"The California Effect" -- December 6, 2018

Three areas in which California is having a huge effect on US data points and US economy:

• national politics
• fossil fuel energy data
• automobile / CAFE standards

CAFE standards: California's role in establishing automobile / CAFE standards was a huge topic a few years ago. It will become a huge issue again when a Democrat wins the US presidency which could be as soon as 2020. California's auto market is so big that whatever standards the state sets, it is difficult for automobile manufacturers to ignore. The easiest road to take: accept California standards as standards for the entire US.

Politics: I've talked about this before, but simply put, regardless of one's party designation walking into a California voting booth, one will be a Democrat walking out. California now requires that the two top vote-getters in the primary go head-to-head in the general election. So, from now on, for US Senator, it will be one Democrat running against another Democrat. For governor and all other statewide offices, the same. Any Republican voter walking into the booth has only two options: vote or not vote for state offices. If the voter votes, that vote will be recorded as a vote for a Democrat. That's obviously not the case when voting for US president, but the outcome will be the same. The popular vote in California from here on out will be "Democratic." Demographically, it is impossible for that to change in the next forty years.

Fossil fuel: like Hawaii, when it comes to energy, California is an island. Most of its energy comes from out-of-state sources, and much of that from foreign sources. I'm sure someone will fact check me on that. For sure, most of California's crude oil comes from foreign sources.

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Politics

 

With that in mind, when it comes to national data about the popular vote in California for statewide office, one needs to "back out" California numbers. As long as California numbers are included in national voting data, the popular vote will go to the Democrat candidate. In California, at the state level, a Democrat will always win a state-wide contest. For US president, the national results -- with California numbers included -- will, from now on, have a popular vote that goes Democratic and an electoral college vote that may or may not go Democratic, if the national election is a close race.

We've talked about that before and that's enough on politics for now.

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CAFE Standards

We've talked about this before and not much need to discuss it again. At the moment, it's not a topic of national interest except for, perhaps, the car manufacturers.

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Fossil Fuel

Today, the EIA announced that for the first time in 75 years, the US was a net exporter of crude oil and petroleum products.

In fact, if one were to "back out" California imports of crude oil, the US would have become a net exporter of crude oil and petroleum before now.

This graphic comes from the state of California:

If I am reading the graph correctly, California refineries receive about 650 million bbls of crude oil each year. That number has remained fairly constant since 1990, and was significantly higher for a short period in the 1980s.

California and Alaska sources provided about 290 million bbls of crude oil.

650 - 290 = 360 million bbls of foreign crude oil. The "gap" could widen (greater crude oil imports for California): the Alaskan pipeline has temporarily been shut down (back open?) but Alaskan crude oil production has been dropping significantly over the past thirty years. Under favorable administrations that might be reversed, but the tea leaves suggest that future US presidents will be less "open" to increasing Alaskan crude oil production. Be that as it may, the fact is, if one backs out California imports, the US would have been a net exporter of crude oil and petroleum products long before last month.

California, onshore and offshore, has huge crude oil reserves and the graphic could be significantly different under different scenarios. I think one could argue that California could become a net exporter of crude oil and petroleum products if allowed to do so.