New Economic Study Shows Chevron Impact On Richmond California: Jobs Jobs Jobs

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This publica on was prepared by:
Beacon Economics, LLC
BEACON ECONOMICS
Jordan G. Levine Economist & Director of Economic Research 424.646.4652 Jordan@BeaconEcon.com
Christopher Thornberg, Ph.D. Founding Partner 310.571.3399 Chris@BeaconEcon.com
And by:
Dus n Schrader Senior Research Associate 424.646.4652 Dus n@BeaconEcon.com
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Reproduc on of this document or any por on therein is prohibited without the expressed wri en permission of Beacon Economics. Copyright 2013 by Beacon Economics LLC.
Contents
Execu ve Summary Report Highlights Total Expenditures Economic Impact: City of Richmond Economic Impact: West Contra Costa County Economic Impact: State of California Conclusion Appendix 1 2 4 5 10 12 15 16
Executive Summary
Chevron Output Impacts
Expenditures and Charitable Contributions, 2012
130 120 110 100 90 80 70 60 50 40 30 20 10 0
118.8 107.9
Chevron Employment Impacts

Expenditures and Charitable Contributions, 2012
800 700
Total Employment
587 540 465 366 366 366 506 772 679
Total Output ($ Millions)
89.6 83.5 76.5 81.9
600 500 400 300 200 100
59.1
59.1
59.1
Richmond
West Contra Costa County
California
Richmond
California
Direct Effect Charitable Contributions
Indirect & Induced Effects
Direct Effect Charitable Contributions
Source: IMPLAN; Calculations by Beacon Economics
Chevron's expenditures generate tens of millions of dollars in revenue for businesses in the City of Richmond and much more revenue for businesses throughout the state each year. Based on Chevron's 2012 expenditures, Beacon Economics es mates that the company generates an impact of: $76.5 million in total output in the City of Richmond per year, which produces $16.3 million in local and state tax revenue in Richmond per year $81.9 million in total output in West Contra Costa County per year, which produces $18.3 million in local and state tax revenue in West Contra Costa County per year $107.9 million in total output in the State of California per year, which produces $24.4 million in local and state tax revenue in the State of California per year Chevron's expenditures also support thousands of jobs at businesses in the City of Richmond and throughout California each year. Based on Chevron's 2012 expenditures, Beacon Economics es mates that the company supports: 465 jobs in the City of Richmond per year 506 jobs in West Contra Costa County per year 679 jobs in the State of California per year This is in addi on to 2,154 employees and 1,795 contractors at Chevron facili es Chevron and its employees' charitable contribu ons generate not only an important social impact, but a signicant amount of revenue and jobs at businesses in the city, the West Contra Costa County region, and the whole state. Chevron and its employees' local charitable contribu ons in 2012 generated an impact of: $7.0 million in total output and 75 jobs supported in the City of Richmond $7.7 million in total output and 81 jobs supported in West Contra Costa County $10.9 million in total output and 93 jobs supported in the State of California
Economic Development Impact Analysis 1
Report Highlights
Employment Impacts of Chevron Expenditures 2009 - 2013
3,500 3,000
Total Employment
3,247
Employment Impacts of Chevron Charitable Contributions, 2012

100
81 93
80
Total Employment
2,420 2,218 1,739 1,739 1,739
75 62 62 62
2,500 2,000 1,500 1,000
60
40
20 500 0 Richmond West Contra Costa County California 0 Richmond West Contra Costa County California
Direct Effect
Direct Effect
Output Impacts of Chevron Expenditures

2009 - 2013
600
Total Output ($ Millions) Total Output ($ Millions)
525.7
Output Impacts of Chevron Charitable Contributions, 2012

