Energizing California - Chevron

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Energizing California Milken Institute Given the area’s less diversified industry mix, Chevron’s operations in Bakersfield may have more critical implications in this local economy than in the rest of the state. In a region with a relatively low per capita income, the presence of Chevron generates higher-paying jobs, with earnings that are, in turn, recycled back into the local economy through higher purchases of goods and services. This redistribution of wealth around the region creates opportunities for local businesses and entrepreneurs to profit from the industry’s impacts. Since 2002, the company’s employment base has increased by 5 percentage points and now represents about a fourth of all the jobs in the industry. Chevron’s presence in Kern County not only generates additional economic activity but also supports the water needs of the region’s biggest asset: agriculture. This initiative is covered in detail in a subsequent section on “Addressing Conservation.” As global demand for oil increases, investment opportunities will become more worthwhile in the region. The need for newer and more efficient technological infrastructure supporting the industry will attract more firms and high-skilled labor into the area. Los Angeles One of Chevron’s key assets in California is its El Segundo refinery, located in the Los Angeles metropolitan area. Built in 1911, Chevron’s second refinery (hence the name “El Segundo”) played an important role in shaping the community that grew up around it, even lending its name to the area. The refinery provides roughly 1,175 jobs and is the one of the largest facilities in the state in terms of oil capacity, processing 260,000 barrels of crude oil per day. 10 Nearly one out of every three workers in the petroleum refinery industry in the Los Angeles area is employed through Chevron. Beyond the refinery sector, Chevron also employs more than 200 workers in petroleum wholesaling operations, accounting for nearly a fifth of this industry’s output in the area. Industry profile Los Angeles, 2007 Chevron Industry-wide Share Firm LQ Employment (number of jobs) 1,464 22,630 6.5% 0.42 Earnings* (US$ millions) $131 $1,416 9.3% --- Output (US$ millions) $860 $8,505 10.1% --- Earnings* per employee ($) $89,532 $62,575 --- --- Output per employee ($) $587,422 $375,852 --- --- Sources: BLS, Moody's Economy.com, Chevron. *Earnings include bonuses In this region, Chevron employs more than 1,460 workers, disburses $131 million in employee earnings, and creates $860 million in gross state output. The firm comprises 6.5 and 10.1 percent of the industry-wide shares of employment and output, respectively. More significant, however, is that each Chevron job, on average, produces an output of $587,000 in Los Angeles. Since the industry average in comparison is about $376,000, it further supports the notion that Chevron employees in the Los Angeles area account for a much greater share of productivity than the industry as a whole. 10 California Energy Commission, Energy Almanac, “California Oil Refinery Locations and Capacities” (as of March 2006), http://www. energyalmanac.ca.gov/petroleum/refineries.html 21
Energizing California Milken Institute The refinery in El Segundo and the Port of Los Angeles yield a complementary relationship based on geographic proximity, since the port provides an efficient means for crude oil transportation. Through its strong import capabilities, the refinery in turn becomes even more of a focal point, playing a key economic role in the industry’s sustainability and the region’s long-term prosperity. After accounting for the multiplier impacts, Chevron is responsible for creating 10,000 jobs in the region. For every single Chevron job in the Los Angeles area, nearly six additional jobs are created elsewhere in the region. Similarly, an additional $278 million and $841 million are generated in terms of earnings and output, respectively. In comparison, the industry-wide impacts contribute an additional 75,800 jobs, $2.6 billion in earnings and $8.3 billion in output to the region’s economic base. Chevron's economic impact summary Los Angeles, 2007 Total Chevron impact Total industry-wide impact Chevron multiplier Industry-wide multiplier Employment (number of jobs) 6.8 9,997 4.3 98,416 Earnings* (US$ millions) 3.1 $409 2.8 $3,992 Output (US$ millions) 2.0 $1,701 2.0 $16,840 Sources: BLS, BEA, Moody's Economy.com, Chevron. *Earnings include bonuses. 22
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Energizing California - Chevron

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