Editorial: Backward California

Feb. 23, 2009
Partly because California officially lives in the past, Americans elsewhere must help the state deal with financial desperation.

Partly because California officially lives in the past, Americans elsewhere must help the state deal with financial desperation. The $800 billion law Congress passed this month in an effort to stimulate the economy pushes an estimated $26 billion toward California. The state government has a budget deficit expected to reach a staggering $41 billion by the middle of 2010.

The generosity gives American taxpayers dollars-and-cents reasons to ask how a state with extraordinary endowments of personal wealth and natural resources fell to such fiscal despair and whether it has done everything possible to solve its own problems. Answers to these questions should be especially poignant after the recent ascension of liberal Californians to positions of power in Congress, to which President Barack Obama inexplicably delegated writing of the stimulus bill.

Discouraging business

California lost its fiscal health by spending too much and by discouraging business activity with excessive taxation and regulation. People and businesses have been leaving the state for years because they no longer could afford to live and operate there. A state that discourages business activity in these ways cannot be said to be doing all it can for its fiscal health. In no area of business, moreover, does California discourage activity more than in offshore oil and gas work. Here, officialdom and apparently much of the population live in the past.

Fierce resistance to offshore leasing, drilling, and nearly everything else associated with oil and gas has dominated Californian politics since the Santa Barbara Channel spill of 1969. The mishap occurred when pilings of a production platform widened a sea-bottom fissure already contributing to natural seepage. The resulting mess turned out to be neither as extensive nor as long-lasting as initially feared. It nevertheless gave nascent environmentalism a rallying point and froze California’s regulatory mood in time.

The technologies of oil and gas drilling and production have advanced far beyond those in use in 1969. The iconic Santa Barbara spill could not recur. Because of attitudes hardened by the Santa Barbara accident, though, California hasn’t issued a lease in state waters since 1969, refuses to issue a lease that won’t involve any platform construction at all, and wants to broaden its antiquated obstructionism to national scale.

At the end of January, the State Lands Commission rejected a lease sought by Plains Exploration & Production Co. under a plan supported by traditional leasing opponents. The plan, full of aggressive environmental offsets, had been approved by the Santa Barbara County Planning Commission last spring. It was opposed only by ExxonMobil Exploration Co. and Sunset Exploration Inc., which have a competitive proposal, and an individual.

Plains Exploration proposed to use extended-reach drilling from Platform Irene in federal waters to develop the Tranquillon Ridge prospect, which is thought to hold 100 million bbl of recoverable oil. The structure lies in state waters and is being drained by federal production. The plan won support from antioil groups after Plains agreed to halt all production off and in Santa Barbara County by 2022, control emissions of greenhouse gases under careful audit, and fund emissions offsets.

Environmental compromise didn’t matter. Lt. Gov. John Garamendi, one of three lands commissioners, said California didn’t want to imply support for offshore drilling at any level. “Approving a drilling proposal will undercut congressional efforts to reintroduce a federal moratorium on offshore oil drilling earlier lifted by the Bush administration,” he said.

Economic perversions

So a broke state has rejected an environmentally buttoned-down project that might have earned it $5 billion. That’s bad enough. But it now slurps federal bail-out money while trying to hook the rest of the country into its disastrous economic perversions.

The US looked forward last year when Congress, not just the Bush administration acting alone as Garamendi implied, voted to relax leasing moratoriums with which it had forfeited wealth and domestic energy supply for three decades. The country shouldn’t now reward a state’s economic self-immolation with taxpayers’ money. It certainly shouldn’t adopt California’s backward-looking approach to oil, gas, technical progress, and consequent contributions to economic health.