Is Taft's Economy Growing Again?
By Kent Miller, The Taft Independent -
March 5, 2010
Taft and oil.
That has been a successful formula for more than 100 years, as the heavy crude oil of the southern San Joaquin Valley has fueled the economy of Taft and the Westside. But today - well into a multi-year recession - what is the economic outlook for Taft, the Westside and the vital energy industry?
There is optimism out there that the worst is over. And there are new players in the energy market that can boost a recovery. But there are also feelings of uncertainty -- or even pessimism -- about the end to the recession being near. It's hard to tell if the Taft area and the Westside as a whole have turned the corner on the recession, said Bill LeBarron, treasurer for the city of Taft.
"I am optimistic it will turn around, but you see trucks (parked) in (company) yards (instead of out on jobs), LeBarron said. "There are not that many jobs out there."
"Building has not taken off this year. There is some remodeling, but people are kind of holding off on buying." Devinder Bains, owner of Taft Chevrolet Buick Pontiac, is pessimistic about a recovery this year or in 2011.
"Things are pretty much the same, nothing has turned the corner," Bains said. "We are not out of the woods yet. Credit is still tight," he said.
"Banks are tightening up," Bains said. "We are hoping it will get better. (But) it will be a couple of years until we see any decent change. "It will be into 2012 before we see any change - the end of 2012 (with its presidential election), into 2013. That is my take."
Taft City Manager Bob Gorson has a more optimistic view of the economy. "In the last three months of 2009, 14 new businesses started up in Taft," Gorson said. "All of them are hiring workers. "Other businesses are expanding. Oil service firms are hiring. Those are very well paying jobs."
Gorson pointed out what he called "two other big things" for the Taft area. Those are: the 72-acre Westside Industrial Park of Charlie Beard, which has two tenants for 5-acre parcels; and the city-owned 27-acre facility, which also has two prospective tenants with letters of intent signed.
"It (the city's industrial park) is vacant land now,' Gorson said. "We are seeking an EDA (U.S. Economic Development Administration) grant of $1.7 million ... for infrastructure. There is a good chance of getting it."
The tenants for the Westside Industrial Park are Huddleston Crane, which is relocating from Dustin Acres and will have a 4,800-square-foot office; and Thomas Energy, which is new to the Taft area and will have about 20 employees, Gorson said.
The city's industrial park tenants are Champion Products, which proposes a cleaning product manufacturing facility; and Nature's Energy, a "green" company that proposes to grow algae to produce biodiesel, he said.
The algae growing will not be at the industrial park, but at another location - possibly at the city's water treatment facility, Gorson said. Nature's Energy will take up to 50 acres for the algae operation and will employ 80 people, he said. Five of the jobs will pay $80,000 or more, Gorson said.
Both Champion and Nature's Energy will receive $1 a year ground leases for 10 years, Gorson said.
"We are just trying to get some good quality jobs, especially light manufacturing," he said. "They (light manufacturing) are good multipliers (increasing the need for employees at firms that deal with light manufacturing)."
In addition to light manufacturing, the city's industrial park is targeting alternative energy and renewable fuels, Gorson said.
Beard also has 120 acres of vacant land that can be used for an industrial park, Gorson said.
Here is a look at some key segments of the area's economy:
Residential property
"I believe that the economy is better than it was a year ago," said Della St.Clair, Taft rental property manager. "(Then) people lost their jobs. (I) had a terrible time collecting rents.
"Now people have gone back to work. The need is there for homes. Things are looking up for us. "We work with the renters to keep them in the properties. A lot of them are back. People are able to afford the housing market."
However, St.Clair noted that the rental housing market is still suffering from impacts of the recession.
"The rental market has gone down; there are lower rents," she said. "What was $1,000 is now $850; and properties are on the market longer.
"Landlords lost their properties. Now there are new investors who are buying at lower prices. It's a buyers' market.
"A lot of homes and repos (repossessions) have been purchased. Investors are holding on to their properties. They rent now until the home prices go back up."
