Fresno State Study: Monterey Shale Could Create 195,000 New Jobs
A new study conducted by economists Antonio Avalos and David Vera of the Craig School of Business at California State University, Fresno, suggests that developing the Monterey Shale– the 1,750 square mile underground rock formation that lies underneath the California’s unemployment-ravaged San Joaquin Valley — could create up to 195,000 direct new jobs and generate more than $22 billion in personal income for area residents.
According to the study, which was commissioned by the Western States Petroleum Association (WSPA), the eight counties of the San Joaquin Valley are positioned to see $6.7 billion in new taxable sales — with more than $1 billion in Kern County alone — and an increase in per capita GDP of up to $3,980. That would constitute a true economic renaissance in an area suffering from double-digit unemployment for far too long: Five of the San Joaquin Valley’s cities rank among the nation’s ten metro areas with the worst unemployment.
The Monterey Shale sits below Fresno, Kern, Kings, Madera, Merced, San Joaquin, Stanislaus, and Tulare counties in the San Joaquin Valley, and Federal estimates are that it contains approximately 15.4 billion barrels of recoverable oil. That’s more than 60 percent of all of the recoverable oil in the United States, making it by far the largest oil reserve in the nation.
This incredible economic potential has not been lost on local leaders. As Assemblyman Adam Gray (D-Merced) said:
“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.”
As the Hanford Sentinel reported:
The study left Kings County economic development officials dreaming of putting a major dent in the Valley’s high rates of joblessness.
“If the oil shale development moves forward in a way that’s even close to what it’s projected to, I think it would easily be the largest economic boon to the Central Valley ever,” said John Lehn, Kings County Economic Development Corp. CEO. “Unquestionably, it’s a huge deal.”
The majority of California’s oil and gas development occurs in Kern County, and supervisor David Couch appreciates the role his county can play curing the region’s economic woes:
“This report highlights a major opportunity for growth at a time when Kern and other counties are fighting for real economic recovery. In addition, this effort proves that by supporting the Valley’s energy sector we can strengthen California’s economy.”
Of course, the safe and responsible development of the Monterey Shale will take place as the state begins implementing Senate Bill (SB) 4, the strictest regulations on hydraulic fracturing in the United States. In a press release, WSPA noted:
“There is an urgency to get this right the first time with clear guidance and direction so the petroleum industry, state legislative leaders, San Joaquin Valley local governments, and community leaders can prepare for the region’s anticipated economic growth.
“The petroleum industry was committed to informed, transparent, and responsible regulations prior to the passage of SB 4, and will remain dedicated and engaged as the Administration enters the implementation phase of the bill.”
According to the study, the oil and gas industry currently supports over 52,000 jobs in the San Joaquin Valley, which account for just over $4 billion in local annual labor income. The industry is also responsible for $23.6 billion in business sales, $365 million in sales taxes, and $386 million in property taxes.
The Fresno State study forecasted direct economic impacts in only eight of California’s counties. Using the Fresno State’s interpretation of the Monterey Shale Formation’s economic opportunities as a guide, we are appear to be merely scratching at the surface of the benefits to producing a valuable energy source that will drive California’s economy for decades to come.
Still, we need to ensure that SB 4 is implemented as it was intended: as a way to make development in California more transparent to citizens, not as a way to slow down the development of our abundant resources and the much-needed economic growth and high-paying new jobs that come with it.