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One of the most valuable industries in Los Angeles is struggling. We're not talking about what's at the box office or what's getting the most hits on TMZ today. We're talking about oil, black gold, Texas tea. LA still has a number of oil fields. In fact, more than a third of the oil that Californians use comes from California. And with extremely low oil prices, there's a big effect on the region's economy. NPR's Sonari Glinton reports.
SONARI GLINTON, BYLINE: OK, we're here. Los Angeles is a world center for transportation, fashion, manufacturing and, above all, entertainment. In the heart of this metropolis, one of the most important industries is hidden in plain sight, just like this oil field I'm standing in, which is just a few hundred yards from NPR's Culver City studios and a few miles from downtown Los Angeles.
LARS PERNER: When you think about Los Angeles, you tend to think of big skyscrapers and beaches, and you don't generally tend to think of oil wells.
GLINTON: Lars Perner is with the Marshall School of Business at USC. I took him for a drive to explore some of LA's oil fields.
PERNER: We're looking at an oil field very close to downtown Los Angeles near Baldwin Hills. And this is fairly valuable real estate with some rather expensive homes close by. And then this oil is clearly very valuable to justify using that space for those oil pumps.
GLINTON: Now, as iconic as the Hollywood sign is or the movie studios are, the oil wells, they came first. They date way back to the mid-1880s.
PERNER: Back in those days, there weren't really a lot of regulations as to how you could drill, so a lot of people got very entrepreneurial and they were trying to get pumps onto their property before the neighbors could.
GLINTON: In fact, local history buffs will tell you LA's oil rush is the thing that put Los Angeles on the map. Part of what made LA's oil so attractive, Perner says, was that the oil was close to the surface - you know, easy to extract. Add the newfangled automobile, incredible weather, a port and that's a recipe for exponential expansion.
PERNER: Well, the petroleum industry, of course, made it possible to have Hollywood where you needed to spread out, but it also made it possible to build an infrastructure to help transport in agricultural produce from other areas so you could support the growth of a relatively large city very quickly.
DAVID SLATER: Los Angeles was a sleepy pueblo that became LA and Hollywood. And the studios all popped up, and people got wealthy because of oil.
GLINTON: David Slater is the chief operating officer for Signal Hill Petroleum.
SLATER: And we are standing in the middle of the Long Beach Signal Hill oil field on top of the hill in the city of Signal Hill.
GLINTON: It's difficult to overstate just how much oil was being produced right here in LA back in the '20s.
SLATER: The production from here made Los Angeles the equivalent of Saudi Arabia today. That's how prolific and how much oil relative to the rest of the world was coming out of Los Angeles basin.
GLINTON: Today, the Signal Hill oil field is still one of the largest producers in the U.S. but the steep drop in oil prices has had a big impact on smaller oil companies like signal Hill. Again, David Slater.
SLATER: And the painful part, though, is when prices go down, contracting our business and eliminating jobs is never, ever a fun thing to go through.
GLINTON: And you have about 150 employees. How is that affecting you?
SLATER: We don't have 150 employees anymore. We now have about 85 employees.
GLINTON: Slater said he'd love to hire them back but he won't be able to until oil prices go up. You see, here in Southern California, cheap gas can be costly. Sonari Glinton, NPR News, Culver City.
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