During the 20th Century, the growth of middle class jobs in Los Angeles and Southern California was fueled by oil, manufacturing and construction. Today, all three of these industries are under attack by new regulations and a not-in-my-back-yard mentality, which together are depleting the number of middle class jobs in these sectors.
Last Friday, the Los Angeles City Council took another step in this direction by directing the City Attorney to draft a moratorium on hydraulic fracturing (fracking) and other commonly used drilling techniques. Jobs related to oil drilling are good middle class jobs and are often union, paying an average of $80,000 per year.
Oil drilling standards are set and regulated at the state level and California has the highest drilling standards in the nation. California Senate Bill 4 authored by prominent environmentalist State Sen. Fran Pavley and signed into law in 2013 by Gov. Jerry Brown, further sets out a process to create an even broader set of regulations and protections for our environment, while still allowing our state to take advantage of domestic oil and gas resources that create jobs, generate tax revenue and provide the energy our businesses and residents need.
SB 4 implements short term regulations while the State takes a comprehensive look at drilling in California through a statewide Environmental Impact Report. Conversely, the ban on drilling initiated last week by the L.A. City Council is a rush to public policy based on misinformation and fear. Of the 218 wells in L.A. County treated with well stimulation in 2013, only 17 were in the City of L.A., and none of the wells within the City were stimulated with hydraulic fracturing. There is no reason for the City of Los Angeles to unilaterally move ahead of SB 4, which will use sound science to provide comprehensive oversight and regulation.
It should also be noted that construction of the Terminal Island Water Reclamation Plant that helps prevent ocean water from contaminating our groundwater basin used the same type of horizontal directional drilling technology used in hydraulic fracturing. Geothermal projects that generate emission free renewable energy from deep underground sources also use similar drilling techniques.
The real risk to the public from this ban is financial. Millions of dollars in revenue to city, county and state government that fund critical public services are at risk. The royalties paid to families throughout the City that have mineral rights contracts will be wiped out by this action. The City will also have to foot the legal costs fighting suits brought by these many contract holders.
Before we jeopardize jobs and public revenue, we should get the science right and allow the State to implement SB 4. If we don’t, we will be unilaterally shooting ourselves in the foot and more middle class jobs in the process.
And that's The Business Perspective.
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