Contemplate this little tidbit the next time gasoline prices push the $5 a gallon mark: The nation’s largest known shale oil reserve is in our own backyard.
The Monterey Oil Shale that encompasses virtually all of the San Joaquin Valley, with the Santos Oil Shale covering the Los Angeles Basin area, has 15.4 billion barrels of technically recoverable oil reserves. The U.S. Energy Information Administration notes that is three times more recoverable reserves than in the boom oil fields of the Bakken Shale centered in North Dakota.
It is also 78 times California’s 2011 oil production. It would keep our refineries in this state going for 21 years without relying on a drop of oil from anywhere else.
The latest jump in prices was blamed on a disruption at refineries — one a fire, the other an electrical outage — and an issue with a delivery pipeline happening all at the same time. It is clear that additional refinery capacity — or storage of refined gas — would go a long way to easing price spikes allegedly caused by supply problems that are becoming all too frequent in California.
And when gas prices spike, people spend less money on other things, hurting the economy and families’ ability to stay above water.
Industry experts will tell you that refineries are money-losing propositions. Which is why they don’t build any more anywhere in the United State these days. But see if the big oil corporations can squeeze profit out of oil without the ability to refine it.
California is more subject to supply price spikes due to the cleaner gasoline we burn, especially during the summer months. No refineries outside of California are equipped to meet the requirements put in place to keep our air as clean as possible. And it is a reasonable requirement given the number — and massive size — of air basins that we have from the Los Angeles Basin to the San Joaquin Valley.
It has turned California into a manmade island of sorts when it comes to fuel. But here’s the real kicker. We are also a manmade island when it comes to oil which you need to be able to create gasoline. California now imports about half of the oil we consumer from countries such as Iraq and Ecuador. Meanwhile, reliance on foreign oil is dropping at other refineries not in California.
California refineries also supply Oregon, Nevada and Arizona.
What hasn’t happened yet — but the odds are great that it will — is a disruption in the supply of crude oil to California refineries. There are no pipelines connecting California our nation’s other oil rich regions to move oil or even gas if refineries could be equipped to produce California’s unique fuel blend.
That means as the rest of the nation is entering an era of stable supplies thanks to domestic production, California will be subjected to double whammy - the special blend requirements and a precarious supply source that is subject to all sorts of possible disruptions, not to mention price pressures by regimes ticked off at the United States.
So what are the leaders of the world’s eighth largest economy that they like to brag about up in Sacramento doing about oil supply and refinery capacity?
The answer can be found the next time you get whiplash watching the numbers spin by like a slot machine as you fill up your tank.
This column is the opinion of Dennis Wyatt and does not necessarily represent the opinion of The Journal or Morris Newspaper Corp. of CA.