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February 11, 2009

California s Energy Policy is Creating and Sustaining Structural Budget Problems


California is going through a state budget crisis and has been going through chronic and persistent budget problems for over a decade. California chooses not to use its offshore oil or develop more nuclear power. Some environmentalists will say that the oil and nuclear power would not be enough to solve the energy problems of the United States. However, this will show that California could get $5-10 billion per year of tax revenue from the development of 10 billion barrels of oil and 16 trillion cubic feet of natural gas. Also, the development of nuclear energy could offset electricity purchases from out of state sources which can often be at spot prices. Each nuclear reactor could offset about $1 billion of electricity and natural gas purchases each year. California's budget gap is projected to be $40 billion over two years. The initial issuance of oil leases would provide immediate revenue to the state of one billion/year or more. The construction to build the oil rigs and nuclear plants would provide construction jobs, taxes and fees which would provide immediate benefits as the projects are being built and before oil is pumped or electricity is generated.

Does anyone believe that California will not need $10-20 billion/year in state tax revenue in ten years or that $2-5 billion/year of tax revenue over the next several years would not help a great deal?


Alaska made about $10 billion in oil revenues in 2008. They made about $5.6 billion in oil revenue in 2007.






Alaska's oil resources is projected to be about 13 billion barrels of oil. California's offshore oil is of comparable scale.
















California's state budget is projected to have a $14 billion shortfall for 2008-2009 and about $40 billion for 2009-2010.


California could choose to stop screwing up its finances by having a state energy policy that would have avoided its past financial problems and could still help fix its future financial problems.

The Tennessee Brown's Ferry nuclear plant saved 800 million for the TVA by helping avoid purchases of power on the spot market.

The current plan is for 33% of California's power to come from renewable energy at a build-up cost of $60 billion. For $28 billion or less the equivalent energy could be provide by new nuclear power. The nuclear power choice would save $32 billion.
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