It’ll all go down on August 3.
Less than two weeks from now, environmentalists will attend a rally at an oil refinery in Richmond, California, to protest fracking in the Golden State.
As you know, both producers and lawmakers alike are eager to tap the Monterey Shale, where more than 15 billion barrels of recoverable crude lay waiting to be developed. That’s about two-thirds of the nation’s shale reserves.
But environmentalists are either opposed to increased fracking in California, or simply want stronger regulations in place.
I suspect they’ll get neither.
In fact, even if the majority of Californians are opposed to fracking, environmentalists still won’t be able to stop the inevitable…
Now, understand I don’t say this to trivialize the demands of those who want to put the kibosh on fracking. As a supporter of a more sustainable energy and transportation infrastructure that focuses on electrified transportation, efficient mass transit, and more walkable communities than it does on more drilling, I get it.
However, I also know that transitioning our energy economy cannot happen with the flick of a switch. And while I agree that our lawmakers need to stop bending over for the oil and gas industry like a bunch of tired old truckstop hookers looking for cigarette money, I also know that environmentalists will simply not be able to muster up enough muscle to sideline the fracking boom that’s now underway in the United States.
California’s Thirsty
No matter how you slice it, California’s thirsty for oil.
You see, most of the state’s oil production comes from Kern County, where about 60% is sourced using enhanced oil recovery methods — basically, they’re scraping the bottom of what’s left after more than a hundred years of production.
This doesn’t bode well for the future of in-state production. Especially one that could definitely use the tax revenue and jobs generated by increased oil production.
Enter the Monterey Shale — which, according to a March 2013 report published by the University of Southern California, could deliver two million jobs and nearly $25 billion in state and local taxes by 2020.
And, quite frankly, there could be even more for the state if a new ballot initiative gets any traction before the next election…
A Lot of Scratch!
It’s called the California Modernization and Economic Development Act (CMED), and it calls for a 9.5% tax on oil and natural gas extracted from the state of California, with the revenue being used to fund investments in education and new, modern energy initiatives.
Supporters of the act say the tax could generate as much as $2.5 billion a year. That’s a lot of scratch!
California is actually the only major oil-producing state in the United States that doesn’t tax its oil resources. And while similar efforts in the past have failed, this time could be different. Because this time, there’s a lot more at stake with the Monterey Shale.
I smell a deal in the works. Here’s how I believe it’s going to go down…
Behind closed doors — where politicians don’t have to answer to environmentalists, and oil producers can “show them the money” some very serious mutual back-scratching will go on, with lawmakers offering to support production at the Monterey Shale and limit any overly-burdensome regulations if the oil companies agree to pony up a little more in tax revenue for the state.
In other words, don’t fight too aggressively against CMED and accept any new measures that would require a tax on its resources, and you can start milking that giant cash cow that the oil industry has been salivating over.
Of course, it won’t placate environmentalists. But there’s little historical data to suggest that such environmental movements in the past have been effective. And let’s face it; even environmentalists have to get to their rallies somehow, and I suspect most will be driving internal combustion vehicles.
Truth is if folks really want to fight the big oil machine, the best thing they can do is buy an electric car. No, it’s not going to kill the industry. In fact, it won’t even measure as an accounting error. But if you truly stand by your principles, then you should have no problem being a part of the electric vehicle movement that could do a hell of a lot more to limit our reliance on oil than picketing outside an oil refinery.
And if you don’t have a problem with fracking — and you simply want to continue profiting from the American shale revolution — get yourself a piece of the Monterey Shale.
That’s where the next round of fracking profits is coming from.
To a new way of life and a new generation of wealth…
Jeff Siegel
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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor’s page.
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