May 17, 2021

In a recent Los Angeles Times column, longtime political reporter George Skelton called Governor Newsom’s plan to ban fracking and ultimately end all oil and gas production in California “a political show … to keep progressive Democratic voters in line as he fights the Republican-led recall attempt.”

Noting that “California’s economy in the 20th century, particularly before World War II, was largely built on oil,” he called the plan to shut down production “a historic game-changer.”

But ultimately, Skelton was skeptical of the unilateral action, concluding: “The fate of oil production should be settled in the marketplace by consumer demand, rather than by gubernatorial fiat. At the least, legislators and voters should participate in such a historic decision.”

Of course, the California Legislature has indeed participated – by considering and rejecting SB 467, a proposal to eliminate 97% of oil production in the state. In voting down the measure, legislators pointed to concerns about devastating job losses and increased dependence on foreign oil which economic analyses found would lead to significantly higher fuel prices for consumers and businesses.

Nonetheless, Skelton’s framing of Newsom’s plan as shutdown “by gubernatorial fiat” reveals an important phenomenon: the Governor’s impulse toward government mandates that require a disregard for basic economics.

As we’ve noted before, state and local energy shutdown policies are based on a radical activist philosophy that limiting in-state production of oil and gas is the only means to achieve climate goals.

Unfortunately, though, policies that limit the supply of oil and gas do nothing to lower demand for those products. The result? As Stanford University economist Charles D. Kolstad puts it: “If California consumers continue to demand the same amount of gasoline, it will just come from elsewhere.”

Notably, Cal State Bakersfield professor Mark Evans and University of California Berkeley professor Severin Borenstein agree. Evans argues that eliminating the oil industry in California “only affects where the oil is produced.” Given current demand, he has equated any plan to limit in-state production as choosing to buy oil from overseas instead of from California.

If Skelton’s modest proposal that “the fate of oil production should be settled in the marketplace by consumer demand” were allowed to become reality, California would continue to produce traditional energy supplies for decades to come – and do so under the most stringent environmental and public health protections on the planet. Energy policy experts like the California Council on Science and Technology and the U.S. Energy Information Administration believe that oil and natural gas will still provide a considerable portion of the economy’s energy needs beyond 2050.

Newsom’s unilateral mandate to shut down in-state oil production despite continuing demand commits California consumers and businesses to higher energy costs and an increasing and risky dependence on foreign sources of oil and gas.