12
10.9
10 8 6 4 2 0
7.7 7.0
500 400 300 200 100 0

399.1 372.3 288.0 288.0 288.0
5.1
5.1
5.1
Richmond
California
Richmond
California
Direct Effect
Direct Effect
Beacon Economics has conducted an economic impact study on the benet to the local, regional, and statewide economies due to the opera ons of the Richmond Renery and associated Chevron opera ons. Overall, this report nds that Chevron has a signicant, posi ve impact on the economy. Chevron supports thousands of jobs in Richmond through its payrolls. Chevron in Richmond supports over 3,900 employees and contractors, which include among other categories, the renery, law and downstream nance. Yet, Chevrons expenditures in Richmond generate thousands more jobs themselves, as well as hundreds of millions of dollars in economic ac vity locally and hundreds of millions of dollars more throughout California. Beacon Economics esmates that roughly 15% of all private-sector jobs in Richmond are at Chevron or directly supported through Chevrons spending in the city. It is the impacts of these expenditures that will serve as the focus of this report. Since 2009, Chevron has spent $288 million on a range of goods and services in the city of Richmond, suppor ng over 2,200 full- me equivalent jobs at businesses in Richmond, as well as genera ng over $370 million in economic ac vity and over $120 million in wages and earnings. While Chevrons investments in Richmond since 2009 are substan al,
Economic Development Impact Analysis
the total economic impact for Richmond beyond these investments was much larger, suppor ng jobs and increasing wages and earnings for local workers far down the supply chain. During 2012 alone, Chevron made nearly $60 million in opera ng expenditures at local vendors within the Richmond area. These annual expenditures support 465 jobs, and create $17.4 million in secondary eects. This represents a lower bound to the ongoing economic impact of Chevron opera ons on the local and regional economy each year. In addi on, expanding the locus of study from the city of Richmond to the larger West Contra Costa County region increases the overall impact, as spending in Richmond generates an impact on suppliers in West Contra Costa County but outside of Richmond. Expand the focus to the whole state of California, and the impact grows even more. This study will examine the economic impacts of Chevrons $288 million in expenditures from 2009 to May 2013 and over $5 million in charitable contribu ons from the company and its employees in 2012 from the perspec ve of each of the areas described above: Richmond, West Contra Costa County, and the state of California. It will show that the expenditures of $288 million between 2009 and 2013 support over 3,200 full- me jobs in California, as well as generate over $525 million in statewide economic ac vity and over $25 million in tax revenues for state and local government in California, among other impacts. This is on top of the average of $58 million per year in taxes paid to the City of Richmond each year. This study will also show that Chevron and its employees 2012 investments in Richmond non-prots and schools have not only generated social benets in the community, but important economic impacts throughout the state. For example, the $5.1 million in local contribu ons: support 93 full- me equivalent jobs in California, produce $10.9 million in economic ac vity, increase wages and earnings for California workers by $5.7 million, add $7.1 million in value to the state economy, and generate nearly $0.5 million in state and local tax revenue. Indeed, by employing an addi onal 1,000 individuals for Chevron's Richmond Renery Moderniza on Project, the company could generate an es mated $209.0 million in addi onal economic ac vity in the City of Richmond, $223.8 million in economic ac vity in the larger West Contra Costa County region, and $294.8 million in economic ac vity statewide. These jobs would generate an overall economic impact that could support an es mated 1,270 total jobs in the City of Richmond, 1,383 jobs in West Contra Costa County, and 1,855 jobs in the State of California each year for the dura on of the project. This is not to overlook the important local impact that these contribu ons have had. This study will take a closer look at some of the specic organiza ons that Chevron and its employees have supported in the Richmond community, such as the East Bay Center for the Performing Arts, the Community Housing Development Corpora on, and Richmond High School. Chevrons expenditures in Richmond since 2009, including construc on projects and real estate, as well as services such as IT and engineering consul ng, have supported thousands of full- me equivalent jobs in California, including over 2,000 in the Richmond community alone and generated over $0.5 billion in economic ac vity throughout the
