Shackled Businesses Can’t Be Rebuilders : Regulation: We won’t regain a vibrant state economy unless corporations get relief from onerous structural burdens.

Charged with rebuilding Los Angeles, Peter Ueberroth has asked for cooperation from business, something that he must have to make his work successful. However, the boom of the 1980s is over and business needs help itself.

The optimistic spirit of the Golden State has turned into frustration. The decade of plentiful jobs, low inflation and interest rates, lofty company profits and sustained growth is gone.

Never has there been a more urgent need to improve our state’s business climate by reforming the structural obstacles that encumber the California business community. The recession, regulatory duplication and higher taxes are burdens shared collectively by businesses, regardless of size, throughout the state and without exception. The challenges that we in the petroleum industry face accurately reflect the pervasive difficulties faced by all businesses.

The recession has forced our member companies into significant cost-cutting, while government at all levels continues to attack the industry through inconsistent environmental policies, overlapping regulations, proliferating fees and higher taxes.

Ueberroth’s study of the business climate, released last month by the Council on California Competitiveness, points out that the host of regulations governing industry in California has created a frustrating duplication in reporting requirements, record-keeping and agency oversight. Similar conclusions were drawn in an environmental analysis prepared for the Western States Petroleum Assn.

The petroleum industry is currently regulated by 38 agencies. The study indicated that different agencies often oversee the same operation or environmental area, and it found the regulations to be confusing--often even conflicting.

For example, even though the State Air Resources Board has mandated, by 1996, a change in fuel composition to reduce air pollution, the local Air Pollution Control districts may take as long as two years to prepare an environmental impact report assessing the effect that manufacturing these new fuels will have on air quality--even though the assessment comes too late to affect the mandate for new fuels. Therefore the petroleum industry could be prohibited from starting construction on the plants for up to two years while awaiting an environmental impact report, despite the 1996 marketing deadline.

Companies will also have to invest billions of dollars to make the reformulated fuels, at an additional cost to consumers of about 20 cents a gallon. But why does California insist on reformulation at all, when Ford Motor Co. recently announced that it can meet the 1996 California tailpipe standard using today’s unleaded gasolines?

The cost of doing business in California is high and growing, even without the recession. Businesses are responding literally with their feet:

--Shell Oil sold its Wilmington refinery at the end of last year, displacing hundreds of workers--the first step in paring its corporate work force by 10% to 15% by the end of this year.

--Arco closed its Northwest regional office in San Mateo last August.

--Unocal laid off 15% of its research and technology division and 85 corporate employees at company headquarters here in Los Angeles.

--Unocal will close 300 service stations in California, and Exxon has announced that it will withdraw from retail operations in Southern California, closing 156 service stations this year.

--Texaco will cut its operating budget by 10%, affecting its corporate offices in Universal City.

While major companies shrink, thousands more jobs are lost from smaller service and supply companies that do business with them.

Oil companies are having to look overseas for alternatives to domestic production, which is becoming prohibitively costly. Lodwrick Cook, Arco’s chairman, remarked in a recent address to business leaders: “Deliberately abandoning a prime industry doesn’t make for sound national policy . . . especially when the economy is in such poor shape.”

To solve this dilemma, we must first acknowledge the critical role that petroleum plays in our lives. Then we should recognize that preserving jobs is an important part of a good environment, and that environmental goals need to be balanced against economic reality. The alternative is regulatory gridlock, greater reliance on energy imports and higher prices (caused by these government policies) when we can least afford them.