Energy Sector Winners and Losers

California’s political leaders routinely point to the state’s economy as evidence that aggressive climate and energy mandates can coexist with economic prosperity. But a new analysis highlighted by Extracting Fact suggests that the headline numbers obscure a much different economic reality for millions of working Californians.

Governor Gavin Newsom has repeatedly touted California’s 21 percent reduction in greenhouse gas emissions since 2000 while the state’s economy grew 81 percent over the same period. The implication is straightforward: California has proven that increasingly aggressive climate policies can produce both lower emissions and robust economic growth.

The problem is that the prosperity has not been evenly distributed.

The Extracting Fact article highlights research from the Berkeley-based Breakthrough Institute finding that extraordinary economic growth concentrated in a relatively small number of technology-dominated counties has masked significantly weaker economic performance elsewhere. According to the analysis, 71 percent of California counties grew more slowly than the national average between 2017 and 2023. The researchers specifically identify California’s climate policies and the departure of energy-intensive industries as factors limiting employment opportunities for working-class and non-college-educated Californians.

That distinction matters enormously for California's independent oil and natural gas producers and the communities where they operate.

California's oil-producing regions provide precisely the kinds of jobs that policymakers should be trying to preserve: skilled, well-paying employment that does not necessarily require a four-year college degree. Those jobs support families, local businesses, contractors, and local governments through taxes generated by producing properties. Yet state policy continues making domestic production more expensive and difficult while California remains heavily dependent upon petroleum.

The economic consequences extend well beyond oil producers. The California Manufacturers and Technology Association, representing thousands of manufacturers, has similarly warned that escalating energy costs have made California one of the most difficult states in the country in which to operate. Meanwhile, California's cost-adjusted poverty rate reached 17.7 percent, tied for the highest in the nation, according to Census Bureau figures cited in the article.

There is an increasingly difficult question Sacramento policymakers must confront: If California's climate policies are successful, why are so many working Californians paying such a steep economic price for them?

CIPA has consistently argued that California can pursue its environmental objectives without deliberately dismantling domestic energy production. California will continue consuming crude oil for transportation fuels, aviation, manufacturing, agriculture and thousands of petroleum-derived products regardless of whether that oil is produced in Kern County or imported from thousands of miles away.

Driving California producers out of business does not eliminate that demand. It simply transfers production, jobs, investment and economic activity somewhere else.

The Breakthrough Institute's findings reinforce an important point that too often gets lost beneath California's impressive statewide economic statistics. A booming technology sector in Silicon Valley does little consolation for an oil worker who loses a career in Kern County, a manufacturer confronting increasingly uncompetitive energy costs, or a working family struggling with some of America's highest costs for housing, electricity, and transportation.

California's energy policies should ultimately be measured not only by emissions reductions, but also by whether ordinary Californians can afford to live, work, and raise their families here.

By that measure, there is considerable room for improvement.