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IN THIS ISSUE – “A Ceaseless Debate Between California and Texas”

CALIFORNIA

WATER & POWER

Capital News & Notes (CN&N) harvests California policy, legislative and regulatory insights from dozens of media and official sources for the past week. Please feel free to forward this unique service.

READ ALL ABOUT IT!

FOR THE WEEK ENDING OCT. 8, 2021

 

Headline in New York Times:

Tesla Will Move Headquarters to Austin, Texas, in Blow to California

Elon Musk announced the move at the company’s annual shareholder meeting, hosted at a factory Tesla is building near Austin.

Tesla is one of several California companies to say they were moving to Texas in recent months. Hewlett Packard Enterprise said in December that it was moving to the Houston area, and Charles Schwab has moved to a suburb of Dallas and Fort Worth.

Mr. Musk’s decision will surely add fuel to a ceaseless debate between officials and executives in Texas and California about which state is a better place to do business.

(From CalMatters today and see next story: Case in point: A recent joint study from the University of Texas at Austin and Stanford University found that a whopping 57.8% of homes in California cost more than $500,000, compared to just 7.8% in Texas. In September, the median price of a single-family home in California was $827,940.)

More:

https://www.nytimes.com/2021/10/07/business/tesla-texas-headquarters.html

 

Stanford & U of Texas Study Why Californians Migrate to Lone Star State

Axios & Stanford / University of Texas

University of Texas at Austin and Stanford University released a joint study comparing the economic policies of California and Texas and how they affect quality of life.

Why it matters: The two most populous states in the country have long epitomized contrasting ideas about government, including policies on taxes, regulation and, more recently, pandemic response.

Context: Even before the pandemic, 50,000 Californians moved to Texas annually, often settling around Dallas.

Texas is one of the fastest-growing states in the country and gained two congressional seats in the latest census, while California is growing slower than the national average and lost two districts.

Texas Gov. Greg Abbott has repeatedly taken aim at California, even campaigning with the motto “Don’t California My Texas!”

Details: According to the study, crime rates and renewable-energy production in both states are similar, although California spends more per capita on both police and green energy subsidies.

The Lone Star State has lower income taxes, but higher property taxes and a lower percentage of insured residents.

The Golden State has much higher income taxes and spends 60% more than Texas on a per-resident basis.

California also spends more per K-12 student, but “student outcomes are if anything better in Texas,” the study concludes.

By the numbers: The biggest economic difference between the states is the overall cost of living.

In California, 57.8% of houses cost more than $500,000.

In Texas, that number is only 7.8%. Most homes here are under $200,000.

What they’re saying: “Both [states] have much to celebrate,” the study’s authors write. “Population and employment surged in Texas while California’s per-capita income and GDP have soared in recent years.”

The bottom line: The study is diplomatic about it, but people come to Texas because it’s inexpensive relative to the rest of the country.

https://www.axios.com/local/dallas/2021/10/07/texas-california-economics-moving-census

 

Stanford / U of Texas policy study:

https://siepr.stanford.edu/research/publications/tale-two-states-contrasting-economic-policy-california-and-texas

 

State Travel Bans Reach One-Third of US

Sacramento Bee

California Democrats wanted to send a message when they passed a law five years ago banning taxpayer-funded travel to states that allow businesses to deny services to gay and transgender people.

California leaders took a stand, but they didn’t discourage Republican states from adopting those so-called religious freedom laws.

Since then, California has banned state-funded travel to 18 states, with a total population of 117 million people. That’s a little more than a third of the nation’s overall population.

You can’t drive across the country without passing through at least one state on the list.

The latest addition came in late September, when Attorney General Rob Bonta announced a ban on state-funded travel to Ohio over a new state law that lets doctors cite their moral or religious beliefs in denying care to a patient.

“Ohio’s decision to condone attacks on the health of its nearly 400,000 LGBTQ+ residents was widely opposed by the state’s medical community. It’s plain that this law only serves to discriminate,” said Assemblyman Evan Low, D-Campbell, who wrote California’s travel ban law. “We will never put Californians at risk of falling victim to the same toxic standard by supporting the use of taxpayer dollars for travel in places where anti-LGBTQ discrimination is the law of the land.”

