A recently released audit details the harsh realities of how the City’s budget will be impacted should oil production end in Long Beach.
The audit released last week details how the City’s budget is dependent on the revenue and how it would impact services should it be eliminated.
It is estimated the city will lose between $278 million to $301 million now that Senate Bill 1137 is being implemented by the State of California.
“We have to get ahead of these challenges that are facing Long Beach uniquely, and make sure that we are taking this seriously while there is still time to act,” Mayor Rex Richardson said during a recent City Council meeting to discuss potential new revenue measures.
In April, the Long Beach Post explained that the City could soon lose as much as $20 million per year in revenue from drilling and extraction and is floating the idea of placing a tax measure before voters this November to shore up the lost revenue.
What many may not realize is that the City is the owner of the oil rights and hires other companies to extract and sell the oil they own.
With 2,700 active and idle oil wells supporting jobs with an average income of $123,000 annually, what is your message to those workers facing unemployment? Will the city council implement programs to support these displaced workers?
The U.S. Energy Information Administration’s data shows increased oil demand in California over the past decade. How will the City of Long Beach manage the increased port traffic to deal with oil imports from foreign countries?
The Los Angeles Times recently reported that port ships are the number one source of Southern California’s smog-causing pollutants. Doesn’t this legislation cause greater environmental damage for Long Beach? Why not favor local energy production, which is under the state’s climate program, instead of foreign imports that are completely exempt from all the state’s environmental regulations?
California spends $25 billion annually to import oil. The City of Long Beach is projected to lose $301 million in oil revenue, which will be diverted to foreign countries to meet our current demand.
The ripple effects of this decreased revenue will impact critical public services, including police and fire departments, libraries, park programs, and other city support services, all of which rely on the funds generated by local oil production.
California now imports 75 percent of the oil we use, primarily from foreign countries. The two primary sources are Saudi Arabia and Iraq. A large amount of oil is also imported from the Amazon Rain Forest.
Related: Foreign Sources of Crude Oil Imports to California
Half of the crude exported from the Amazon overall goes to California, according to a report by Amazon Watch and Stand.earth, two nonprofit groups that work to protect the rainforest. They also modeled how that oil is distributed once it’s refined.
“One in every nine tanks of gas, diesel or jet fuel pumped in California comes from the Amazon,” said Angeline Robertson, the lead author of the report and a senior researcher at Stand.earth. “So if you take nine trips somewhere, one of those trips was Amazon oil.”
State Senator Lena Gonzalez (D-Long Beach) authored SB 1137, aiming to reduce California’s domestic oil production. SB 1137 reduces local oil production and forecasts a significant decrease in revenue for the state of California and local cities.
SB 1137 was intended to help fight climate change, yet 50 percent of the oil from tearing down the rainforest is imported to California. What are the environmental and economic costs of this?
The state’s advisors warn SB 1137 could act as a “reverse setback,” meaning cities and counties might not be able to permit housing and other development within the setback zone.
SB 1137 increases oil imports from foreign sources, and imports are more expensive than domestic production due to transportation costs, SB 1137 may further drive up California gasoline prices.
With the California Independent Petroleum Association deciding to withdraw their referendum and pivot to a legal strategy, these budget deficits are bound to be seen throughout the state.
“Californians do not want to further increase our dependence on expensive foreign crude when California workers can create the energy locally under the strictest regulations in the world. Supporters of the energy shutdown can make unfounded claims in the press and in paid advertisements, but they can’t make those claims in court without evidence,” said Jonathan Gregory, Chairman, California Independent Petroleum Association, CEO of RMX Resources.
“That’s why we are pivoting from the referendum to a legal strategy since it is a violation of the US Constitution for the government to illegally take private property, particularly operations that were duly permitted by the government and all impacts mitigated.”
Polling has consistently shown that Californians would rather produce their energy locally under California’s strict environmental rules and regulations than increase our already troubling reliance on imported foreign crude from Saudi Arabia, Iraq, and Ecuador.
A poll conducted by CIPA in April showed only 49% initial support for maintaining SB 1137 among California voters, even before being informed about all the negative aspects of the Energy Shut Down Law. Typically, referendums and initiatives need to start with over 65% support to survive a robust campaign.
Supporters of SB 1137 tout polling that shows support for upholding the law. However, unlike CIPA’s polling that used the actual language drafted by the Attorney General, their polling uses language that would not appear in the ballot summary. Supporters ask if voters would support banning new wells near schools, hospitals, and nursing homes. They do not inform voters the setback distance is a full kilometer, applies to all businesses not just sensitive receptors, and affects maintenance at existing facilities, not just new wells.
Shutting down these permitted assets, into which companies have invested millions of dollars without any proven environmental harm, constitutes an illegal taking under Article 5 of the US Constitution. It also violates due process and equal protection given that entities with much higher proven emissions that exist in the setback zones such as landfills, ports, water treatment and other industrial facilities, are not shut down by this or any other law. Instead of unfounded claims, the state will have to prove their case in a court of law where statements must be factual and backed by evidence.
Long Beach residents deserve to have the resources available to them to ensure continuity of funding services to maintain vital services they are accustomed to enjoying.