With the state budget $15 billion in the red, one would think that Gov. Arnold Schwarzenegger would consider virtually every potential fiscal fix. Indeed, the governor has stated that he is open to all suggestions. And, he and his largely Democratic staff have explored every variety of new sales and use taxes, from the sublime to the ridiculous. They have even considered turning the state into the equivalent of a “pay day” borrower, trading future lottery earnings for quick, up-front funds.
None of this would be necessary if Arnold were not a prisoner of his doctrinaire “save the Earth” environmental ideology. Because the one solution Arnold has refused to examine or even discuss, despite his self-declared receptivity to new ideas, is also the one most likely to succeed: Expanding state tideland gas and oil drilling. State tidelands are lands and water areas along the coast that are seaward of the ordinary high tide line by up to three miles. They are an enormous storehouse of natural gas and oil.
Of course, Arnold has opposed John McCain’s prudent suggestion that the U.S. do away with its 27-year drilling ban on California’s Outer Continental Shelf. He has bought into the Gore-Obama fairy tale that fossil fuels are evil, that high gasoline prices are good and that a nation which is almost entirely reliant on petroleum can somehow switch almost instantaneously to use of alternative fuels without risking unemployment or economic dislocation. So he would rather the U.S. not touch the estimated 10 billion barrels of undeveloped oil and nearly 17 trillion cubic feet of undeveloped natural gas to be found in California’s OCS.
Royalties for drilling in the OCS are not a potential budget fix because they would accrue to the federal government, not the State of California. On the other hand, revenues from leasing state tidelands for gas and oil development go directly into state coffers. During Gov. Edmund G. “Pat” Brown’s administration, tidelands leasing was second only to income taxes as a state government revenue generator. But evidently these are revenues Arnold would rather not have.
Is tidelands drilling something radical, new and environmentally hazardous? Not even close. The state began receiving oil and gas lease payouts in 1956. Today the state administers over a hundred project sites where oil companies operate about 1,000 wells. In the 80s, tidelands oil revenues helped fund K-12 education and higher education. Since then, it has supported local governments, the State Lands Commission, the California Housing Trust Fund, salmon and steelhead trout restoration, state parks maintenance, management of marine creatures, land acquisition and pollution abatement. However, since 2002, tidelands revenues have been diverted from these programs to the faltering state General Fund.
No one can recall the last time any tidelands well created an environmental hazard.
What is remembered is that in 1969 there was an oil well blow-out in the OCS off Santa Barbara that killed marine birds and mammals and covered miles of coastline in tar. Since then, drilling safety technology has advanced substantially and no similar accidents have occurred. In fact, leakage from barge shipments of oil has proven far more likely.
Is there a hold-up to tidelands development besides Arnold’s hang-up? Yes. Existing state law prohibits the State Lands Commission from issuing new oil and gas leases except in specific instances. Under misguided liberal leadership, the U.S. is the only nation in the world that outlaws domestic energy production. And California has even outdone the federal government in keeping gas and oil development off-limits.
We challenge Arnold to reform this law. He cannot escape the coming budget apocalypse without drastically raising taxes or cutting state programs. Opening up the state tidelands to hydrocarbon exploration and development is his best last chance.