California passed its travel restrictions in 2016 in response to Indiana’s “Religious Freedom Restoration Act,” which made it easier for people to demand exemptions from anti-discrimination laws by allowing lawsuits that challenge them on the basis of religious belief.

Businesses groups condemned the Indiana law, and then-Gov. Mike Pence later signed an amendment that was intended to protect gay and transgender people from discrimination. Today, California does not ban state-funded travel to Indiana.

While the California travel ban law was intended to put pressure on conservative-leaning states not to pass anti-LGBT laws, in practice several of those states have gone ahead with such laws and California’s banned state list has grown considerably.

One state, North Carolina, was added to the list after lawmakers in that state passed a bill prohibiting transgender people from using the bathroom of their gender identity. Though North Carolina has since repealed that law, it remains in the banned list.

Other states on the banned travel list include Alabama, Arkansas, Florida, Idaho, Iowa, Kansas, Kentucky, Mississippi, Montana, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas and West Virginia.

All of the states on the travel ban list voted for former President Donald Trump in the 2020 election.

Republicans have full control of state government in almost all of them, with the exception of Kentucky and North Carolina, which have Democratic governors.

California still allows state-funded travel to the following states which voted for Trump: Alaska, Indiana, Louisiana, Missouri, Nebraska, Utah and Wyoming.

The California law has exemptions for serious government business, such as law enforcement, tax collection, and those traveling for training events required for grants from the ban.

It is unclear how much of an impact the travel ban will have on college sports.

https://www.sacbee.com/news/politics-government/capitol-alert/article254625357.html#storylink=cpy

 

Governor Signs New Law to Study State-Issued, Zero-Cost Credit Cards

Sacramento Bee

California set a course to offer the nation’s first zero-cost, public option platform for personal financial services, under a new law signed by Gov. Gavin Newsom.

Assembly Bill 1177, authored by Assemblyman Miguel Santiago, D-Los Angeles, calls for the state to conduct a market analysis of a state-backed program that would give Californians a public option for banking services like debit cards.

The study would aim to determine with that service would be viable within six years. The commission must complete the analysis by July 1, 2024. Then, the Legislature could decide whether to launch a public banking program.

Black and Latino families are more likely to lack access to commercial banks than white and Asian households, a trend that Santiago aims to reverse with a public bank.

“Creating a public option for banking and closing the racial wealth gap isn’t only a moral imperative,but is necessary to foster greater financial security for all of our communities. This bill is a much-needed step to address the needs of the unbanked and underbanked and moves us closer to building a more equitable economy after the pandemic,” Santiago wrote in a statement urging lawmakers to pass his bill.

His bill was part of a package of consumer financial protection bills that the governor signed into law.

“With the nation’s strongest state consumer financial protection watchdog and these new measures, California continues to have the backs of working families recovering from the pandemic,” Newsom said in a statement.

The governor’s signature was hailed by supporters of public banking, including Trinity Tran, lead organizer for the California Public Banking Alliance.

“Universal banking access would be life-changing for the millions of Californians who face barriers to opening or maintaining a bank account and bring in billions in local spending from savings from high-cost fees and interest,” Tran said in a statement.

The bill was supported by SEIU California, whose president, Bob Schoonover, said in a statement, “Gov. Newsom does more than create the groundwork for a public banking option in signing AB 1177 into law. He sets the foundation for rebuilding a stronger and more inclusive economy. A significant proportion of Black, Latino, and low-income Californians — many of whom are essential workers who do difficult and dangerous work — have had to pay a disproportionate amount of their paychecks to access essential banking services.”

Schoonover said that AB 1177 becoming law “puts the solution within our reach, but it is only the beginning.”

https://www.sacbee.com/news/politics-government/capitol-alert/article254761472.html#storylink=cpy

 

“We’ve Come to the Day of Reckoning”: Water Law Changes Farming Forever

National Public Radio

California’s agricultural empire is facing a shakeup, as a state law comes into effect that will limit many farmers’ access to water.

The seven-year-old law is supposed to stop the over-pumping from depleted aquifers, and some farmers — the largest users of that water — concede the limits are overdue.

The state grows roughly 40% of the country’s vegetables, fruit and nuts. But it’s also famously prone to drought, and in those dry years, when farms run short of water from rivers and reservoirs, they turn on powerful pumps and draw well water from aquifers.