For Kern County overall, the median sales price for all residential units appreciated $2,300 in the fourth quarter of 2009, according to the Kern Economic Journal of California State University, Bakersfield. Median prices were up 1.7 percent in the quarter, from $132,200 in the third quarter of 2009 to $134,300 in the fourth quarter, said Abbas Grammy, CSUB economics professor and publisher and managing editor of the Journal.
However, Grammy noted, the number of units sold in the quarter was down from 3,290 in the third quarter of 2009 to 3,190 in the fourth quarter; and the number of building permits issued for construction of privately-owned dwelling units fell from 432 in the third quarter to 358 in the fourth quarter.
Black Gold
In energy overall, Kern County is seeing an upswing, said Robin Fleming of the Kern Economic Development Corp.
"Overall there are signs of a rebound in oil," Fleming said. "Some people in the oil industry are being hired back."
A major oil find of between 150 million and 250 million gross barrels of oil equivalent that was reported in July 2009 by Occidental Petroleum is within the area around existing fields on the Westside, said Taft City Manager Gorson.
Oxy has refused to reveal the location of the find and an Oxy spokesperson declined to comment on company plans for the Westside this year.
"They have started hiring engineering talent and (for) drilling activity almost across the board," Gorson said. "There is a rumor that Oxy and other majors are tying-up every drilling rig in the country. The activity should really increase around Taft."
Crude oil price increases could help spur Westside production.
The average price of San Joaquin Valley heavy crude oil climbed by $8.01, or 15.2 percent, per barrel between the third and fourth quarters of 2009, Grammy reported in the Journal. It was $60.18 a barrel at the end of the third quarter, Sept. 30, and $68.19 as of Dec. 31.
"It looks like the trend is more activity (in the local oil industry)," said John Neumann, owner of Accelerated Environmental Services Inc. In Taft. "The big oil companies are keeping a tight grip on it - a close eye on it."
"(But there is) more activity out there. The drilling rigs are coming back. That's always a good sign."
"There has been an increase in hiring, Neumann said.
"We are doing a little bit (of hiring)," he said. "It seems like there is more activity (in the oilfields)."
Jobs
CSUB Professor Grammy reported that countywide, Kern's workforce fell by 2,900 from the third quarter to the fourth quarter of 2009, with 5,800 less people employed and 2,900 more people unemployed, he reported. Non-farm jobs were up by 3,500 in the fourth quarter, but farm jobs plunged by 8,000, according to the Journal report.
Taft recorded an unemployment rate of 14.7 percent for the fourth quarter of 2009, a giant jump from the 10.4 percent rate for the fourth quarter of 2008, the Journal reported.
The Taft area was far above the 6.3 percent in Kernville - the lowest in the county - but only about 40 percent of the rate in Arvin, a whopping 37.3 percent. In addition to Arvin, the communities of Shafter, Lamont, Wasco, McFarland and Delano all had rates of more than 25 percent unemployed - one in every four who are employable.
Kern County's unemployment rate climbed to 14.7 percent in the fourth quarter, a gain of 0.9 percent from the 13.8 percent in the third quarter of 2009.
New Players
The energy field is getting a little stronger - with help from solar, KEDC's Fleming said. Solar and hydrogen will be two big players in Kern's energy picture in this decade, she said.
The $2 billion Hydrogen Energy California project in Tupman is in the permitting process. It is a joint project of Rio Tinto, one of the world's leading mining and exploration companies, and BP p.l.c., a giant in petroleum exploration and production, and refining and marketing.
The facility will have 1,500 construction jobs for a couple of years and 150 permanent jobs by 2015, Fleming said.
"They hope to get the OK for construction by 2011," she said.
"Solar will be big in Kern County. There are 19 solar projects in the pipeline in Kern County.
"Most of them are in the southern San Joaquin Valley."
Information on the locations of the projects is confidential for now, Fleming said.
Taft's Gorson said there is a 20,000-acre, 7,000-megawatt solar facility in the planning stages "in the sphere of influence of Taft."
