California repeatedly warned about spiking gas prices, fragile supply. But fixes never came.
California, the nation’s fifth largest economy, could not figure out how to save the global economy from itself.
California officials could not even figure out how to save the global economy from itself.
California officials could not figure out how to save its own economy from its own addiction to the boom-like production of oil and gas — or how to save the global economy from its own addiction to oil and gas.
The state has now gone bankrupt, after paying for an enormous bailout of its public sector with money diverted to pay bondholders, with the state facing a $28.3 billion unfunded pension liability at the end of March.
The state is bankrupt, and its economy is failing, because its officials and voters failed to understand that the state was running out of money — with soaring energy prices, an excess supply of oil that California can no longer produce cheaply, and the need for an enormous public spending cutback.
California could have avoided its own bankruptcy and the worldwide recession by embracing the new technologies that would have freed it from the need to sell its oil and gas to other states. It could also have avoided the crisis by accepting that the boom in the oil and gas industry would have passed and that its political leaders would have to look for another way to pay for public services.
But California’s elected officials and voters turned a blind eye to warnings about this inevitability of the oil and gas boom — warnings that the state could run out of reserves.
The oil and gas boom was based on an endless source of cheap energy — oil and coal — that could be extracted at low cost. California was in a position to exploit this new source of energy, but instead it chose to run huge public sector deficits and borrow money to pay for them.
It is not hard to see why this choice is untenable.
California’s government was always in debt to the tune of $17.2 billion in 2010, according to its Department of Finance. By the end of the year, this amount was already $14.4 billion.
The state had $10 billion in reserves when the governor in January 2011 announced his budget.
The state had $500 million in reserves at the end of February.
At the end