There’s more shale oil in California’s Monterey formation than in the rest of the country combined. More than 15 billion barrels of oil are locked in shale deposits underground, and the new drilling techniques that have kicked off America’s energy revolution elsewhere in America should make this bounty available for the first time.
California collects about $15 billion in tax revenues for every billion barrels of state oil production, according to research conducted last year by the University of Wyoming’s Timothy Considine and Edward Manderson. If that is accurate, then simply by opening up Monterey oil development—no incentives, grants or state funds required—tax receipts could total $250 billion over the coming two decades.
California’s greens are sure to raise a fuss over any new drilling in America’s greenest state, but their fears are misplaced. Drilling for shale oil doesn’t risk water contamination in the way drilling for shale gas does, and much of the drilling will be done on existing oil fields.
But as exciting as all of this sounds, there’s still a lot that could go wrong. The stratigraphy of the Monterey formation is complicated: Seismic forces have crunched and bent the shale layers, which making exploratory drilling much more speculative than it would be otherwise.
These problems will need to be figured out before drilling begins, but this shouldn’t be taken as an excuse to block it altogether. The brown jobs created by new drilling will provide a major economic boon for a struggling state, and the environmental benefits of consuming oil rather than extremely dirty coal should not be discounted.
Rather than pushing against any and all new drilling in California, smart greens should be looking for ways to move forward with drilling while ensuring that environmental concerns are taken care of.