Source: www.nytimes.com : 2022-07-07 12:15:46 : Brad Plumer and Alisha Jucevic
TAFT, Calif. — Every five years, this city of 7,000 hosts a rollicking, Old West-themed festival known as Oildorado. High schoolers decorate parade floats with derricks and pump jacks. Young women vie for the crown in a “Maids of Petroleum” beauty pageant. It’s a celebration of an industry that has sustained the local economy for the past century.
This is oil country, in a state that leads the country in environmental regulation. With wildfires and drought ravaging California, Gov. Gavin Newsom, a Democrat, wants to end oil drilling in the state by 2045. That has provoked angst and fierce resistance here in Kern County, where oil and gas tax revenues help to pay for everything from elementary schools to firefighters to mosquito control.
“Nowhere else in California is tied to oil and gas the way we are, and we can’t replace what that brings overnight,” said Ryan Alsop, chief administrative officer in Kern County, a region north of Los Angeles. “It’s not just tens of thousands of jobs. It’s also hundreds of millions of dollars in annual tax revenue that we rely on to fund our schools, parks, libraries, public safety, public health.”
Across the United States, dozens of states and communities rely on fossil fuels to fund aspects of daily life. In Wyoming, more than half of state and local tax revenues comes from fossil fuels. In New Mexico, an oil boom has bankrolled free college for residents and expanded medical care for new mothers. Oil and gas money is so embedded in many local budgets, it’s difficult to imagine a future without it.
Disentangling communities from fossil-fuel income poses a major obstacle in the fight against climate change. One study found that if nations followed the urging of scientists and cut emissions from oil, gas and coal deeply enough to avert catastrophic warming, United States tax revenues from oil and gas production, currently about $34 billion per year, could fall by two-thirds by 2050.
While Kern County produces 70 percent of California’s oil, it is also the state’s largest supplier of wind and solar power. But renewable energy doesn’t generate as much tax revenue as fossil fuels, partly because California exempts solar panels from property taxes to spur construction. And jobs in the wind and solar industries generally don’t pay as much or last as long as those in the oil fields.
So Kern County is feuding with the governor. Local officials, who have unsuccessfully sued to block Governor Newsom’s restrictions on drilling, are backing a plan for up to 43,000 new wells and have threatened to halt solar projects in response to the state’s oil crackdown.
Whether Kern County can transition to cleaner energy could offer a model, or a cautionary tale, to the rest of the nation.
“California is about 10 years ahead of other places on climate policy, but I expect we’ll see similar issues pop up across the United States,” said Kyle Meng, an economist at the University of California, Santa Barbara. “When you look at how deeply oil and gas is woven into the fabric of many communities, providing money for schools and hospitals and roads, the shift to clean energy can get really complicated, really fast.”
‘Oil supports everything we have’
Nestled in the southwest corner of the San Joaquin Valley, Taft was built above the Midway-Sunset oil field, California’s largest, after a gusher in 1910 sent millions of gallons of crude raining from the sky.
Today, Taft is surrounded by roughly 10,000 wells, and oil defines the city.
Downtown features the Oilworker Monument, a towering bronze statue of a derrick and a roustabout wielding a wrench. The Black Gold Brewing Company sells oil-themed beers like Petroleum Highway Porter, along with Thai food, guns and ammunition. The West Kern Oil Museum walks visitors through thousands of modern products derived from petroleum, from fertilizer to nail polish.
“We take a lot of pride in what we do here, in our contribution to America’s energy security,” said Dave Noerr, a former oil field worker and mayor of Taft since 2016, as he drove his pickup truck through town one recent morning. “And our industry partners have been incredibly generous to our community in return.”
Property taxes from oil and gas fund Taft’s well-kept parks and recreation centers. The local college built a new classroom and hired staff to teach anatomy with funding from Chevron. Millions of dollars in donations from oil companies support the Taft Oil Technology Academy, a popular high school program where students learn petroleum geology, fly drones and research topics like carbon dioxide recycling.
But Taft’s boom years may be over, and the future is uncertain. Even as Russia’s invasion of Ukraine has sent oil prices soaring, crude production from California’s fields keeps declining. Much of that drop is structural: The state’s output peaked in 1985 after decades of exploitation, and the remaining heavy oil requires sophisticated techniques like steam injection to extract.
At the same time, local officials and oil companies say production has been further depressed because state regulators have made it increasingly difficult to obtain drilling permits. As California has suffered through record-breaking heat waves, droughts and wildfires, the state has moved to slash greenhouse gases that result from burning oil, gas and coal and are rapidly heating the planet.
Since 2019, the annual number of permits issued by state regulators to drill new wells or modify existing ones has fallen by roughly half, and regulators have restricted techniques like hydraulic fracturing. Kern County wants to take over permitting from the state, aiming to approve thousands of new wells by 2035, but courts have blocked those efforts.
