North Dakota and California--two very different pictures

Another amazing statement from our President this past week: “we can’t just drill our way out of” our energy woes. Actually, we can. I've been reading about the tremendous shale boom that's taking place in several spots across America.

The Wall Street Journal recently highlighted one such spot known as the Bakken Shale in North Dakota. It will will later this year be producing more oil than any other site in the country, surpassing even Alaska’s Prudhoe Bay, the longtime leader in domestic output. And the oil rush is making Dakotans rich in a hurry, with farmers and other landowners becoming overnight millionaires from lucrative royalties and leases.

All this is thanks to the technological leap forward represented by hydraulic fracking, a process that allows drillers to blast through underground shale rock and pump out oil and natural gas. The good news is that projections of how much oil is here seem to grow every year. In 1995, the U.S. Geological Survey estimated 150 million “technically recoverable barrels of oil” from the Bakken Shale. In April 2008 that number was up to about four billion barrels, and in 2010 geologists at Continental Resources (the major drilling operation in North Dakota) put it at eight billion. This week, given the discovery of a lower shelf of oil, they announced 24 billion barrels. Current technology allows for the extraction of only about 6% of the oil trapped one to two miles beneath the earth’s surface, so as the technology advances recoverable oil could eventually exceed 500 billion barrels. Amazing . . .

Now for the bad news. Let's compare the boom in North Dakota with our state of California. It's not a pretty picture. While North Dakota’s oil production has tripled since 2007 (to more than 150 million barrels in 2011), the Golden State’s oil production has fallen by a third in the past 20 years, to 201 million barrels last year from 320 million in 1990. I always thought the problem was simple--we just were running out of oil here. But that's not true. In 2008, when the USGS estimated four million barrels of recoverable oil from the Bakken, it estimated closer to 15 million barrels in California’s vast Monterey Shale. So we have the oil, but we don't have the politicians willing to get it out.

What has that done for California? Let's compare some statistics. North Dakota led the nation in job and income growth in 2011. It has the nation's lowest unemployment rate, at 3.3% (California's is 11.1%), and it saw a huge 38.5% increase in its number of millionaires between 2009 and 2010, according to state tax return data. California, by contrast, lost nearly 50,000—or almost one-third—of its high-income residents ($500,000 and above) between 2007 and 2009, according to the Sacramento Bee. North Dakota is also flush with cash and a budget reserve of at least $1 billion, out of a $3.5 billion biennial budget. The state has already cut income taxes, and it is building thousands of miles of "shovel ready" infrastructure projects—roads, bridges, railroads, pipelines—without almost any of Uncle Sam's funny money. Bismarck may be the only state capital in the country that debates what to do with all its tax riches. And our state? California's budget analysts just announced their fifth straight year of fiscal disaster, with up to $6 billion of red ink for 2012-13. Budgets for schools, transportation, health care, libraries and museums are being cut, even though the state already has one of the nation's highest income and sales taxes. Gov. Jerry Brown is sponsoring a ballot initiative this year to raise those taxes yet again.

Thanks to Brown and fellow Democrats, we are suffering in this state. They and the President don't understand reality; they would prefer to live in a world of make-believe, where all our energy can come from the sun, wind, and other renewables.