Solar facilities create construction jobs in the building phase and then permanent operating positions, he pointed out.
That has been a successful formula for more than 100 years, as the heavy crude oil of the southern San Joaquin Valley has fueled the economy of Taft and the Westside. But today - well into a multi-year recession - what is the economic outlook for Taft, the Westside and the vital energy industry?
There is optimism out there that the worst is over. And there are new players in the energy market that can boost a recovery. But there are also feelings of uncertainty -- or even pessimism -- about the end to the recession being near. It's hard to tell if the Taft area and the Westside as a whole have turned the corner on the recession, said Bill LeBarron, treasurer for the city of Taft.
"I am optimistic it will turn around, but you see trucks (parked) in (company) yards (instead of out on jobs), LeBarron said. "There are not that many jobs out there."
"Building has not taken off this year. There is some remodeling, but people are kind of holding off on buying." Devinder Bains, owner of Taft Chevrolet Buick Pontiac, is pessimistic about a recovery this year or in 2011.
"Things are pretty much the same, nothing has turned the corner," Bains said. "We are not out of the woods yet. Credit is still tight," he said.
"Banks are tightening up," Bains said. "We are hoping it will get better. (But) it will be a couple of years until we see any decent change. "It will be into 2012 before we see any change - the end of 2012 (with its presidential election), into 2013. That is my take."
Taft City Manager Bob Gorson has a more optimistic view of the economy. "In the last three months of 2009, 14 new businesses started up in Taft," Gorson said. "All of them are hiring workers. "Other businesses are expanding. Oil service firms are hiring. Those are very well paying jobs."
Gorson pointed out what he called "two other big things" for the Taft area. Those are: the 72-acre Westside Industrial Park of Charlie Beard, which has two tenants for 5-acre parcels; and the city-owned 27-acre facility, which also has two prospective tenants with letters of intent signed.
"It (the city's industrial park) is vacant land now,' Gorson said. "We are seeking an EDA (U.S. Economic Development Administration) grant of $1.7 million ... for infrastructure. There is a good chance of getting it."
The tenants for the Westside Industrial Park are Huddleston Crane, which is relocating from Dustin Acres and will have a 4,800-square-foot office; and Thomas Energy, which is new to the Taft area and will have about 20 employees, Gorson said.
The city's industrial park tenants are Champion Products, which proposes a cleaning product manufacturing facility; and Nature's Energy, a "green" company that proposes to grow algae to produce biodiesel, he said.
The algae growing will not be at the industrial park, but at another location - possibly at the city's water treatment facility, Gorson said. Nature's Energy will take up to 50 acres for the algae operation and will employ 80 people, he said. Five of the jobs will pay $80,000 or more, Gorson said.
Both Champion and Nature's Energy will receive $1 a year ground leases for 10 years, Gorson said.
"We are just trying to get some good quality jobs, especially light manufacturing," he said. "They (light manufacturing) are good multipliers (increasing the need for employees at firms that deal with light manufacturing)."
In addition to light manufacturing, the city's industrial park is targeting alternative energy and renewable fuels, Gorson said.
Beard also has 120 acres of vacant land that can be used for an industrial park, Gorson said.
Here is a look at some key segments of the area's economy:
Residential property
"I believe that the economy is better than it was a year ago," said Della St.Clair, Taft rental property manager. "(Then) people lost their jobs. (I) had a terrible time collecting rents.
"Now people have gone back to work. The need is there for homes. Things are looking up for us. "We work with the renters to keep them in the properties. A lot of them are back. People are able to afford the housing market."
However, St.Clair noted that the rental housing market is still suffering from impacts of the recession.
"The rental market has gone down; there are lower rents," she said. "What was $1,000 is now $850; and properties are on the market longer.
"Landlords lost their properties. Now there are new investors who are buying at lower prices. It's a buyers' market.
"A lot of homes and repos (repossessions) have been purchased. Investors are holding on to their properties. They rent now until the home prices go back up."
