Fracking Offers Jerry Brown a Watershed Moment


The recent announcement that Jerry Brown is studying "fracking" in California, suggests that our governor may be waking up to the long-term reality facing our state. It demonstrates that, despite the almost embarrassing praise from East Coast media about his energy and green policies, Brown likely knows full well that the state's current course, to use the most overused term, is simply not politically and economically sustainable.

Although largely a prisoner of basic green dogma, Brown also is a former Jesuit, with that order's sense of rationality, order and, well, philosophical flexibility. Unlike many of his progressive idolaters and legislative allies, Brown may well be intelligent enough to look past the rhetoric of the environmental movement and consider its often unexpected ill-effects.

Brown needs to balance "California comeback" stories – including one that gushingly describes "California beaming" – with the actual realities. Good times, and the current technology bubble, may be blessing Silicon Valley, but as Walter Russell Mead points out, this comeback is being pushed "over the heads of the poor and the jobless." This, he adds, "is not how progressives used to think."

The chasm between the effects of "noble" green politics and the interests of most Californians is becoming evident, if not widely recognized in the mainstream media. Editorial writers at the New York Times may believe we are losing our need for oil and gas, but this transition should be more difficult than they suggest and, if achieved through often-thoughtless Draconian measures, could have profound impacts on the overall economy.

Let's start with the supposed "up" side of the purist renewable policies hitherto embraced by Brown. The governor's 2010 election promise about creating 500,000 "green jobs" – his economic rationale for his energy and other environmental policies – increasingly looks far-fetched. With electric car maker Fisker, backed by well-connected Democratic venture capitalists and Al Gore, now perhaps ready to follow solar-panel maker Solyndra into bankruptcy, the pitch about a green economy seems unlikely, even bizarre.

The state-driven "green" policies have also created huge losses for the giant state-employee retirement fund CalPERS, one of whose managers at a recent conference confided that renewable–energy investments have negative returns approaching 10 percent.

Certainly, neither green energy nor even the current Silicon Valley bubble are creating enough jobs to make up for the enormous shortfall in employment since the recession. This is particularly evident in urban areas like Los Angeles and Oakland – where Brown was mayor from 1999-2006 – as well as most of the state's interior. Overall, the state vies for last-place honors with the likes of Rhode Island, Nevada and Mississippi for the nation's highest unemployment rate. The damage is greatest in the state's more blue-collar interior. Working-class Stockton just was allowed to enter bankruptcy and other municipalities seem likely to join the queue.

Progressive journalists, eager to pronounce the state's comeback to justify their ideology, seem utterly unaware of the seriousness of the overall situation in the state. One wonders what they would say if Pete Wilson or Meg Whitman were governor. Compare Texas, which is 550,000 jobs ahead of its 2007 number, to California, which, despite recent gains, remains down 560,000 jobs from its peak. Perhaps unemployment is not a big issue in the progressive reserve of Palo Alto, where the jobless rate is about the same as in North Dakota, but it is a constant in much of Los Angeles, San Jose and Santa Ana, as well as the Central Valley. If this suggests a "comeback" to New York Times columnist Paul Krugman, perhaps we need a new definition for that word.

These comparisons seem particularly relevant to the discussion of fracking – oil and gas extraction using a technique called hydraulic fracturing. In the environmental scheme of things, oil and even natural gas, once widely favored by progressives, now constitute an utter evil. This is true even though gas has been the primary reason for the country's reduced carbon emissions by replacing coal as a source for generating electricity. Some of the state's well-heeled greens would like to ban the process entirely.

Brown must be aware he is not just governor of the public sector or of his admirers among the coastal rich. He has to consider the unimaginable: removing mandates that force the state to rely on expensive, often-unreliable renewables, notably, solar. These have helped push California electricity prices well above the national average, and much higher than in prime economic competitors such as Washington state, Utah, Texas, Arizona and Nevada. Economist John Husing suggests this is one reason why California not only completely missed the recent national revival in manufacturing jobs – 500,000 the past two years – but actually lost 10,000 more such jobs.

