The LAEDC has prepared two reports examining the economic impact of the crude oil marine terminal that Pacific L. A. Marine Terminal LLC (Pacific Energy) is developing at Pier 400 in the Port of Los Angeles.

The first report is an Economic Impact Statement describing the jobs, wage and tax revenues associated with the construction and operation of the new crude oil marine terminal.

The LAEDC calculates that construction of the nearly $360 million project will generate employment equivalent to approximately 4,800 full-time, one-year jobs. These jobs include engineers and construction workers building the terminal, their suppliers, as well as the workers in jobs supported by their spending. [This “pass-through” spending - where workers paid by the project, in turn, generate additional wages for still more workers - helps boost the overall wage total to almost the cost of the project itself.]

The LAEDC also calculates that the ongoing operations at the marine terminal will sustain direct and indirect employment equivalent to 123 full-time jobs. The Economic Impact Statement estimates the tax impact of construction-related economic activity and ongoing operations, both by type of tax and by level of government. Further details are discussed below.

The Economic Impact Statement focuses only on the jobs, wages and tax revenues associated with the construction and operation of the crude oil marine terminal - the “first order” impacts of the project. As with any part of the state’s energy infrastructure, however, the new terminal also has important implications for the California economy. The broader “secondary” and “tertiary” impacts are considered in LAEDC’s second report, titled, In California’s Uncertain Oil Future: Will We Have Enough? In this report, the LAEDC contrasts the state’s growing demand for crude oil with declines in traditional California sources of supply in Alaska and the state itself. Crude oil is the raw material from which gasoline is refined, so the discussion is placed within the context of California’s future gasoline market. Over the next 20 years, demand for refined products in California will increase despite the adoption of hybrids, diesels, and more efficient gasoline-powered vehicles. The supply of refined products will grow at a moderate rate, though sources of supply to refineries will change significantly.

Will there be enough? Californians face two critical issues in our future gasoline market. First, it is uncertain whether there will be sufficient refinery capacity to meet growing product demand. Second, regardless of the balance of supply and demand, it is likely that California will need to import huge quantities of crude oil from distant sources. It is unclear whether the state’s oil terminal facilities will be able to accommodate the coming surge in imports.

The Pacific L. A. Marine Terminal LLC terminal helps address the state’s need for capacity to import because it is a deepwater port. Transporting large volumes of oil great distances is most efficient (and hence least expensive) on extremely large vessels. Without the capacity to handle enormous crude oil tankers in port, Californians will end up paying more for oil (and hence gasoline) because oil will have to be transported in comparatively small ships or transported in large tankers and then transferred to smaller ships off the California coast.

The second LAEDC report concludes by highlighting the most oil-intensive industries in California who have the greatest likelihood of being impacted by these higher oil prices. The report also stressed the economic development impact of rising fuel prices in California.