For Kern County overall, the median sales price for all residential units appreciated $2,300 in the fourth quarter of 2009, according to the Kern Economic Journal of California State University, Bakersfield. Median prices were up 1.7 percent in the quarter, from $132,200 in the third quarter of 2009 to $134,300 in the fourth quarter, said Abbas Grammy, CSUB economics professor and publisher and managing editor of the Journal.
However, Grammy noted, the number of units sold in the quarter was down from 3,290 in the third quarter of 2009 to 3,190 in the fourth quarter; and the number of building permits issued for construction of privately-owned dwelling units fell from 432 in the third quarter to 358 in the fourth quarter.
Black Gold
In energy overall, Kern County is seeing an upswing, said Robin Fleming of the Kern Economic Development Corp.
"Overall there are signs of a rebound in oil," Fleming said. "Some people in the oil industry are being hired back."
A major oil find of between 150 million and 250 million gross barrels of oil equivalent that was reported in July 2009 by Occidental Petroleum is within the area around existing fields on the Westside, said Taft City Manager Gorson.
Oxy has refused to reveal the location of the find and an Oxy spokesperson declined to comment on company plans for the Westside this year.
"They have started hiring engineering talent and (for) drilling activity almost across the board," Gorson said. "There is a rumor that Oxy and other majors are tying-up every drilling rig in the country. The activity should really increase around Taft."
Crude oil price increases could help spur Westside production.
The average price of San Joaquin Valley heavy crude oil climbed by $8.01, or 15.2 percent, per barrel between the third and fourth quarters of 2009, Grammy reported in the Journal. It was $60.18 a barrel at the end of the third quarter, Sept. 30, and $68.19 as of Dec. 31.
"It looks like the trend is more activity (in the local oil industry)," said John Neumann, owner of Accelerated Environmental Services Inc. In Taft. "The big oil companies are keeping a tight grip on it - a close eye on it."
"(But there is) more activity out there. The drilling rigs are coming back. That's always a good sign."
"There has been an increase in hiring, Neumann said.
"We are doing a little bit (of hiring)," he said. "It seems like there is more activity (in the oilfields)."
Jobs
CSUB Professor Grammy reported that countywide, Kern's workforce fell by 2,900 from the third quarter to the fourth quarter of 2009, with 5,800 less people employed and 2,900 more people unemployed, he reported. Non-farm jobs were up by 3,500 in the fourth quarter, but farm jobs plunged by 8,000, according to the Journal report.
Taft recorded an unemployment rate of 14.7 percent for the fourth quarter of 2009, a giant jump from the 10.4 percent rate for the fourth quarter of 2008, the Journal reported.
The Taft area was far above the 6.3 percent in Kernville - the lowest in the county - but only about 40 percent of the rate in Arvin, a whopping 37.3 percent. In addition to Arvin, the communities of Shafter, Lamont, Wasco, McFarland and Delano all had rates of more than 25 percent unemployed - one in every four who are employable.
Kern County's unemployment rate climbed to 14.7 percent in the fourth quarter, a gain of 0.9 percent from the 13.8 percent in the third quarter of 2009.
New Players
The energy field is getting a little stronger - with help from solar, KEDC's Fleming said. Solar and hydrogen will be two big players in Kern's energy picture in this decade, she said.
The $2 billion Hydrogen Energy California project in Tupman is in the permitting process. It is a joint project of Rio Tinto, one of the world's leading mining and exploration companies, and BP p.l.c., a giant in petroleum exploration and production, and refining and marketing.
The facility will have 1,500 construction jobs for a couple of years and 150 permanent jobs by 2015, Fleming said.
"They hope to get the OK for construction by 2011," she said.
"Solar will be big in Kern County. There are 19 solar projects in the pipeline in Kern County.
"Most of them are in the southern San Joaquin Valley."
Information on the locations of the projects is confidential for now, Fleming said.
Taft's Gorson said there is a 20,000-acre, 7,000-megawatt solar facility in the planning stages "in the sphere of influence of Taft."
Solar facilities create construction jobs in the building phase and then permanent operating positions, he pointed out.
