Like any developed economy, LA benefits from having many overlapping industries that seem to create a multiplicative effect in wealth generation.  The total is greater than the sum of the parts.  In this case the “parts” are the various industries of LA like healthcare, technology, education, fashion, aerospace, finance, shipping, manufacturing, and tourism.  Oh, and entertainment.  There’s a small film industry here, but you’ve probably never heard of it. 

The economist in me finds this phenomenon fascinating.  Does this mean rural areas, which only farm crops or butcher animals, or Caribbean countries that only host tourists, will ever generate meaningful wealth for their citizenry?  Is it enough to do one thing really well?  Or, how can the government incentivize different industries to develop in poorer geographical areas to help foster this magical overlap?  I don’t know the answer.  Sadly nobody else does, either.  Fortunately our government is focused on preventing non-whites from voting and legislating women’s bodies or trans-people.  Easier to solve made up problems than actual ones.  

I said yesterday LA is rising from the Pacific Ocean.  About 5 million years ago the future LA basin stopped getting deeper.  As the plates continued grinding past each other, something shifted and the basin began shrinking.  This started pushing up all the infill and with it, the juicy black gold … oil.  Modern LA owes its existence to oil.  

Oil was discovered in 1890, and pumping began almost immediately.  Oil derricks popped up everywhere in an unregulated feeding frenzy.  Peak oil occurred in 1901.  200 oil companies were active at the time, with over a thousand derricks.  More if you count the illegally set up ones.  The field was never very big, and all the pumping quickly drained the reservoir.  Today the easy, surface oil is mostly gone.  Only a few wells remain today, and the city produces about 30 barrels of oil a week.  The city council recently passed a resolution to prohibit new oil pumps, though the ones that operate can continue to do so.  It makes for a strange juxtaposition, a neighborhood surrounded by a working oil pump.

It’s problematic building a city over a former oil field.  Methane remediation is an ongoing concern.  Where as North Carolina homes monitor radon levels, LA homes monitor for methane.  In 1985, a Ross Dress For Less store blew up after methane accumulated overnight.  That exciting boom led the way for new ordinances, which ensure structures are properly ventilated and methane levels are monitored.  During the frenzy years, many wells were drilled without permission and abandoned without proper capping.  Methane and other noxious gases seep from the soil in parts of the city.   

Regardless what you think about oil, LA burst onto the national stage because of fossil fuels, all thanks to plate tectonics.  Lots of satellite industries orbit fossil fuel extraction, and the magical economic overlap begins.  People come, communities get established, more cultural and economic overlap occur as more services are needed, and the agrarian city Governor Neve established is never the same again.   

Today the GDP (Gross Domestic Product) of Cali is over 3 trillion dollars, making it the 5th largest economy in the world.  Within the U.S. the next state to come close to California’s output are Texas and New York, both at around 1.8 trillion.  I know, it chaps my ass Texas has so much economic power too.  

California outputs more than the bottom 25 states combined and is responsible for about 15% of the U.S.’s total GDP.  LA plays a big part of that number.  This place, despite its trouble with housing, traffic, and smog, is a remarkable engine.  All of us reap the output.  The movie and music industries here showed the world American culture and brands.  We have been living off the dividends ever since.

Oil still seeps from the ground in places like The La Brea Tarpits.  An enormous amount of animals from The Ice Age got stuck in the tar, their bones perfectly preserved.  It is a wonderland of ancient fossils from creatures humans accidentally hunted into extinction.  The bubbling goop a reminder of LA’s humble beginnings from oil town to international city.