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Kern County's economy gains as commodity prices rise

The run-up in gold and silver prices leads to the reopening of a mine near Mojave, and higher crude prices give a boost to the county's oil fields. Crops such as cotton also are soaring in value.

May 11, 2011|By Alana Semuels, Los Angeles Times

Reporting from Mojave — David Rubio stands high on a hill looking over the desert, where hundreds of white wind turbines spin in the dry air.

Rubio promises that he'll soon be hiring, but the jobs won't involve those high-tech windmills. The work will be in the mine shaft beneath him, where his employer, Golden Queen Mining Co., plans to extract millions of ounces of gold and silver.

"We'll be the first new mine in 20 years," he says, turning toward Soledad Mountain, where a ladder is just visible through a tunnel. "Unemployment is high in Mojave, so people are interested."

Alternative energy projects such as wind farms and solar installations get most of the attention these days, but the good earth is doing its fair share in helping Kern County pull slowly out of its economic slump.

The run-up in gold and silver prices over the last year has led Golden Queen to reopen this mine in the desert. On the other side of the Tehachapis, farmers in Kern County and elsewhere in the Central Valley are planting more crops and hiring more workers, thanks to deep snows in the Sierra Nevada and the abundance that means for water supplies.

Higher oil prices are also giving a boost to the companies that extract petroleum from the many fields across Kern County.

"They're way ahead of the curve," economist John Husing said about the county, pointing to the strong agriculture and oil presence there as the reason for growth. "They added jobs last year where a good part of Southern California hadn't started yet."

The strength of Kern's commodities is providing a modest ray of light in a county that has seen its share of economic turmoil. The county's unemployment rate generally fluctuated between 14% and 17% in 2009 and 2010, depending on farm employment, but is down from its high of 17.8% in March 2010.

Sales tax revenue in Bakersfield jumped 18.4% in the fourth quarter of 2010, driven by purchases of equipment for the petroleum industry, heavy industrial equipment and new cars.

Plantings of Upland cotton, the most widely harvested in the nation, will increase 29% in 2011 to 160,000 acres, according to the U.S. Department of Agriculture. Plantings of Pima cotton, a longer and more valuable variety, will increase 24% to 225,000 acres, which should create more farm jobs.

"There should be more employment in cotton this year," said Don Davis, president of the Kern County Farm Bureau. "That means more money going into people selling fertilizer, pickups, diesel. It will also mean they'll be hiring more employees to work the ground."

IHS Global Insight predicted two years ago that the Bakersfield metro area would be among the first regions in California to emerge from the recession. The area is still on target to do better than most areas of California, said Jim Diffley, chief regional economist for the research firm.

Kern's interconnectedness with Los Angeles and its growing trade infrastructure account for some of that growth. Agriculture and oil help too.

"Many areas of the U.S., including Bakersfield, benefited from a high value of commodities," Diffley said. "It goes in a cycle."

A recent report by MetroMonitor, a segment of the Brookings Institution, found that the Bakersfield metro area is one of the 20 strongest-performing areas in the economic recovery. Employment in the region grew 1.4% in the fourth quarter of 2010 from the same period a year earlier, compared with 0.6% growth, on average, for the U.S. The region's gross metropolitan product also grew at a faster rate than many of the country's largest metropolitan areas during that period.

"Commodity prices are picking up again," said Richard Chapman, president of the Kern Economic Development Corp. "That's going to have a trickle-down effect."

That trickle-down effect also means that the budget issues plaguing the rest of the state aren't as pronounced in Bakersfield. The city's proposed 2011-12 budget includes plans to add police jobs and give raises to some employees.

Sales in local restaurants have bumped up too.

"We're definitely seeing an uptick," said Daniel Young, the owner of Graziano's Pizza in Mojave. Last year, business was so slow that Young was thinking of shutting his doors.

Although prices of many commodities have retreated in recent weeks, they still are far above their levels of a year ago. Cotton, at $1.51 a pound, is up 88% over the last 12 months. Silver is up 96%.

Gold is up 22% from a year ago, part of the reason that Lutz Klingmann, president of Golden Queen Mining Co. in Vancouver, Canada, has gone through permitting processes to open the Soledad Mountain Mine. The company will also mine silver there.

"Commodity prices are a reason why it is a good time to be mining in California," Klingmann said.

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