state. This $0.5 billion in economic ac vity is roughly equivalent to the annual revenues of Californias en re satellite telecommunica ons industry, according to the U.S. Economic Census. The combined eects of direct spending on goods and services in Richmond and the secondary impacts this spending generates for suppliers of these goods and services, in turn, provides a substan al boost to the local, regional, and state economies and labor markets. The support that Chevron and its employees contribu ons provide to non-prots and schools in Richmond serves as key supplement to this new economic ac vity. In all, Chevrons opera ons in Richmond are an important driver of economic ac vity not only locally, but throughout the whole state of California.
Total Expenditures
Top Chevron Expenditures by Category
Expenditure (as % of total) Construc on of Other New Nonresiden al Structures Architectural, Engineering, and Related Services All Other Basic Inorganic Chemical Manufacturing Real Estate Wholesale Trade Source: Chevron, Calcula ons by Beacon Economics
2009 33.9 25.7 22.0 9.0 3.2
2010 34.3 19.3 23.4 11.1 4.5
2011 34.6 27.0 17.1 8.8 4.8
2012 36.2 19.3 19.6 10.0 4.0
2013 39.6 22.2 10.7 7.7 3.6
Chevrons expenditures in Richmond spanned businesses across dozens of industries, but ve cateTotal Chevron Spending by Year gories consistently received the most investment. As 2009 - 2013 80,000,000 noted above, Chevron invested heavily in construc75,800,000 on projects, and thus it is unsurprising that the Con70,000,000 60,300,000 58,500,000 58,000,000 struc on of Other New Nonresiden al Structures cat60,000,000 egory received the greatest amount of investment 50,000,000 each year from 2009 to the present. Expenditures 40,000,000 in this category represented at least one-third of all 30,000,000 23,300,000 Chevron expenditures in each of those years, from a 20,000,000 low of 33.9% of total expenditures in the 2009 scal 10,000,000 year to a high of 39.6% in the 2013 scal year. Ar0 2009 2010 2011 2012 2013 chitectural, Engineering, and Related Services, which Source: Chevron; 2013 represents January-May 2013 spending. includes consul ng services in these areas and are closely ed to Chevrons construc on investments since 2009, also received a sizable percentage of Chevrons total investments. Expenditures in this category were at a low of 19.3% of all expenditures in the 2010 and 2012 scal years and reached a high of 27.0% of all expenditures in scal year 2011. All Other Basic Inorganic Chemical Manufacturing represents a substan al but diminishing propor on of total investment, from a high of 23.4% of all expenditures in scal year 2010 to a low of 10.7% of all expenditures in scal year 2013.
Total Spending ($)
Chevrons total expenditures reached their peak in scal year 2009, at $75.8 million, and they have decreased each consecu ve year therea er, even as expenditures in each category remained generally consistent on a propor onal basis. Expenditures in some categories have diminished over mesuch as Transit and Ground Passenger Transportaon, which represented 0.7% of all expenditures in scal year 2009 and 0.6% of all expenditures in scal year 2010 but 0.0% of all expenditures in scal years 2012 and 2013. On the other hand, some new expenditures have emerged over me, such as Retail Motor and Vehicle Parts, which represented 0.0% of expenditures from 2009 to 2011, but 2.4% and 0.2% of expenditures in scal years 2012 and 2013, respec vely. In general, though, categories of expenditures received a fairly consistent propor on of overall Chevron spending, but from a smaller total sum of expenditures.
Economic Impact: City of Richmond