In the Midway-Sunset field, the dusty foothills are covered by a thicket of steam pipes, power lines and pump jacks quietly bobbing up and down, pulling oil from the ground.
“It’s actually unusual how quiet it is right now,” said Fred Holmes, the chairman of a small oil company who also runs a foundation providing college scholarships to local students, surveying one of his leases beneath the unyielding sun. “If we could get permits to drill new wells, there’d be a lot of activity to see. But there’s nothing going on.”
Understand Inflation and How It Impacts You
The drilling slowdown threatens Kern County’s finances, officials say. In 2020, oil and gas generated nearly one-quarter of the county’s property tax revenue, $197 million, which helps fund schools, hospitals, law enforcement, water agencies and other programs. In recent years, sharp swings in oil prices have forced painful cuts, including staffing reductions at fire stations and library closures. The latest price spike has provided some relief, but officials say that as drilling declines, it will get harder to provide critical services in a county with 900,000 people and some of California’s highest poverty rates.
“The problem is, we’ve got crime rates going up, homelessness going up, the cost of living is going up, our population is increasing,” Mr. Alsop said. “And the revenues we need to address these things are stagnating, all because of our unique position on oil and gas.”
Last year, Taft’s voters agreed to increase local sales taxes to avert a fiscal crisis and patch up shortfalls in the firefighting budget.
“If the governor says no to new oil and gas, every part of Taft is going to feel the pain,” Mayor Noerr said. “Think of all the social programs that won’t get funded, who is that going to hurt most? It’s going to be people of color, the poor. It angers me to no end.”
As gasoline prices soar, local officials say producers should be unleashed. They argue that California’s appetite for petroleum remains high, with electric cars still a fraction of the market. The state imports over half its oil from foreign countries, including from places like the Amazon rainforest in Ecuador.
“As long as we’re still using oil, doesn’t it make more sense to get every last drop we can right here in Kern County, where it provides jobs and tax revenue?” said Zack Scrivner, a county supervisor.
To ease the transition from fossil fuels, Governor Newsom has proposed $65 million to support and retrain displaced oil and gas workers, $200 million to clean up abandoned wells and $450 million to help communities diversify their economies.
“Later is too late when it comes to climate change, and California is moving aggressively to deploy clean energy and cut pollution in our communities,” said Alex Stack, a spokesman for the governor. “This administration has committed unprecedented funding to support the vision of regional leaders to help create more diversified, inclusive local economies.”
Not everyone in Kern County wants more drilling.
In the agricultural town of Shafter, scattered pump jacks clank amid almond groves. There are three fracking wells within a half-mile of Sequoia Elementary School, one visible from the playground. In 2015, a parent sued the state over health risks from pollution.
Kern County has some of the nation’s worst air pollution, partly owing to geography: The valley is a bowl that traps pollutants. Researchers say oil and gas is a significant source of smog-forming compounds like sulfur oxides. A state health panel concluded that living near active wells increases the risk of asthma, heart attacks and premature births.
“The pollution is everywhere,” said Anabel Marquez, 68, a Shafter resident whose grandchildren have asthma. “You can smell it, it dries out your eyes and your throat.”
Ms. Marquez said her pleas to restrict drilling locally have fallen on “deaf ears.” “When people bring home checks from the oil industry, it’s not something that they’re usually willing to stand against,” she said.
In places like Taft, economic worries dominate. The city’s population has been shrinking. Vacant storefronts dot the main street. Two years ago, a nearby federal prison closed, delivering another blow.
Renee Hill, 63, grew up in the city, left, and then returned a decade ago with her husband to open an antique and flower shop on Taft’s main drag, hoping to help revive downtown.
“Oil supports everything we have,” Ms. Hill said. “If oil goes away, we don’t have anything else. We’re 15 miles from the nearest highway, so we’re not going to get Amazon warehouses. This isn’t some seaside paradise that will bring in tourists. I wish there was something else we could do, but that’s the reality.”
Communities built on fossil fuels
Nationwide, 21 states produce significant amounts of oil, gas and coal, filling their coffers with property taxes, royalties, lease sales and fees, according to a recent study by Resources for the Future, a nonpartisan research group. The most reliant states include Wyoming, which gets 59 percent of state and local tax revenue from coal, oil and gas, followed by North Dakota at 31 percent, Alaska at 21 percent, New Mexico at 15 percent and West Virginia at 9.4 percent. Montana, Oklahoma, Louisiana and Texas get at least 7 percent of in-state revenue from fossil fuels.
“Tax revenues aren’t as visceral as jobs — everyone understands how painful it is to lose a job,” said Daniel Raimi, a fellow at Resources for the Future. “But in raw numerical terms, it’s just as big a challenge.”
