Mixing Oil and Water

On Aug. 6, the California Coastal Commission approved a desalination plant at Carlsbad in San Diego County, a region with severe water needs in normal times and hard hit by the current drought. The $300-million for-profit venture by the Poseidon Resources Corporation aims to produce as much as 50 million gallons of fresh water each day, about nine percent of the water San Diego County uses. The approval marks a change for the Coastal Commission, an unelected body usually in the business of rejection.

The 12-member Commission oversees planning, access and development along California’s 1,100-mile coastline, an area that includes 15 counties and more than 100 cities. Its rule, as the Pacific Research Institute’s Steven Hayward has pointed out, combines “bureaucratic ideology of near-Stalinist zeal with corruption of the worst kind.’’

As for corruption, Coastal Commissioner Mark Nathanson tried to shake down movie stars when they sought to remodel their Malibu estates. Some didn’t play along, and in 1992, Nathanson was convicted of racketeering and served five years in prison. The Commission has since survived a court challenge and remains California’s banana republic—build absolutely nothing anywhere near anyone. Oddly enough, the Commission owes its existence to oil.

In January of 1969, a drilling site near Santa Barbara spilled some 200,000 gallons of crude and fouled more than 30 miles of coastline. The spill and ensuing activism led politicians to push a new bureaucracy to protect the coast. That led to Proposition 20, the Coastal Zone Conservation Act, a ballot initiative in 1972. The resulting Commission was supposed to be temporary but the legislature welded it in place with the California Coastal Act of 1976. Three decades later, some coastal residents are taking a new look at offshore drilling.

As Andrew Cline recently pointed out in the Wall Street Journal, since 1975, drilling within 200 miles of the U.S. coastline has a safety record of 99.999 percent. According to NASA and the Smithsonian Institution, natural oil seepage exceeds the amounts from tanker accidents and drilling.

Daniel Weintraub of the Sacramento Bee, who opposes drilling, notes that there are currently 109 offshore leases, 79 managed by the federal government and 30 by California state government. Of those 30, 18 are active producers. By Weintraub’s account, the companies that run the active leases pay about 16 percent of their revenue to the state. This year the proceeds are approximately $500 million to the general fund, currently in need of help in our budget crisis, with a deficit of $15 billion. More active leases would mean more revenue in a state that needs it, along with more oil, more energy and more fresh water.

California maybe short on water and energy but there is an oversupply of government. The policy challenge is to reverse that dynamic.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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