ECONOMY WATCH : Oiling the Recovery
President Clinton’s signing of a bill to end a 22-year-old ban on oil exports from Alaska’s North Slope is good news for California.
So much Alaskan crude came here that it pushed down prices, making it unprofitable for independent oil producers to invest in California. The state suffered this unintended consequence when the export prohibition was imposed in response to the oil crisis of the early 1970s. The 1973 action was meant to assure the nation a measure of oil self-sufficiency.
The Clinton Administration endorsed lifting the export prohibition early this year after a study by the Energy Department concluded that allowing Alaskan oil exports to Japan, South Korea and other Asian counties could generate up to $2 billion in local, state and federal royalty and tax revenues. The decision is also expected to produce 25,000 U.S. jobs (mostly in California and Alaska), benefit U.S. oil producers and promote world trade.
Alaskan crude now accounts for about 45% of the total refined in California. As a result of the law signed Tuesday, state refiners will use more California crude, thus creating more oil field jobs here.
The Energy Department study said ending the ban might boost crude oil prices in California, but that isn’t likely to mean higher pump prices because most of the companies that drill for crude also refine it.
The new jobs will be especially welcome in California. They can’t help but add to the economic recovery that seems finally to have begun.