Impact from Expenditures
Impacts from Chevron's Expenditures in the City of Richmond, 2009 - May 2013
Impact Employment (# of jobs) Output (Millions of $) Value Added (Millions of $) Labor Income (Millions of $) Employee Compensa on (Millions of $) Proprietor Income (Millions of $) Direct Eect 1,739 288.0 155.6 120.8 95.5 25.3 State and Local Taxes Employee Compensa on (Millions of $) 0.3 Source: IMPLAN, Calcula ons by Beacon Economics Figures have been rounded. Tax on Produc on & Imports (Millions of $) 10.2 Households (Millions of $) 5.7 Corpora ons (Millions of $) 0.2 Total (Millions of $) 16.3 Indirect Eect 233 45.6 22.7 14.1 11.2 2.9 Induced Eect 247 38.8 24.7 12.3 10.1 2.2 Total Eect 2,218 372.3 203.0 147.2 116.8 30.4
As shown in the table above, Chevrons investment of $288 million generates substan al indirect and induced impacts in the City of Richmond. The $288 million of expenditures between 2009 and the present generates $45.6 million in indirect impacts, through economic ac vity from Chevrons suppliers, and $38.8 million in induced impacts, through economic ac vity from, among others, workers whose wages and earnings increase as a result of Chevrons spending. Thus, the total value of economic output that has been supported by the ongoing opera ons of Chevron in the City of Richmond over the past ve years is $372.3 million. This represents a substan al amount of demand for goods and services at businesses within the City limits that is a ributable to the opera ons of Chevron. However, spending by Chevron at local businesses not only creates addi onal economic output, it also supports a large number of employment opportuni es at both Chevron and at businesses throughout the City of Richmond. This analysis nds that Chevrons spending in the City of Richmond supports 1,739 jobs at businesses throughout Richmond directly. Many of these jobs come from Chevrons spending on construc on projects718 in allas construc on is a highly labor-intensive industry. Yet, Chevrons spending in some less labor-intensive and more capital-intensive cate-
gories, such as Architectural, Engineering, and Related Services, was substan al, as well, and thus supported many of these jobs (505 jobs in this category were supported directly through Chevrons spending). Similar to employment, Chevrons local spending also supported a signicant number of jobs at other local businesses as well. Indeed, roughly 21.6%, or 480 in all, of the total number of jobs supported by Chevrons spending come through indirect and induced eects. The biggest eects are in Architectural, Engineering, and Related Services, with 46 total jobs supported through these eects. This is likely the result of the rela vely high wages that accrue to this sector despite it being less labor-intensive. As these workers earn above-average incomes, these wages are then pumped back into the local economy via retail sales, rent and mortgage payments, dining out, and other entertainment, among other items. Thus, unsurprisingly, local Food Services and Drinking Establishments also benet from spending by Chevron in the economy, with 28 total jobs supported through these eects. On top of the jobs generated through Chevron's spending, the company also has a substan al direct employment base at its facili es: a total of 2,154 employees and 1,795 contractors. This sizable investment in the local economy is not only good solely for the economy, it is also good for individuals in Richmond. In fact, Chevrons spending generates over $120 million in wages and earnings for Richmond workers directly, and generates a total of $147.2 million for these workers including indirect and induced eects. Most of these total wages and earnings, 79.3%, or $116.8 million, goes to employees, while the remainder goes to Richmond business-owners or other establishment owners. As described above, because much of Chevrons spending goes to industries with lower average wages, much of the wages and earnings generated by this spending go to lower-wage workers. This is a benet to the many workers in lower-wage industries, such as construc on, that were badly hit by the recession. For example, according to the California Employment Development Department, total employment in the Construc on sector in the Oakland Metropolitan Division (Alameda and Contra Costa Coun es) fell from 72,700 workers on a seasonally adjusted basis in March 2006 to a low of 45,700 workers in March 2011a drop of 37.1%. Thus, Chevron is helping to alleviate some of the cyclical eects associated with the Great Recession by providing demand for jobs and paying wages to workers that have been dispropor onately impacted by the recent economic downturn. Impacts from Chevron's Expenditures in the City of Richmond, 2012
Impact Employment (# of jobs) Output (Millions of $) Value Added (Millions of $) Labor Income (Millions of $) Employee Compensa on (Millions of $) Proprietor Income (Millions of $) Direct Eect 366 59.1 32.5 25.2 19.9 5.3 State and Local Taxes Employee Compensa on (Millions of $) 0.1 Tax on Produc on & Imports (Millions of $) 2.3 Households (Millions of $) 1.2 Corpora ons (Millions of $) 0.0 Total (Millions of $) 3.5 Indirect Eect 48 9.3 4.6 2.9 2.3 0.6 Induced Eect 51 8.1 5.1 2.6 2.1 0.5 Total Eect 465 76.5 42.3 30.6 24.3 6.3
Source: IMPLAN, Calcula ons by Beacon Economics Figures have been rounded and es mated in 2013 dollars.
Such a steep decline was a severe distress on the labor market of the region, but even more severe for the tens of thousands of workers in the Construc on sector. Without Chevrons tens of millions of dollars in spending on construc on projects in Richmond throughout the recession and its a ermath, job losses in this sector would likely have been even greater. For workers in Richmonds Construc on sector whose technical skill sets are not easily transferrable to some other industries, Chevrons construc on projects may have served as a crucial source of employment in the face of otherwise substan al job cuts. Based on an analysis of the economic impact of Chevrons spending last year, $58 million (its lowest level of annual spending since 2009), Chevrons expenditures support 465 or more jobs annually in Richmond. These expenditures generate $76.5 million in economic ac vity in the city, as well as $30.6 million in wages and earnings for workers at Richmond businesses. In addi on, Chevron has contributed substan ally to Richmonds revenue base through local taxes. Es mated local tax payments as a result of Chevrons opera onsthat is, taxes that are not directly a ributable to Chevrons spending, which will be described in the State of California sec on belowto Richmond from 2009 to 2013 range between $53.6 million and $68.9 million, primarily in the form of property taxes, u lity user taxes, and business license taxes. For example, Chevron paid $26.8 million in u lity user taxes to the City of Richmond in scal year 2012, which represents 58.3% of all u lity user tax revenues for the City of Richmond that year. U lity user taxes that year represented 26.8% of all general fund revenues for the city. Consequently, Chevrons u lity user tax payments in 2012 represented 15.6% of all general fund revenues for the city.
Chevron Annual Local Tax Payments