The limits on that water use will force many farmers to scrap practices that relied on unfettered access to that shrinking underground reservoir. “It’s unsustainable to continue over-drafting the aquifer the way we are,” said Rick Cosyns, a farmer near the town of Madera, just north of Fresno. “It’s just a race to the bottom.” (Cosyns was interviewed in August. He died unexpectedly on Sept. 7.)

This year’s drought hit hard and fast. With rivers running low, there’s little “surface water” available for agriculture. As a result, farmers’ pumps ran hard this summer. Big pipes that emerge from the ground alongside fields and orchards delivered powerful gushers of water. State-wide, farmers to pumped an estimated six to seven million additional acre-feet of water this year, above what they normally use. (An acre-foot of water is 325,851 gallons.)

For 100 years in California, anyone could dig a well on their land and pump as much as they wanted. Farmers got most of it. They pumped so much water that the underground water table fell by more than 100 feet in some places. The ground itself subsided as water was pumped out from underneath it.

All that’s supposed to end. The Sustainable Groundwater Management Act (SGMA), passed in 2014 but just now going into effect, treats the aquifer like a bank account that has to stay in balance. There can be withdrawals of water, but they cannot exceed the rate at which the aquifer is replenished.

The new restrictions are creating winners and losers among farmers.

Cosyns’s farm, near Madera, is among the fortunate ones. It has another source of water. It’s part of an irrigation district set up a century ago to distribute water from nearby rivers to farmers. Most of that water, today, is captured by a dam on the San Joaquin River.

A deep irrigation ditch runs alongside the almond orchard. It’s empty this year because of the drought. “I’d sure feel better if this was full of water, and most years it is,” Cosysns said.

Most years, when there’s enough rain and snow, he could use that water to irrigate orchards and let some of the water just sink back into the ground. Eventually that water can filter all the way back down to the aquifer, hundreds of feet below.

It’s a way to keep that aquifer bank account roughly in balance, making water deposits when there’s plenty of water from the river, and pumping water out again when there’s a drought.

Yet even here, the water table in the aquifer has been falling. The reason, Cosyns said, lay elsewhere. “The surrounding areas are pumping the water out from under us,” he said.

Those farmers own land that’s outside the irrigation district, and they don’t get water from the dam on the San Joaquin River. They pump from the aquifer every year, making withdrawals but no deposits. Under the new law, that will have to end.

Cosyns had only limited sympathy. “We’ve made the investments” in securing additional water supplies, he said, “and others are getting into our bank accounts that we saved for.” Farmers who rely solely on groundwater may think it’s their right to do that indefinitely, “but we’ve come to that day of reckoning, when that’s no longer going to be the case.”

This is the main division in California agriculture as the groundwater law comes into force. On the one side are farmers in irrigation districts with secure access to water from California’s rivers and reservoirs; on the other, farmers who’ve relied almost completely on their wells.

Many of the aquifer-dependent farmers will have to cut their pumping drastically, and that likely means they’ll have to idle some of their land. According to some estimates, anywhere from half a million to a million acres will cease growing agricultural crops in the San Joaquin Valley, which covers a wide swath of land between Sacramento and Bakersfield.

This does not sit well with some farmers, such as David Roberts, who grows citrus crops in Tulare County. “We’re going to turn the water crisis into a food crisis, because we cannot replicate the San Joaquin Valley anywhere else in the United States,” he says.

No other place, he says, has the climate to grow more than 400 different crops. And when consumers realize what they’re missing, he expects a backlash. “This ground will come back into production one way or another,” he says. “The United States cannot be without the San Joaquin Valley producing fruit.”

Roberts agrees that overuse of the aquifer has to end. But he wants the government to step in to deliver more water from rivers and dams to make up for the lost groundwater, to keep more land in production and also replenish the aquifer.

Other water experts say that’s a pipe dream, and unnecessary. Some crops currently grown in the Central Valley, including almost half a million acres of corn used to feed dairy cattle, can easily be grown elsewhere. California’s dairy industry is likely to contract because cattle feed will become increasingly scarce, they say, but consumers will barely notice.

