State energy policies hits Inland Empire in the wallet

When it comes to attracting investment and creating stable communities through good-paying jobs, the Inland Empire has been dealt some good cards, and some bad cards. Too often, what comes out of Sacramento falls into the latter category. Recent research has underscored that the state’s energy policies in particular are driving higher costs and business instability – making it harder for families in our region to make ends meet, leaving many in poverty. In this way, examining the impacts of energy policy on Inland Empire communities can act as a lens through which California legislators should evaluate future state energy decisions.

Here, unemployment is high – the highest in the country for a metropolitan region with over one million people – and our region struggles with a lack of middle-skill jobs for residents with lower education levels.  Poverty in the Inland Empire has exploded from 11.8% in 1990 to 19% in 2012, with a disproportionate impact on African Americans, Latinos, and children.

A new regulation that will take effect next year pushes transportation fuels under the cap in California’s “cap and trade” program. This means rising gas prices for drivers, adding another expensive component for Inland resident commuters.

We must identify the factors that exacerbate these problems and take the necessary steps to address them. While our state’s ambitious clean energy and climate change initiatives have noble environmental and public health goals, the unintended economic consequences have been largely ignored. In his new report “California Energy Policy & The Inland Empire,” the Inland Empire Economic Partnership’s, Chief Economist, John Husing argues, “Unfortunately, with the environment now the cleanest it has been in decades, the ability to further positively affect it is requiring regulatory and energy measures that are negatively impacting job creation in the very sectors that marginally educated workers need to see growing.”

Construction, manufacturing, logistics, and mining, oil and gas all offer jobs with four important characteristics for Inland Empire residents: minimal educational requirements, skill ladders to better paying jobs, strong median incomes, and long term job prospects. But these are the very jobs being squeezed out by California’s aggressive energy measures.

Husing states that “California is becoming increasingly divided between its prosperous coastal counties and its struggling inland counties.” Wealthier areas can push for more aggressive energy agendas at greater cost. But that is not the case where I live. Statewide policies should not benefit a few select regions while other areas like the Inland Empire are sacrificed. And so I argue that California needs a more balanced approach to energy planning that recognizes and mitigates against harmful economic impacts in more vulnerable regions of the state.

In fact, taking steps to reduce poverty will do more to improve public health in our region than additional environmental regulations. However, we continue to see more economically taxing energy policies coming down the pipeline. For example, a new regulation that will take effect next year pushes transportation fuels under the cap in California’s “cap and trade” program. This means rising gas prices for drivers, adding another expensive component for Inland resident commuters. Additionally, the logistics industry which is so important to our region’s economy will take a major blow as trucking costs skyrocket.

Coupled with more costly fuel, we are also experiencing much higher electricity rates than neighboring states. California used to be a manufacturing powerhouse, but now we are fielding complaints and reading headlines about businesses moving investment out of state. A major contributor is the fact that manufacturing firms are sensitive to the instability and cost of California’s rigid energy policies. This makes us less competitive, despite the fact that the Inland Empire boasts other advantages such as significantly lower space costs and high labor cost savings.

There is room to improve. According to Husing, “Assuming the political will can be found, the ultimate need is to rebalance the impact of the state’s policies so that solving the issue of poverty and related public health issues is put on an equal footing with energy and environmental concerns. In doing so, it must be remembered that when companies decide to leave California, put their expansion outside the state or never come, it is the workers who bear the consequences.”

I strongly urge legislators to ask tough questions about the real impacts of California’s energy and environmental policies. They sound good and look good on paper, but what do they mean for vulnerable regions and populations? The Inland Empire needs Sacramento to be a partner when it comes to job growth and shrinking levels of poverty. No matter which region they call home, state legislators should all agree that a flourishing and balanced economy, stronger middle class, and higher state tax revenues are goals worthy of their immediate attention.
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Ed’s Note: Paul Granillo is president of the Inland Empire Economic Partnership.