California politicians may seem to frequently preach a future free of fossil fuels. But a new study issued by the Los Angeles Economic Development Corp.’s (LAEDC) Institute for Applied Economics found that the oil and gas industry still has a strong fiscal impact on the Golden State’s economy.
In the Aug. 27 study—“2019 Report Oil and Gas in California: The Industry, Its Economic Contribution and User Industries at Risk”—the LAEDC analyzed the extraction, production, refining, and petroleum products manufacturing in the state. It found that those activities generated $152.3 billion in total economic output, making up 2.1% of California’s overall gross state product in 2017.
The study also found that the industry also made significant fiscal contributions to California’s state and local governments, including $21.6 billion in state and local tax revenue and $11 billion in sales tax, $7 billion in property taxes, $1 billion in income taxes, and $96 million in the Department of Conservation’s Division of Oil, Gas, and Geothermal Resources (DOGGR) assessments.
“The oil and gas industry makes a significant contribution to the California economy in terms of jobs, labor income, economic output and the industry’s contribution to California’s GDP,” observed Shannon M. Sedgwick, senior economist for the LAEDC and the Institute of Applied Economics.
“Not only that: As a key input for products ranging from pharmaceuticals to flame-retardant clothing, many other California industries rely upon the state’s oil and gas industry and its production, downstream processing, and products as an input in their production and provision of services,” Sedgwick said.
These include manufacturing, agriculture, and transportation industries in the state, as well as leisure and hospitality business, Sedgwick said.
Wide range of skills
The report details the industry segments that provide career paths for diverse individuals across the skills and education spectrum, all with relatively high wages that averaged just over $80,000/year, Sedgwick added. Findings include nearly 50% of the industry’s workforce is ethnically diverse, 63% of its workers do not have a bachelor’s degree, and one third of all workers have a high school degree or less, Sedgwick noted.
“We’re extremely proud of the opportunities we are able to provide the Californians who work together to power this valuable industry,” said Catherine Reheis-Boyd, president of the Western States Petroleum Association.
“While the economic impact numbers are compelling, the other side of the numbers tell the story of the state’s hard-working men and women who are deeply rooted in the industry, and in making their communities thrive,” Reheis-Boyd said.
“The labor income we generate highlights the industry’s commitment to the health, education, and living conditions of our industry employees,” Reheis-Boyd said.
Nick Snow
NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.