In fact, some farmers think the future looks bright. “I actually think it’s going to be a better future than the past has been,” says Jon Reiter, a rancher and adviser to large-scale farming operations in the valley.

People already are working on creative ways to adapt and prosper, he says. Farmers and water managers are building the infrastructure to capture more water in years when it rains, flood their fields, and replenish the aquifer. That will allow them to pump more groundwater in the future.

Some land still will have to stop growing crops, Reiter says, “but we’re going to take that land and put it to other uses.” There are profits to be made leasing land for solar production, for instance.

“I see the San Joaquin Valley being really a solar hub, renewable energy hub for the whole of California,” he says. “It could be a big part of our state achieving its renewable energy objectives.”

There’s also a new state program that will pay farmers to turn fallowed fields into habitat for birds, lizards, and native shrubs.

No one knows exactly what that Central Valley will look like when this all shakes out. Dozens of local committees are in charge of enforcing the new groundwater law.

Soapy Mulholland, a conservationist who’s on half a dozen of these committees, says they include a much larger range of viewpoints than previously had influence over groundwater. “You’re considering disadvantaged communities, the farmers, you’re considering the environment, and all those players are at the table,” she says. “And that’s a good thing.”

https://www.npr.org/2021/10/07/1037369959/new-protections-for-californias-aquifers-are-reshaping-the-states-central-valley

 

“Sexy, Sexy Infrastructure”: San Joaquin Valley Turns to Groundwater Recharge

National Public Radio

Aaron Fukuda admits that the 15-acre sunken field behind his office doesn’t look like much.

It’s basically a big, wide hole in the ground behind the headquarters of the Tulare Irrigation District, in the southern part of California’s fertile Central Valley. But “for a water resources nerd like myself, it’s a sexy, sexy piece of infrastructure,” says Fukuda, the district’s general manager.

This earthen basin could be the key to survival for an agricultural community that delivers huge quantities of vegetables, fruit and nuts to the rest of the country — but is running short of water. The basin just needs California’s rivers to rise and flood it.

When rains come in the winter and swell the rivers, Fukuda and his colleagues open some gates and send water through irrigation canals to fill this basin and lots of others they’ve set up. That captured water will seep into the ground, eventually finding its way to a natural aquifer system hundreds of feet below.

Water underground has become a scarce and regulated asset in the state. Farmers have pumped so much water from aquifers in this part of California that they’ve become depleted, threatening water supplies for agriculture and communities that depend on wells for their household water. A 7-year-old law, just now taking effect, strictly limits the amount that farmers can pump from those aquifers, and those limits could put some farmers out of business.

Water-capturing basins like this one, however, offer farmers a way to survive. That’s because the new law treats the underground aquifer like a bank account. If farmers deposit water into that account when water is plentiful, they can draw more water out when they need it, in years of drought. “It really is the difference between our community surviving and not,” Fukuda says.

In the past, many Californians considered the winter floods a nuisance, Fukuda says. Now, that has now changed completely. “It’s liquid gold,” he says. “Cold, crisp floodwater is gold these days.”

Farmers and water managers in the southern part of the Central Valley, where the water problem is most severe, are grasping at the water banking idea like a lifeline. Jon Reiter, a rancher and water consultant, works with some of them.

He shows me a field of grapes, destined to become raisins. The soil is sandy and looks as if it could absorb any water that landed here. There’s an embankment around three sides of the field already. “You could imagine how much water you could store in the ground in a location like this,” Reiter says.

The owner of this field, he says, “has made the determination that he would be willing to actually remove the raisins” and use the land instead to capture water. The water he would “sink” might be more valuable to him than his raisin crop because it could earn him the right to pump more water from the aquifer during a future drought to irrigate other fields.

Don Cameron, the owner of Terranova Ranch near Helm, Calif., has even bigger ambitions. Cameron’s farm relies almost entirely on groundwater. He’s been watching the underground water level fall for years and worrying about the future.

Ten years ago, during a winter with lots of rain, he decided to flood some vineyards and orchards, to see if he could replenish the aquifer without even clearing land for a dedicated “recharge basin.” “A lot of people were skeptical, our neighbors especially,” Cameron says. “I mean, they thought we were crazy. That we were going to kill our vineyard.”

