A Tale Of Two Oil States

There has been many comparisons made between two of our largest states in the continental US – California and Texas – with economics being in the forefront, particularly in relation to oil production.

California's economy has been weakened after decades of poor decisions made at both the state and local level and at the moment has the highest unemployment rate and tax burden in the country. Texas, on the other hand, has seen its economy rebound as it has become far more business friendly. The resurgence of oil and natural gas production has only added to its economic rebound.

So what the heck is going on in California that makes it the economic basket case it has become?

First, it doesn't help that the state government, which is totally in thrall to the environmental lobbies, has made it almost impossible for the state top make use of its vast energy resources (read that to mean oil and natural gas) by all but banning drilling. That's stupid considering it may have untapped resources to rival those of the Bakken field, and that's not even counting the offshore resources. But California won't let anyone drill for it anywhere.

Second, the public unions are draining the state and municipal coffers dry.

Third, the almost pathological NIMBY (Not In My Back Yard) and BANANA (Build Absolutely Nothing Anywhere Near Anything) attitude that permeates the thinking of too many of those in power.

I could go on and on, but I would merely be reiterating things I and others have written about the once great Golden State and its decline.

What was interesting about the WSJ opinion piece linked above were the comments by California residents, some of whom knew their state was dysfunctional but planned to stay and fight, others who knew their state was dysfunctional and were packing up and leaving, and yet others who appear to have been hitting the hash pipe a little too hard. This last has been evidenced by their continuing trash talking of Texas and quoting long discredited or obsolete stats they claim show California is better. A couple of the last group kept making claims that the per capita income and life expectancy stats were all that anyone needed to look at to see that California had it all over Texas. Of course they ignored California's high cost of living, which if they had taken into account, gives Texas the edge. The claim was also made again and again that Texas had a much higher poverty rate than Texas, but recent stats from the Census Bureau gives lie to that, showing that California's poverty rate was on the order of 23% while Texas has a poverty rate of 16%...and falling.

A number of companies have been relocating from California to Texas, including defense contractor Raytheon, which plans to move its space systems business unit HQ to Texas.

All the indicators show that California is headed for a crash unless the state government can get its collective head out of its rear end and starts to address both economic and environmental realities. And should the crash come I think you'll see a lot of states balking at bailing it out. Why should the fiscally responsible states be forced to pay for the profligate and irresponsible spending by a state incapable of understanding that they've run out of other people's money?

In the mean time Texas sees its economy booming and its popularity as a business destination growing by the day. Too bad if California can't see its problems are of its own making.