… and oil companies won’t come here if there’s enough to be had elsewhere.
This brings me to California, of all places, in a development noted in an Investor’s Business Daily editorial last night:
The former Golden State is floating in debt, even as it sits on two-thirds of America’s shale oil reserves locked in a formation four times the size of the one that sparked North Dakota’s economic boom.
North Dakota is now the largest oil producer in the country after Texas with a monthly oil output of about 20 million barrels. North Dakota’s oil boom accounts for 11% of U.S. oil production, and it is the impetus behind the state’s $3.8 billion surplus and an unemployment rate of just 3.2%, the lowest in the nation.
California is not running a surplus, but it is sitting on a lot more oil than is contained in the Bakken shale formation North Dakota straddles. Covering 1,750 square miles from southern to central California, the Monterey shale formation has untapped deposits estimated at 15.4 billion barrels, according to the United States Energy Information Administration.
Until recently, the complex geology of the formation has made exploration and extraction prohibitively expensive.
But as with oil from the Bakken shale in North Dakota and natural gas extracted from the Marcellus formation in the Northeast, technological advances have unleashed a bounty of riches, pushing proven reserves upward and smashing the myth of peak oil.
Whether the formerly Golden State led by Democrat Jerry “Governor Moonbeam” Brown is sane enough to take advantage of its newly available bounty is of course an open question. But I expect there will be similar discoveries in less-hostile political climates during the next several years. If so, oil companies will be able to get very selective about where they choose to do business.
They won’t do business in a state with a newly-enacted punitive severance tax combined with an already-existing Commercial Activities Tax on gross revenues when many other states don’t have either.
Drop the severance tax from your budget proposal, Governor Kasich. Ohio’s economic future depends on it.