In fact, the grapevines and trees survived just fine, and the experiment boosted groundwater levels below his field. Further experiments, some carried out in collaboration with researchers at the University of California, Davis, confirmed the feasibility of this “on-farm recharge.” Now Cameron is persuading his neighbors to do the same thing. Together, they could potentially flood tens of thousands of acres.

This is only possible, though, because Cameron happens to be in a fortunate location, right next to a branch of the Kings River, which in turn is connected to a big canal that’s a major artery in California’s vast water distribution system. That channel is bone-dry at the moment, but in years of heavy rains, it can fill with water. Many other farmers who are dependent on groundwater, and who will be hit hardest by the new law limiting its use, can’t make “deposits” in their underground bank account because they have no access to floodwater. They’re not connected to the network of ditches and canals that would be needed to carry floodwaters to their fields.

All that Cameron needs is for Mother Nature to deliver a flood. “I know we’ll have another one,” he says. “There is no doubt in my mind that we will flood again. We may even see more severe flooding in the future.”

Climate experts agree that this is likely. In the past, California relied on precipitation arriving as snow in the Sierra Nevada mountains. The high-altitude snowpack acted as a giant reservoir, releasing water into rivers slowly as it melted. In the future, more of that water will arrive as rain, flooding quickly into rivers. The biggest reservoir available to store it may turn out to be underground, in the aquifer that California’s farmers have drained for most of the past century.

This won’t solve all of the Central Valley’s water problems, though. For one thing, there still won’t be enough water available to fully recharge the aquifers. Aggressively capturing and storing floodwaters could make up for 40% to 50% of the current groundwater deficit at best, according to Reiter.

In addition, recharging the aquifer could have mixed effects on the Central Valley’s other big groundwater problem: contamination of wells with agricultural chemicals. These include nitrates from fertilizer and cattle waste. The problem is most severe for low-income communities that rely on shallow wells for household water use.

Flooding more land probably will flush those agricultural pollutants into aquifers, says Helen Dahlke, a hydrologist at the University of California, Davis. “We often see a spike in nitrate, for example, at the groundwater table below a recharge site,” she says.

In the long run, though, she thinks it will be good for water quality. “Most of the water that we use for recharge is very clean, because it comes from rainfall or snowmelt from the Sierra Nevada Mountains,” she says. “Eventually there will be a pulse of clean water also coming into the aquifer, which can dilute many of the pollutants that have moved into the groundwater over the last couple of decades.”

She points to the experience of a small community in Tulare County called Okieville. There are parts of the community where wells show high levels of contamination. But along its southern edge, there’s a groundwater recharge basin that the Tulare Irrigation District regularly fills with floodwater. People who live near that basin have enjoyed reliable supplies of clean water from their wells.

The irrigation district now is planning to build a new recharge basin on the other side of Okieville. “The idea is we can begin to shove water underneath their community. Good, clean water,” says Aaron Fukuda, general manager of the irrigation district. “The water quality, we hope, gets better.”

https://www.capradio.org/170548

 

Water Generators & Solar…Home of the Future

Associated Press

BENICIA— The machine Ted Bowman helped design can make water out of the air, and in parched California, some homeowners are already buying the pricey devices.

The air-to-water systems work like air conditioners by using coils to chill air, then collect water drops in a basin.

“Our motto is, water from air isn’t magic, it’s science, and that’s really what we’re doing with these machines,” said Ted Bowman, design engineer at Washington state-based Tsunami Products.

The system is one of several developed in recent years to extract water from humidity. Other inventions include mesh nets, solar panels and shipping containers that harvest the moisture from the air.

Bowman said his company’s machines — made for use at homes, offices, ranches and elsewhere — dehumidify the air and in doing so create water that’s filtered to make it drinkable.

The technology works especially well in foggy areas and depending on the size can produce between 200 and 1,900 gallons (900 and 8,600 liters) of water a day. The machines also operate efficiently in any area with high humidity, including California’s coastline, he said.

But they’re not cheap, with prices ranging from $30,000 to $200,000. Still, in California, where residents have been asked to conserve water because one of the worst droughts in recent history has depleted reservoirs, some homeowners are buying them to meet their water needs.

