

A Tale Of Two Oil States - teawithcarl
http://online.wsj.com/article/SB10001424127887324695104578416871045535226.html

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surrealize
> California has the natural resources and technical expertise to be the next
> Texas if it wants to be. What it needs is the political will. California
> Governor Jerry Brown at least says he wants to drill, but his dominant
> Democratic Party is so beholden to the already-rich greens that the state is
> paralyzed.

Those poor oil companies, being outspent by the Green Party spending
juggernaut!

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rayiner
That $80 billion number is fictional. The proper measure of the net income
from extractive services must subtract the value of the decrease in oil in the
ground (you don't count selling off your family jewelry as net positive wealth
generated!). Valuing oil in the ground is difficult, but the net value
generated by that extraction is a fraction of the 80 billion number.

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Killah911
"if California were more like Texas" I'm glad I was lying down when I read
this line. Even if I was sitting in a chair I would have fallen out of it
laughing as hard as I did. This reads more like PAC Campaign Ad than a news
Article...

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issa
Treating capital as profit is just one small part of the problem. The larger
issue being that fossil fuels are not sustainable. Other countries are
rocketing forward (solar in germany, wind in denmark, etc) while the US is
holding on to a past which is killing us.

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smutticus
So someone who wants to drill in CA paid Rupert Murdoch to print this article.
This is propoganda, not journalism.

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joshuaheard
What facts in this article do you dispute? This is a carefully researched and
reasoned article that is consistent with what I know about California after
living there 40 years. California's anti-drilling stance has existed since
they banned offshore drilling after the Santa Barbara oil spill. The Sierra
Club was formed in California (named after the mountain range there) and has a
history of environmental activism. I don't think this article is much of a
surprise to anyone.

~~~
lsc
It was more the tone. It was pretty blatantly playing the "real Americans"
against the "coastal elites" in a way that can only be called blunt and
amateurish.

On a not particularly related note, speaking as a tax-paying Californian who
buys gas, The actions of California seem perfectly rational. The oil is
finite; once you extract it, all you have is land that costs a bunch of money
to clean up. You might as well get as much as possible out of it. Let Texas
and the rest of the world sell their gas and oil into the current market; I
feel pretty comfortable saying that the price of oil, long term, has quite a
lot of upside. Nothing wrong with sitting on an appreciating asset.

~~~
dredmorbius
Not that I advocate drilling in California, or increasing the amount of fossil
carbon dumped into the atmosphere, but I'm not entirely convinced that oil
prices will only go up. This has helped me in understanding a fundamental
paradox of orthodox economics and the environmental movement, in particular
the Simon-Ehrlich wager. I'm beginning to suspect Simon might have won
regardless. He did in the time scale initially agreed on: a wager for the
price of five metals in 1990, made in 1980.
(<http://en.wikipedia.org/wiki/Simon%E2%80%93Ehrlich_wager>)

Energy is fundamental to the economy. It is _very_ fundamental. If a future in
which California decides it _is_ expedient to extract the oil under its lands
and waters is one in which there's been widespread economic disruption, it's
possible that the total decrease in economic output would _lower_ the price of
oil.

As a practical matter, oil prices above $85/barrel have been identified as
recessionary (<http://www.theoildrum.com/node/7246>). It's currently at $95.61
for WTI, $104.01 for Brent (<http://www.oil-price.net/>).

An early reference to the connection between energy (specifically oil) and
economic ability was Admiral Hyman Rickover (father of the nuclear navy) in
1957. Profoundly insightful, and forshadowing much of what came to be
associated with the ecology and counterculture movements:
[http://ourfiniteworld.com/2007/07/02/speech-
from-1957-predic...](http://ourfiniteworld.com/2007/07/02/speech-
from-1957-predicting-peak-oil/)

Peak oil will happen, it's merely a question of when it will (or whether it
already has). The economic, political, social, and other factors associated
with it may not be triggered for some time after, though again, perhaps
they've already started.

And if actual fossil reserves don't limit us (coal will likely last at least a
century longer, possibly more), climate impacts would have similarly
devastating effects. I'm looking at US crop yields this year with concern,
though the drought appears to have lessened somewhat in the midwest (while
deepening elsewhere).

~~~
lsc
>Energy is fundamental to the economy. It is very fundamental. If a future in
which California decides it is expedient to extract the oil under its lands
and waters is one in which there's been widespread economic disruption, it's
possible that the total decrease in economic output would lower the price of
oil.

This is a very good point.

Edit: on a related note, though, the state can't really borrow money, and
generally spends as much as it takes in. (and tax revenues vary wildly with
our rapid boom-bust cycles.) - In a very real way, the worse the California
economy is doing, the more each dollar of extra revenue would help.

>Peak oil will happen, it's merely a question of when it will (or whether it
already has). The economic, political, social, and other factors associated
with it may not be triggered for some time after, though again, perhaps
they've already started.

My problem with peak oil is that we have fission technology right here, ready
to go. It's way cleaner, and way safer than coal. We've got enough uranium to
party for a few more generations, and many generations after that if we put
some effort into using the stuff more efficiently. It's just political
resistance that keeps us on coal/gas instead of fission for our 'in place'
generation.

And yeah, not all of our energy use is in-place. But having a good source of
cheap and mostly clean electricity? it helps a lot. Heck, there's a lot of oil
about that takes more energy to extract than the oil will yield, right? if we
have cheap fission power to pump in, well, more of that starts to make sense.
So yeah; while cheap fission will power the gears of industry, and long-term
can power much of our transport, well, it's going to be a long time before oil
stops making sense for transport. (I mean, electrified freight trains?
probably realistic. fission-powered container ships? maybe not so realistic.)

And also, I'm being optimistic; I'm assuming that because we have fission, and
because it's proven and safe (compared to the alternatives... which is to say,
not completely safe, but reasonably so.) we will overcome the political
resistance before things get really bad. It's possible I'm wrong.

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jedberg
I think the author is trying to convince people that California should drill
more. But all this did was convince me that CA made the right decision.

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MarkMc
The article does seem biased. It says, "California has huge reservoirs
offshore" but doesn't mention the enormous BP oil spill in 2010.

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jmspring
CA has off shore reserves - probably true Requiring fracking to get to those
reserves has challenges and has multiple concerns outlined including --
[http://www.everettassociates.net/article/3509-new-study-
high...](http://www.everettassociates.net/article/3509-new-study-highlights-
environmental-risks-from-fracking)

I will say this, CA is a bit more cautious than TX in general, and given the
recent fertilizer explosion in TX, I'm ok with more regulation than less.

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beedogs
That article link doesn't work for me. Here's one that does:

[http://online.wsj.com/article/SB1000142412788732469510457841...](http://online.wsj.com/article/SB10001424127887324695104578416871045535226.html?mod=googlenews_wsj)

Also, wow, the comments at the bottom of that story are shockingly dimwitted.

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croatiankp
Well, at least we know where the WSJ stands on drilling and the environment
:).

