Energizing California - Chevron

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Energizing California Milken Institute After incorporating the multiplier impacts, Chevron accounted for nearly 0.5 percent of the state’s total non-farm employment and gross output. In other words, Chevron is directly and indirectly responsible for one out of every 250 jobs in California. High-paying Chevron jobs bring other long-term benefits to the state. Upon retirement, many former employees receive either lump-sum or annual payments. Based upon pension payments to California residents at the time of the distribution, roughly $200 million was distributed in 2007, creating a ripple effect that boosts the total income impact to over $330 million. Industry Some 65,000 people are directly employed by the energy industry in California, with an additional 239,500 jobs produced as a result of its ripple effects. The industry’s statewide earnings totaled almost $5.8 billion, with another $10.5 billion in indirect earnings. Statewide, the industry was responsible for a total of $46.3 billion in output in 2007. Chevron accounted for approximately one-fifth of the industry’s economic contributions in California. Economic impact summary California, 2007 Chevron Industry-wide Direct impact Total impact Direct impact Total impact Employment (number of jobs) 9,934 68,674 64,924 304,454 Earnings* (US$ millions) $1,223 $3,909 $5,777 $16,274 Output (US$ millions) $4,543 $9,203 $23,033 $46,297 Tax** total (US$ millions) $1,953 --- --- --- Pension (US$ millions) $207 $331 --- --- Sources: Bureau of Labor Statistics, Bureau of Economic Analysis, Moody's Economy.com, Chevron. *Earnings include bonuses; **Includes state and local taxes only. Regional Impacts The Bay Area Headquartered in San Ramon, Chevron has an especially strong presence in the Bay Area. It has a major refinery in Richmond, and Chevron Energy Solutions (CES), its energy efficiency and renewable power solutions subsidiary, is based in San Francisco. As of 2007, the Bay Area was home to 7,080 Chevron employees—71 percent of the company’s total employment base in the entire state. The company’s presence generates an additional 30,000 jobs indirectly. Furthermore, the $970 million in earnings Chevron pays to its employees indirectly generates $1.5 billion in earnings elsewhere in the Bay Area. In addition to $2.7 billion in direct Chevron output, the firm stimulates another $1.7 billion in other sectors. Incorporating all of these subsidiary effects, the impact of the entire energy industry in the Bay Area comes to 77,300 jobs, $5.3 billion in earnings, and $10.5 billion in output. In this calculation, as in all of the regional totals given below, we have limited our definition of the energy industry to Chevron’s primary NAICS codes for comparative purposes. 3
Energizing California Milken Institute Bakersfield While Chevron’s economic contributions in the Bakersfield area may not equal its footprint in the Bay Area, they represent a significant piece of Bakersfield’s overall economy. The Kern River oil field, operated by Chevron, is the third-largest oil field in the state, producing more than 30 million barrels a year. In 2007, Chevron employed almost 1,140 workers in the Bakersfield area. The firm was responsible for distributing total earnings of $109 million to its employees and contributing $492 million in gross state output. After accounting for the multiplier impacts, Chevron generates 5,000 jobs, $242 million in earnings, and $884 million in gross metro output in the area. A total of 22,000 jobs, $1.1 billion in earnings, and $3.8 billion in output in the Bakersfield region are tied back to the energy industry as a whole. Los Angeles One of Chevron’s prime assets in California is its El Segundo refinery. With a capacity of 260,000 barrels per day of crude oil, it is one of the largest facilities in the state. Overall, Chevron has more than 1,460 workers based in the region; in 2007 it disbursed $131 million in earnings and created $860 million in gross state output. Adding in indirect impacts, Chevron accounts for 10,000 jobs, $409 million in earnings, and $1.7 billion in output. A total of 98,000 jobs, $4.0 billion in earnings, and $16.8 billion in output in the Los Angeles area are tied back to the energy industry as a whole. Maintaining California’s Economic Growth and Diversity Because it is difficult to quantify the long-term value of many of Chevron’s early-stage investments, and because it is virtually impossible to assign a precise dollar value to many social contributions, this portion of the report takes a more narrative approach to describing the multiple areas of California’s economy that are impacted by Chevron. Meeting the Rising Demand for Energy Diversity is a key ingredient for building a sustainable economy—and diversity is one of the great hallmarks of the California economy, which can draw on vast natural and human resources. Its broad portfolio of energy assets—ranging from traditional oil and natural gas to more renewable and alternative forms, such as biofuels, wind, solar, and nuclear—gives California a head start as it searches for ways to cope with rising demand while mitigating environmental impact. Chevron is responding to the increasing demand for energy by making major investments in new production in the San Joaquin Valley and enhancing its refineries. All of the oil Chevron produces in California stays in the state, where it is refined into transportation fuel that meets the state’s stringent air standards. Chevron’s products and services are also mostly consumed in the state. Chevron is also making significant R&D investments in alternative energy, including “cellulosic” technology that can produce biofuels from nonfood sources. The firm has partnered with the University of California, Davis, on a multiyear research project exploring how agricultural waste can be used as a fuel source, and has set up a separate business unit to commercialize this technology. 4
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