one of the worst economic recessions in California history. I am committed to taking the findings of this report back to Sacramento and continue to work on policies that will ensure we can capitalize on this resource in a safe and responsible manner,” said California Assemblymember Adam Gray.
Here is a summary of the report's main findings:
•Oil reached a maximum production level in both California and in the SJV in 1985. Current levels of State and SJV oil production are less than half the production level reached in 1985.
Page 2 of 3 - •Oil produced by SJV counties currently represents over 75% of the total oil production in California while gas currently represents over 65% of the total gas production in California.
•With over 95% of the total oil and gas produced in the region, Kern is the largest producing county in the SJV and in the State as well. Kern’s petroleum industry contributes almost 20% to the county’s gross domestic product (GDP) and more than 5% to total employment.
•The petroleum industry along with the industries linked to it supports 52,271 jobs in the SJV (3.1% of total employment in the region), paying a total of $4.08 billion in annual labor income.
•The petroleum industry generates a total of $23.6 billion in sales for businesses located within the SJV, representing close to 10% of total sales in the region.
•In terms of the fiscal impact, the petroleum industry annually generates $364,991,480 in sales taxes and $386,058,743 in property taxes.
•The impact of the MSF oil production under the alternative scenarios in the SJV economy implies job gains between 2,151 and 34,485 under the high resource scenario; and between 2,151 and 195,683 under the high resource-oil boom scenario.
•Personal Income can grow by $201 million to $4 billion under the high resource scenario; and by $201 million to $22 billion under the high resource scenario-oil boom scenario.
Taxable sales can grow by $74 million to $1.2 billion under the high resource scenario; and by $74 million to $6.7 billion under the high resource scenario-oil boom scenario.
•SJV’s nominal GDP per capita can grow by $44 to $701 under the high resource scenario; and by $44 to $3,980 under the high resource scenario-oil boom scenario.
•At the county level, the job gains vary, being most substantial for Fresno and Kern Counties. For Fresno County the results suggest job gains between 519 and 8,327 under the high resource scenario; and between 519 and 47,251 under the high resource-oil boom scenario.
•Taxable sales are forecast to grow for all counties in the SJV. However, just as in the case of employment, Fresno and Kern Counties taxable sales show the biggest gains. For Kern County the results suggest taxable sale gains between $20 million and $325 million under the high resource scenario; and between $20 million and $1.8 billion under the high resource-oil boom scenario.
The Western States Petroleum Association (WSPA) is a non-profit trade association that represents the men and women of the petroleum industry in the six western states of Arizona, California, Nevada, Oregon, Hawaii and Washington. WSPA member companies and associates engage in a number of industry-related activities, including petroleum exploration, production, refining, transportation, and marketing.
Founded in 1907, WSPA is the oldest petroleum trade association in the United States, and is headed by current President Catherine Reheis-Boyd from its headquarter offices in Sacramento, California.
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