Study Questions Oil Industry’s Area Impact

The oil industry in the region that includes Ventura County may be going bust, but its demise may go largely unnoticed because it hasn’t contributed much to local economies for decades, according to a study released Thursday by researchers at UC Santa Barbara.

While the oil industry at one time was crucial to the tax base, the study concludes that its contribution to stimulating the local economies of Ventura, Santa Barbara and San Luis Obispo counties is not significant now and there is little reason to believe it will be in the future.

Falling oil prices, depleted deposits and dim prospects for future drilling are responsible for the situation, according to the study.

“The oil industry has not influenced the course of economic production in the counties. It has neither accelerated or deterred the economy,” said Randy Bergstrom, UCSB history professor and coauthor of the report.

The three-year study will serve as background for future federal decisions regarding the industry. It was prepared by a team of UCSB researchers for the U.S. Minerals Management Service. It examines the history of the oil industry in the three counties since 1950 and attempts to assess its prospects through 2015.

The Minerals Management Service, which oversees offshore drilling on the outer-continental shelf, is in the midst of its own study to allow expanded offshore drilling on 40 undeveloped oil and gas tracts off the Central Coast. Companies have options to drill in those tracts, which are not covered by moratoriums.

The UCSB study says offshore oil drilling could be attempted in the channel, either from platforms or from land using extended reach drilling. Either strategy would very likely be met by intense opposition from Central Coast residents, Gov. Gray Davis and California lawmakers.

The report does identify significant property tax revenues paid to counties from oil production. In Santa Barbara County, however, those revenues peaked in 1985 at $12.6 million annually. In Ventura County, whereas the oil industry paid half of the county’s property tax revenue in the 1950s, it today contributes about 1%, or $6 million.

“The economic effects are significant in terms of contributions to the tax base, but not in terms of stimulating growth in the private economy,” the study states. “We could not find any statistical pattern of positive impacts of the industry’s presence on the overall scale of economic activity.”

Offshore oil production in California peaked in 1995 and has since declined sharply because of falling oil prices and depleted reserves. About two-thirds of the oil in offshore deposits has been consumed, according to the Minerals Management Service.

In San Luis Obispo County, the oil business is all but over with only cleanup and restoration remaining, according to the study.

“What this is saying is that for the average per capita income the oil industry has not made much of a difference,” said Fred Piltz, chief of environmental studies at the Minerals Management Service. “From the average person’s point of view, there’s not going to be a significant effect one way or the other.”

Frank Holmes, spokesman for the Western States Petroleum Assn., disputed the findings. He said other research shows the oil industry provides 10,000 jobs and pumps $1 billion into local economies through wages, taxes and charitable contributions.

“The oil industry may not have a significant number of jobs, but the benefits to the tri-counties are significant,” Holmes said.

Technology developed to expand offshore oil exploration in Southern California has helped open the North Sea and coast of Africa to drilling. Cleanup technologies pioneered on the California coast have helped protect the environment abroad, according to the study.