Don Johnson, of the San Francisco Bay Area city of Benicia, said he bought the smallest machine, which looks like a towering AC unit, hoping it would generate sufficient water to sustain his garden. But he found it puts out more than enough for his garden and his household.

“This machine will produce water for a lot less than you can buy bottled water at Costco for, and I believe, as time goes on and the price of freshwater through our utilities goes up, I think it’s going to more than pay for itself,” he said.

Besides the high price tag, the unit also requires a significant amount of energy to run. But Johnson said the solar panels on his roof produce enough power to operate the machine without additional energy costs.

Experts like University of California, Davis hydrology researcher Helen Dahlke said the technology makes sense for individual homeowners, especially in rural areas. But she said it is not a practical solution for California’s broader water woes.

Dahlke said the focus should be on fighting global warming to prevent future droughts.

“We really actually need to curb climate warming to really make a difference again,” she said.

https://apnews.com/article/science-technology-lifestyle-business-california-bf3a376a4a23ab4ac88dfdb834613114

 

Pain at the Pump Leads Long-Term Energy System Adjustments

NY Times

Americans are spending a dollar more for a gallon of gasoline than they were a year ago. Natural gas prices have shot up more than 150 percent over the same time, threatening to raise prices of food, chemicals, plastic goods and heat this winter.

The energy system is suddenly in crisis around the world as the cost of oil, natural gas and coal has climbed rapidly in recent months. In China, Britain and elsewhere, fuel shortages and panic buying have led to blackouts and long lines at filling stations.

The situation in the United States is not quite as dire, but oil and gasoline prices are high enough that President Biden has been calling on foreign producers to crank up supply. He is doing so as he simultaneously pushes Congress to address climate change by moving the country away from fossil fuels toward renewable energy and electric cars.

U.S. energy executives and the Wall Street bankers and investors who finance them are not doing anything to bolster production to levels that could bring down prices. The main U.S. oil price jumped nearly 3 percent on Monday, to about $78 a barrel, a seven-year high, after OPEC and its allies on Monday declined to significantly increase supply.

Producers are still chafing at memories of the price crash early in the pandemic. Wall Street is even less enthusiastic. Not only have banks and investors lost money in the boom-bust cycles that whipsawed the sector over the past decade, but many also say they are prepared to pare their exposure to fossil fuels to meet the commitments they have made to fight climate change.

“Everyone is very wary since it was just 15 or 16 months ago we had negative-$30-a-barrel oil prices,” said Kirk Edwards, president of Latigo Petroleum, which has interests in 2,000 oil and natural gas wells in Texas and Oklahoma. He was recalling a time of so little demand and storage capacity that some traders paid buyers to take oil off their hands.

If the drillers don’t increase production, fuel prices could stay high and even rise. That would present a political problem for Mr. Biden. Many Americans, especially lower-income families, are vulnerable to big swings in oil and gas prices. And while use of renewable energy and electric cars is growing, it remains too small to meaningfully offset the pain of higher gasoline and natural gas prices.

Goldman Sachs analysts say energy supplies could further tighten, potentially raising oil prices by $10 before the end of the year.

That helps explain why the Biden administration has been pressing the Organization of the Petroleum Exporting Countries to produce more oil. “We continue to speak to international partners, including OPEC, on the importance of competitive markets and setting prices and doing more to support the recovery,” Jen Psaki, Mr. Biden’s press secretary, said last week.

But OPEC and its allies merely reconfirmed existing plans for a modest rise in November. They are reluctant to produce more for the same reasons that many U.S. oil and gas companies are unwilling to do so.

Oil executives contend that while prices may seem high, there is no guarantee that they will stay elevated, especially if the global economy weakens because coronavirus cases begin to increase again. Since the pandemic began, the oil industry has laid off tens of thousands of workers, and dozens of companies have gone bankrupt or loaded up on debt.

Oil prices may seem high relative to 2020, but they are not stratospheric, executives said. Prices were in the same territory in the middle of 2018 and are still some ways from the $100-a-barrel level they topped as recently as 2014.

Largely because of the industry’s caution, the nationwide count of rigs producing oil is 528, roughly half its 2019 peak. Still, aside from recent interruptions in Gulf of Mexico production from Hurricane Ida, U.S. oil output has nearly recovered to prepandemic days as companies pull crude out of wells they drilled years ago.

