California's oil industry has commissioned a remarkably shoddy piece of academic pseudo-research and is flogging it all around the state as proof that an epic bonanza is in the offing. A report from the University of Southern California has predicted as many as 4,425,000 net new jobs will be created by oil production in the Monterey Shale by 2020.
It's utter nonsense on its face, of course. But the USC report cloaks its absurd claims in 76 pages of fancy economic modeling and algebraic smoke and mirrors. As a result, the study gained a significant amount of traction around California policy circles. The study's jobs predictions have been quoted approvingly by legislators and the media, as well as Gov. Jerry Brown.
Who wrote such mendacious tripe? The USC study's authors included academics with experience in climate policy analysis, geophysics, oil engineering and urban economics, as well as non-academic specialists in public communications. Not one of them had any experience in oil industry economics or industrial sector economic forecasting. The lead author, Peter Gordon, is a well-known conservative, and his recent academic writings and blogging have focused on transportation, urban planning and the wonders of free-market economics. The study was commissioned by the Western States Petroleum Association, the lobbying organization of California's oil industry.
So I smelled a rat. I held my nose, drank a lot of coffee and called several of the state's top economists. They dissected the USC study and figured out why it is so unreliable ... in my latest report for Next Generation. Read it here.