Wyoming, which mines 40 percent of America’s coal, has faced budget crunches as coal power has dwindled nationally, forcing cuts to colleges and health care. State lawmakers have sought to prop up coal, passing laws that make it harder for utilities to close coal plants and threatening to sue other states that hurt Wyoming’s coal industry.
“It’s not a completely irrational response,” said Robert Godby, an economist at the University of Wyoming. “If you’re backed up against a cliff, it might be inevitable that you’re going to fall off, but you’re still going to fight it for as long as possible.”
Even states receptive to climate action can find themselves in a bind. In New Mexico, the second-biggest oil-producing state, surging revenues have enabled the legislature to raise teacher salaries, provide free day care, and fund new health and criminal justice programs.
What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.
Gov. Michelle Lujan Grisham, a Democrat, has promised to tackle global warming and signed legislation requiring utilities to shift to carbon-free electricity by 2045, while providing money to coal communities hurt by plant retirements.
Still, Ms. Lujan Grisham has criticized President Biden’s plans to limit oil and gas drilling on federal lands, a major source of state revenue. This spring, lawmakers shelved legislation to halve the state’s greenhouse gas emissions by 2030.
The New Mexico Oil and Gas Association has campaigned against production curbs, with one ad showing children in a classroom and warning, “Proposed laws aimed at oil and gas would take billions away from public education, gutting our schools. Reading programs, sports, even school lunches — all at risk.”
Experts say oil and gas communities should start planning now, or risk the fate of regions in Appalachia that suffered after the rise of cheap natural gas hobbled the coal industry. “You look at what happened to some of those coal communities and it’s a terrifying scenario,” said David Tuan, the city administrator of Williston, N.D., which has doubled in population since 2010 amid an oil boom.
To date, few places have gracefully navigated the end of fossil fuels. Tonawanda, N.Y., a town of 74,000 north of Buffalo, lost millions in tax revenue after a coal plant closed in 2015. The state legislature helped replace the funds, and the town is now looking to redevelop its waterfront and expand industries like tire manufacturing.
But not all states can afford to do what New York did, experts say, and the federal government may need to step in.
In May, Senator Michael Bennet, Democrat of Colorado, introduced legislation to help replace local revenue when fossil fuel facilities close. He wrote the bill after visiting towns in Northwest Colorado, where planned coal plant and mine shutdowns could cut tax revenue in half.
“To me this is a big obstacle to climate action,” Mr. Bennet said. “We have struggled to make progress on this issue because we haven’t been able to provide a persuasive vision of what an energy transition will look like to some of the communities that will be most affected.”
A rocky road to clean energy
An hour’s drive east of Taft, scrubby flatlands give way to the Tehachapi Mountains, which contain some of America’s largest wind farms. Further east lies the Mojave Desert, where acres of solar panels have proliferated.
Kern County has become California’s most important source of renewable energy, providing half the state’s wind power and one-quarter of its solar power.
One afternoon in Bakersfield, at the union office of the International Brotherhood of Electrical Workers’ Local 428, former oil workers practiced bending conduit, the tubes used to route wiring, as they trained to become electricians.
Richard Romero, 35, was an oil rig operator for 11 years but left after the last price crash. “I got sick of the ups and downs,” he said. “It just seems like everything’s going green at some point. There’s pretty much no future in oil anymore.”
In theory, renewable energy could offer an economic alternative to oil, gas and coal. A Brookings Institution analysis found that a quarter of U.S. counties with the greatest potential for wind and solar power are currently fossil-fuel hubs.
But the transition is far from simple. Historically, oil and gas has been one of Kern County’s few industries where workers without college degrees can find high-paying jobs; the average salary is $80,000. Solar and wind farms require lots of construction work, but fewer employees to operate. (Kern County’s biggest employer is agriculture, but in 2019 it had roughly 16,000 oil and gas jobs and 2,500 renewable energy jobs.)
In the Midway-Sunset field, Eddie Carmichael, a 62-year-old welder, was repairing worn-out steam pipes. He has worked in oil since he was 20 and put four children through college. He was skeptical he could find comparable work elsewhere.
“I could go flip burgers, I guess, but that’s not going to do me any good,” he said. “That’s not going to pay my health insurance.”
There are also revenue concerns. In 2020, Kern County’s solar farms generated just $1.5 million in property taxes, less than 1 percent of what fossil fuels did, partly because of the state tax exemption for solar panels, a policy the county has fought to change.
Local leaders and businesses are discussing strategies to diversify Kern County’s economy by expanding industries like aerospace, manufacturing, new energy sources like hydrogen or biodiesel, or even carbon capture technology.
“Oil is so culturally ingrained here that it’s difficult for many people to imagine we could do anything else,” said Mercedes Macias, a senior organizer with the Sierra Club in Kern County. “At the same time, I don’t envy the supervisors trying to figure this out, because it’s not like anyone has step-by-step instructions for how to reinvent an economy that’s so dependent on fossil fuels.”
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