Tags: Mills | oil | gas | reserves

Manhattan Institute Fellow Mark Mills to Moneynews: California Could Be the Next Saudi Arabia

By Forrest Jones and John Bachman   |   Monday, 12 Nov 2012 11:49 AM

California could be the next Saudi Arabia if it tapped the massive oil and gas reserves that are beneath its soils, said Mark Mills, a senior fellow at the Manhattan Institute.

Meanwhile, the country as a whole could create close to 5 million jobs if it allowed for increased drilling of hydrocarbons, namely coal, oil and gas.

Hydrocarbons must take priority, though that doesn’t mean ruling out the use of renewable energy.

Technological advances that allow wind and solar sources to create energy have come a long way, but not nearly as much as they have in allowing companies to extract oil and gas these days where once thought impossible.

“California’s oil and gas resources are unmatched in the country. They actually sit on some of the richest oil and gas reserves in the world. There is more oil under the ground in California than in Saudi Arabia,” Mills told Newsmax TV, adding that development of the state’s energy sector could heal its financial ills.

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“If they were to produce it fully and export oil and gas from the state of California, that state, which is one of the most stressed states in terms of deficits, could wipe out their entire deficits over the coming years.”

Increased drilling for hydrocarbons in the United States could add millions of jobs to an economy in desperate need of job growth.

“We have already seen something like a couple of million jobs created nationally in the last several years in the hydrocarbon sector, and the next 3 to 4 million or maybe 5 million or more could happen over the next several years,” Mills said, noting that jobs would grow both in the energy sector and sectors that indirectly serve it.

“These are not just hard-hat jobs in the field for people mining and drilling, these are the ripple-out jobs that occur when you create expanded hydrocarbon production,” he said.

“Roughly speaking, for every single employee directly in the hydrocarbon business, you get about six other jobs in everything from manufacturing to healthcare, from information services to manufacturing services, education, training. So the entire economy is boosted.”

And such job growth would benefit the economy in more ways than one.

More jobs mean more growth and ultimately, more tax revenues, which help narrow the country’s gaping deficits and pay down debts as well, especially if the jobs are high-paying positions.

Energy companies themselves would pay royalties to federal, state and local governments.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

Furthermore, the United States is home to such massive energy reserves that it could export oil and gas on top of the refined fuels it already does ship out, namely diesel and gasoline.

“To say it’s a win-win understates it because these jobs, these benefits, don’t come from stimulus or grants or loans or special spending from federal and state governments. They come from the fact that the increased production of the fuels the world needs generates economic wealth,” Mills said.

“The rough number that the benefits that expanding hydrocarbon production will bring is in the $2 trillion range. It might even be more like $4 or $5 trillion over the next 10 years of economic benefits to the United States. This is astounding.”

Meanwhile, global energy demand is going to continue rising, possible by the equivalent of two times the level of what the United States consumes today in just two decades.

Governments should resist the argument that fossil fuels will dry up one day and renewable energy should be ready to fill in the void.

Technology is allowing energy companies to tap oil and gas wells like never before, much faster than it is allowing for the generation of power via wind or solar sources.

“The magnitude of the increase in demand for energy for the world is so large, it’s not as if we get to pick and choose. Every way of making and refining energy will be needed,” said Mills.

“People have been looking, in the United States, in China and in Europe, for decades now and have spent tens of billions of dollars — maybe hundreds of billions of dollars — on projects and development and research trying to come up with economically viable substitutes for coal, oil and gas,” he stated.

“And so far, at the scales we need for energy, we haven’t gotten them yet. It doesn’t mean we will never get them, but they aren’t there.”

All credible energy forecasts say oil and gas will still drive energy demand.

“The biggest thing that people miss is that technology has advanced enormously in the last two decades. It’s just that it has advanced faster and better in hydrocarbons.”

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

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