We are clearly missing the party here. California's energy policies reflect what is already happening in Europe, where anti-fracking ideology, sometimes supported by the no-doubt-disinterested Russians, have largely won the day. But the costs of green policies have already convinced hard-pressed Spain to abandon its widely praised renewable program.

Far more economically healthy Germany also is rethinking its renewables mandates. One reason: German companies like Bayer and BASF consider moving to cheaper locales, such as along the U.S. Gulf Coast, where electricity is one-third the price. Texas, Utah and Arizona are to California's hard-pressed manufacturers what the Gulf Coast is to Germany's.

And, then, there are the effects of the budget. Unlike his East Coast admirers, Brown must know that the budget situation is hardly rosy over the longer term. The state auditor recently released a report showing the state's net worth to be negative by some $127 billion, in large part due to often out-of-control pension costs. There are already indications that the return from last year's hike in income taxes may not be as large as expected and that what was, during the election, promised to schools will likely end up, as widely predicted, covering rising pension obligations.

Companies and individuals may not leave California in droves, as some have suggested, but investors certainly can put their money someplace more fiscally responsible. A longer-term problem may be that the higher-income earners, who generate the vast majority of income-tax revenue, are also those most likely to change behavior or find effective income-hiding strategies; remember, Facebook paid no income taxes last year.

Given these prospects, reviving California's fossil-fuel industry could prove a critical boost to the budget. A deal to raise some energy taxes while allowing more exploration and development would go a long way to filling the state's coffers.

Energy taxes play a big role in financing higher education in many states, including North Dakota, Louisiana and Texas. Oil money, ironically, has allowed Texas to fund universities, particularly the main University of Texas campus in Austin, as a competitor to the perennially hard-pressed University of California system. An energy boom in California, whose energy resources may exceed those of all these states, might offend most academics, but, my hunch is, they might take the money.

Perhaps more important, a pragmatic shift on energy would also help, as columnist Tim Rutten puts it, "jump start" the state's economy, particularly in central California. In the past decade, Texas has created almost 200,000 energy-related jobs, while California has generated barely 20,000. These jobs provide good wages to many blue-collar workers, the very people losing out the most in our progressive-minded state.

There are other signs of pragmatism from the governor. Brown has announced support for a peripheral canal that would provide more-reliable water supplies to the state's huge agribusiness industry. Although some state regulators threaten farmers with ever-tougher regulations, some observers, such as three-term Salinas Mayor Dennis Donahue, now a full-time farmer, say the governor is trying to "walk the line between labor, greens and agriculture."

Many Republicans and conservatives find the notion of Brown getting on the road to reality itself fundamentally unrealistic. But the past could be prologue. Brown also started off his first term, in 1975, as something of a dreamer, proclaiming a "small is beautiful" agenda. This was, in many ways, ahead of its time, and skeptical of government spending, but Brown's environmental views, particularly, also offended some business interests. Far worse, he signed off on legislation freeing up public-sector unions, which has turned into something of a disaster.

But by the time he started running for a second term, Brown readjusted to a new reality. He could claim that, as someone opposed to the growth of institutionalized government, he could live with Proposition 13. Brown had opposed the measure, but, once it passed, in 1978, he chose, unlike many progressives, to embrace it.

Brown then ran as a centrist, pro-growth governor. He particularly embraced the then-ascendant technology industry, gaining new donors and allies, although the shift toward realpolitick horrified some of his green backers. But the politics worked brilliantly.

Today's circumstances, of course, are different. For one thing, Brown faces little pressure from the right, as the Republican Party, at least for now, has deteriorated into near irrelevancy. The once-potent California business community also has lost much influence, with every lobby, basically, trying to make its own deal with the overweening state apparat.