Another reason for the pullback from drilling is that banks and investors are reluctant to put more money into the oil and gas business. The flow of capital from Wall Street has slowed to a trickle after a decade in which investors poured over $1.4 trillion into North American oil and gas producers through stock and bond issues and loans, according to the research firm Dealogic.

“The banks have pulled away from financing,” said Scott Sheffield, chief executive of Pioneer Natural Resources, a major Texas oil and gas producer.

The flow of money supplied by banks and other investors had slowed even before the pandemic because shale wells often produced a lot of oil and gas at first but were quickly depleted. Many oil producers generated little if any profit, which led to bankruptcies whenever energy prices fell.

Companies constantly sold stock or borrowed money to drill new wells. Pioneer, for example, did not generate cash as a business between 2008 and 2020. Instead, it used up $3.8 billion running its operations and making capital investments, according to the company’s financial statements.

Industry executives have come to preach financial conservatism and tell shareholders they’re going to raise dividends and buy back more stock, not borrow for big expansions. Mr. Sheffield said Pioneer now intended to return 80 percent of its free cash flow, a measure of money generated from operations, to shareholders. “The model has totally changed,” he said.

Oil company shares, after years of declines, have soared this year. Still, investors remain reluctant to finance a big expansion in production.

With oil and gas exploration and production businesses taking a cautious approach and returning money to shareholders, the first company “that deviates from that strategy will be vilified by public investors,” said Ben Dell, managing director of Kimmeridge, an energy-focused private equity firm. “No one is going down that path soon.”

This aversion to expanding oil and gas production is driven in part by investors’ growing enthusiasm for renewable energy. Stock funds focusing on investments like wind and solar energy manage $1.3 trillion in assets, a 40 percent increase this year, according to RBC Capital.

And the biggest investment firms are demanding that companies cut emissions from their operations and products, which is much harder for oil and gas companies than for technology companies or other service-sector businesses.

BlackRock, the world’s largest asset manager, wants the businesses it invests in to eventually remove as much carbon dioxide from the environment as they emit, reaching what is known as net-zero emissions. The New York State Common Retirement Fund, which manages the pension funds of state and local government workers, has said it will stop investing in companies that aren’t taking sufficient steps to reduce carbon emissions.

But even some investors pushing for emissions reductions express concern that the transition from fossil fuels could drive up energy prices too much too quickly.

Mr. Dell said limited supply of oil and natural gas and the cost of investing in renewable energy — and battery storage for when the sun is not shining and the wind is not blowing — could raise energy prices for the foreseeable future. “I am a believer that you’re going to see a period of inflating energy prices this decade,” he said.

Laurence D. Fink, chairman and chief executive of BlackRock, said this could undermine political support for moving away from fossil fuels.

“We risk a supply crisis that drives up costs for consumers — especially those who can least afford it — and risks making the transition politically untenable,” he said in a speech in July.

There are already signs of stress around the world. Europe and Asia are running low on natural gas, causing prices to rise even before the first winter chill. Russia, a major gas supplier to both regions, has provided less gas than its customers expected, making it hard for some countries to replace nuclear and coal power plants with ones running on gas.

OPEC, Russia and others have been careful not to raise oil production for fear that prices could fall if they flood the market. Saudi Arabia, the United Arab Emirates, Russia and a few other producers have roughly eight million barrels of spare capacity.

“The market is not structurally short on oil supply,” said Bjornar Tonhaugen, head of oil markets for Rystad Energy, a Norwegian energy consulting firm.

Helima Croft, head of global commodity strategy at RBC Capital Markets, said she expected that OPEC and Russia would be willing to raise production if they saw the balance between supply and demand “tighten from here.”

If OPEC raises production, U.S. producers like Mr. Edwards of Latigo Petroleum will be even more reluctant to drill. So far, he has stuck to the investment plans he made at the beginning of the year to drill just eight new wells over the last eight months.

“Just because prices have jumped for a month or two doesn’t mean there will be a stampede of drilling rigs,” he said. “The industry always goes up and down.”

https://www.nytimes.com/2021/10/04/business/energy-environment/oil-and-gas-prices-clean-energy.html