United States: Energy Update From Sunny California

Last Updated: January 19 2017
Article by Melissa J. Lyon

Working from Fox's sunny California office this week has reminded me of the state's place in the energy industry, so I thought I would give you an energy update about the state while I am here.

I recently saw an old photograph of Huntington Beach from the early 1900's that at first glance, I thought was a photograph of Spindletop. The beach was more crowded with oil wells than it was with sun-bathers. It was astounding...

In fact, California's role in the energy sector started much earlier than that. According to history.com's article on the oil industry, early explorers of America encountered oil slicks off the coast of California as early as the 16th century.

It is easy to be isolated in the Rocky Mountain region and to keep our focus on the energy sector in our neighboring states. But, while it may not be on the forefront of our minds, we cannot forget the crucial role, not to mention the historically important role, that many other states play to the energy industry of the country as a whole.

Let's quickly highlight the energy sector in this sunny state, nicknamed "The Golden State."

Highlighting energy in California – what's the scoop?

According to the U.S. Energy Information Administration's ("EIA") California state profile and energy estimate:

  • California is the most populated state in the nation, and with the largest economy, its total energy demand is second only to Texas.
  • The state has an abundant supply of crude oil and is a top producer of conventional hydroelectric power.
  • Even though California's crude oil production has declined overall in the past 30 years, it remains one of the top producers of crude oil in the nation.
  • In fact, California accounted for about 6% of total U.S. production in 2015.

Some may forget that California is also a refining-giant. According to the EIA:

  • California ranks third in the nation in petroleum refining capacity and accounts for more than one-tenth of the total U.S. capacity.

What people are talking about in the state: Water

  • The focus of many people in California is the end of the recent drought in Northern California. But it is not over for the whole state...some areas are still a little dry.
  • The LA Times recently featured an article that discusses this in depth – recent storms have pulled nearly all of northern California out of drought conditions, but drought is still an issue for folks in the southern and central parts of the state.
  • Storms reportedly dramatically boosted the Sierra Nevada snowpack — a key source of water for California — to 161% of normal and helped rectify the state's water shortage.

The Importance of Relationship Between Water and Energy for California

Water and energy resources have been described as "inextricably entwined" in the state of California, according to the California Energy Commission ("CEC"), "Drought Impacts California's Energy." Hydroelectricity is obviously significantly impacted by drought. According to the CEC, "[w]ith less water available to generate hydroelectricity, natural gas and renewable energy supplies may be used to make up the difference."

Takeaway – although we may be focused on the Rocky Mountain region and the energy sector in our area, we cannot forget the critical role and issues in other states. The Golden State is one of those states...

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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