So, if Brown is to move to the center, he will have to do it largely on his own, and put up with the incessant hectoring of his allies. Yet, Brown's occasional genius has demonstrated a Machiavellian quality, knowing when to embrace opponents in order to divide or weaken them, or to allow allies to stew. He also, at this stage of life – today, April 7, is his 75th birthday – must wonder if he wants to leave a legacy of fiscal weakness, a fading competitive edge and an ever-expanding class chasm. In the long run, whether on fracking or a host of other issues, Brown's success will not derive from pleasing progressive writers, but by promoting a better future for the vast majority who live in, and love, this state.

Joel Kotkin is executive editor of and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared in the Orange County Register.

Photo: Troy Holden

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wow cool hopefully this

wow cool hopefully this program can be followed by the governor ain in other American states in order to wake up to the reality of long-term.
Ace Maxs

That's good, I was a little

That's good, I was a little relieved to hear that. This means that the progress that has been seen in front of us. I hope, really can bring good effect.


PR war

Something that is very interesting is that anywhere where there is largely left of center populace, the achievements that are remembered and celebrated are those that advance the leftist agenda. What is blamed for the failure of policy is the "process," and the only actors who are ridiculed are those who oppose their mainstream agenda. Meaning, that even if leftist policy prescriptions continue to fail, they only need one slip-up from the RIght, or one antithetical actor behaving immorally, for them to scapegoat and direct public fury towards.

You have silent pragmatists, such as the San Jose municipality, who had the nerve to challenge its public employee pension to reign in runaway costs, and were able to do so successfully. But they could only do this without the ire, and constant berating of the mainstream media. Which is to be expected, as the Left tends to elevate motives above behavior/action/ramification/etc. And those who run San Jose are on their side, and must therefore have good intentions. The same applies to the state of Massachusettes. Whereas if a republican did the same thing, such as in the case of Scott Walker from Wisconsin, it would be lambasted as being in the pockets of big-business, and they only what they do out of the cruelty and greed of their cold black capitalist hearts.

Given this reality, Governor Brown has a very tight rope to walk. If he can manage to increase jobs by fracking and drilling and expanding the ports, while lambasting a "conservative" scapegoat, and also advance some level of green infrastructure, he may be able to get away with helping the state. Which is pathetic in its own right, that someone has to do so much unnecessary harm, just to "get away" with helping its constituents. And he may be able to do so without undergoing a rigorous bruising from the Left, which will not let anything antithetical to its agenda go unnoticed, and unpunished. But that is the current state of California, and that is where we find ourselves today.

He's one of them, he "cares" for the environment and social equality, I'm sure a more robust California will be call for journalists and critics to look the other way, and focus on the good things, as it makes better PR to cite any good news as proof that the leftist agenda works.

Finding California's Energy Utopia

The Economic Alliance of Northern Santa Barbara County recently hosted an energy action summit, a day-long dialogue about alternative energy technologies, onshore oil and gas opportunities, and how either could directly impact the state and Santa Barbara County.

The summit featured USC’s report analyzing the potential impact of the development of the Monterey Shale on job creation, economic activity, personal incomes and government tax revenues over the next 15 years, along with results of UCSB’s Santa Barbara County Onshore Oil and Gas Economic Study.

That California could be ready for a discussion about a balanced approach that is both pro-growth and pro-environment is supported by the news coverage of the event in the Santa Maria Times, on, and in the
Santa Barbara Independent.

Most Greens DO want the American Dream ...

... for themselves (single-family home, private automobile, uncongested highways) - but not for others, and especially not for future residents, who should be forced to live in apartments and take urban mass transit and maybe own a bicycle.

Most of the Greens have no problem driving their cars (which tend to run on fossil fuels, regardless of the source of those fuels) to hearings about proposed highways (such as the proposed completion of I-710 through South Pasadena), and happily expressing their opinion (it's really just several variations on the anti-mobility theme, in particular for future residents) that we don't need to expand or even improve the highway network.

I dont see Brown

I don't see Brown doing anything to change from his green religion to "allow" fracking. Don't forget that Brown was the beginning of turning California from a place to aspire to, to the present basket case that it has become. Being broke does seem to make a difference to liberals who think spending huge money solves whatever.