Everyone knows that one should not concentrate all efforts and resources in one area as one could lose everything thus the proverb to “not put all his eggs in one basket”. We all know that California does not follow the norm, but sets its own path for determining what amount of tax revenue actually goes into the general fund and what kind of energy, be it new or established models, serve the 5th largest economy in the world.

California’s Legislative Analyst’s Office reports that personal income tax liability is concentrated among top earners. Shockingly, almost 70% of the general fund comes from less than 5% of the population. The Governor’s budget summary for 2019-2020 reflects this scary trend. The State has 40 million residents and relies on less than 3 percent or just over one million of its wage earners for most revenue allocated to the general fund. It’s enlightening to know that there are more than one million millionaires in California in the “basket” to help with the funding.

On the subject of energy, we all know there is no love lost between California and Washington politics. However, since California is the 5th largest economy in the world, the policies and decisions made in California may be putting the U.S. at a national security risk.

Up and down the West Coast, California has numerous ports including those at: Los Angeles, Long Beach, Oakland, Richmond, Port Hueneme, San Diego, Martinez, San Francisco, Benicia, Stockton, Crockett, Sacramento, Redwood City, Eureka, and Alameda.

California’s imports and exports of goods  in July 2018 alone were $50 billion for the month, with more than $36 billion in imported goods and $14 billion in exported goods. Popular commodities passing through U.S. west coast ports of entry include: electronics, computers and computer equipment, automotive parts, plastics, industrial supplies and materials, fuel and oil, and clothing.

The state’s daily need to support its 145 airports (inclusive of 33 military, 10 major, and more than 100 general aviation) is 13 million gallons a day of aviation fuels. In addition, for the 35 million registered vehicles of which 90 percent are NOT EV’s are consuming a day: 10 million gallons a day of diesel and 42 million gallons a day of gasoline.  Thus, more than 60 million gallons of fuel used by the 5th largest economy in the world each and every day of the year.

According to the U.S. Energy information Administration (EIA) the United States is now the largest global crude oil producer, surpassing Russia and Saudi Arabia to become the world’s largest crude oil producer. The American shale boom has important security implications as well, as America is now less dependent on crude oil from the turbulent Middle East, EXCEPT for California.

California is an “energy island” to roughly 40 million residents, bordered between the Pacific Ocean and the Arizona/Nevada Stateline with no pipelines over the Sierra Nevada Mountains. To access the oil shale boom from the rest of the country for California, that oil must to go through the Panama Canal to reach California ports. There are other options of crude oil by trucks, or by railroads, but both have been overwhelmingly ruled out environmentally.

Both California’s in-state crude oil production, and Alaskan oil imports are in-decline to meet the States’ energy needs. Shockingly, California increased crude oil imports from foreign countries from 5% in 1992 to 56% in 2017. 

California’s choice to not increase in-state production may become a national security issue for further discussions to not access crude oil from the largest shale reserves and ocean crude oil reserves in the country, in the Monterey Shale and Pacific Ocean. California’s reliance on crude oil imports from foreign countries is at 56% and increasing each year.

In 2017, California imported crude oil from foreign countries at the rate of more than 354 million barrels annually, costing California more than $20 billion annually at the Brent Average Crude Oil Spot Price which was recently $58.58 per barrel for January 2019. . This equates to “exporting” almost $55 million on a daily basis from California to Saudi Arabia, Ecuador, Columbia, Iraq, Kuwait, Brazil, and Mexico and others to support the crude oil energy needs of California.

The States’ choice is to continue “exporting” $55 million of its dollars to oil rich nations on a daily basis to obtain oil from foreign countries may be exposing the U.S to a national security issue. In addition, those foreign countries have less stringent environmental regulations than California, and transport their crude oil via air polluting ships delivering that the oil to California ports.

The subject of energy for the world’s 5th largest economy is about finding a workable, sustainable balance across equally important concerns for our economy, our shared sense of social equality, our impact on the environment, and a truly sustainable energy future. California energy needs continue to grow with ever increasing populations of people, vehicles, and businesses.

As mentioned in a recent Rand research study, on imported oil being a threat to U.S. National Security, the United States would benefit from policies that diminish sensitivity of the U.S. economy to an abrupt decline in the supply of foreign crude oil to the Golden State.

Defying the proverb to not put all you eggs in one basket, California lawmakers are happy with their dependency on the few 5 percent of the population for supplying the revenue for the general fund and, continuation of the state’s dependency on foreign countries for its energy needs now and in the future.

The goal to have 100% intermittent electricity by 2045 has already driven up the cost of electricity to residents and businesses to be well above the national average, and the scary trends for funds and oil are both fueling (no pun intended) the growth of the poverty, homeless, and welfare populations in California.

Author

  • Ron Stein is an engineer who, drawing upon 25 years of project management and business development experience, launched Principal Technical Services (PTS) in 1995. He writes frequently on issues of energy and economics.