Fiscal Years 2009 - 2013
80,000,000 70,000,000
Tax Payments ($)
60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0 2009 2010 City of Richmond 2011 2012 2013
County of Contra Costa
Source: Chevron; 2013 represents estimated tax payments.
Tax payments for scal year 2013 have been es mated. City of Richmond, California Finance Department. Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2012.
Thus, the ongoing opera ons of Chevron and its spending on goods and services at local businesses has a sizable impact on the City of Richmond. Not only does Chevrons spending generate thousands of jobs and hundreds of millions of dollars in demand at local businesses, it also contributes to a substan al volume of take-home pay that can be recirculated back into the economy, and to tax revenues for the City of Richmonds General Fund.
Impact from Charitable Contributions

Impacts from Chevron's Charitable Contribu ons in the City of Richmond, 2012
Impact Employment (# of jobs) Output (Millions of $) Value Added (Millions of $) Labor Income (Millions of $) Employee Compensa on (Millions of $) Proprietor Income (Millions of $) Direct Eect 62 5.1 3.0 3.3 3.1 0.1 State and Local Taxes Employee Compensa on (Thousands of $) 8.0 Source: IMPLAN, Calcula ons by Beacon Economics Figures have been rounded. Tax on Produc on & Imports (Thousands of $) 132.8 Households (Thousands of $) 148.0 Corpora ons (Thousands of $) 0.0 Total (Thousands of $) 289.3 Indirect Eect 7 0.8 0.5 0.3 0.2 0.1 Induced Eect 7 1.0 0.7 0.3 0.3 0.1 Total Eect 75 7.0 4.1 3.9 3.6 0.2
Thus far, this report has largely focused on the economic benets of local spending by Chevron, but there are other social benets as well. For example, Chevron and its employees contributed a total of $5.1 million to 98 non-prot organiza ons in Richmond in 2012. These contribu ons were spread across several categories of organiza onscivic and community organiza ons, economic development, educa on, and youth and public safetybut they were collapsed into two general categories: Civic and Social Organiza ons and Grantmaking and Giving Organiza ons. Roughly $350,000 of total contribu ons falls into Civic and Social Organiza ons, while the remaining $4,750,000 falls into Grantmaking and Giving Organiza ons.
Chevron Charitable Contributions by Major Type

10.2% 6.7%
30.0% 53.1%
Civic and Community Education/College & Scholarships
Economic Development Youth and Public Safety
Source: Chevron
For example, in 2012, Chevron contributed $300,000 to the West Contra Costa SparkPoint Center in Richmond, for which Chevron is a founding corporate partner. The SparkPoint Center provides nancial educa on services such as
Contribu ons by Chevron employees in Richmond that were matched by Chevrona combined total of $75,134are included in this analysis.
debt management and job training, as well as oers free tax prepara on for struggling individuals and families in the East Bay. The La na Center, an organiza on that seeks to improve the quality of life and health of La no communi es by providing personal and leadership development opportuni es to all La nas and their families, received $130,000 in support from Chevron just last year. Many other organiza ons, from religious groups to womens organiza ons to homelessness causes and many more, Chevron is making a signicant social contribu on to complement its sizable economic benets it brings to the City of Richmond. Importantly, although these are largely socially-focused contribu ons aimed at improving the quality of life and economic prospects for the community in which Chevron operates, they do generate strong economic impacts. To illustrate, those $5.1 million in contribu ons have generated an addi onal $1.8 million in economic ac vity in Richmond. That is, 25.7% of the economic ac vity these contribu ons generate is not the eect of direct contribu ons, but rather new output that is generated as a result of $5.1 million in new investment these organiza ons can make as a result of Chevron and its employees contribu ons. Organiza ons such as the Richmond Chamber of Commerce help to bring business to the city, while organiza ons such as City of Richmond YouthWORKS improve the quality of life for its residents, which encourages in-migra on and promotes a be er business climate. Thus, support for non-prots does not only provide a social benet to the Richmond community but an economic benet, as well. These contribu ons support a total of 75 jobs in Richmond and provide a total of $3.9 million in wages and earnings for workers at non-prot organiza ons and schools. Unsurprisingly, because these ins tu ons are not prot-seeking, most of the $3.3 million in direct wages and earnings go to employees, rather than the ins tu ons founders. At the same me, indirect wages and earnings went predominantly to employees, as well, as most of the secondary eects of these contribu ons owed to industries like Other Private Educa onal Services or Environmental and Technical Consul ng Services that may not operate on as high of prot margins as many other industries. Ul mately, while Chevron and its employees contribu ons have supported dozens of jobs in Richmond, the impact of these contribu ons on the wage base in Richmond is especially pronounced. The charitable contribu ons of Chevron and its employees in 2012 were consistent with their contribu ons in preceding years. In 2009, Chevron and its employees contributed over $3.4 million to local organiza ons, including the Bay Area Rescue Mission and Rubicon Programs. In 2010, Chevron and its employees contributed over $3.7 million to local organiza ons, including the Neighborhood House of North Richmond and the Community Housing Development Corpora on. In 2011, Chevron and its employees contributed over $3.3 million to local organiza ons, including Community Services of North Richmond and the Richmond Community Founda on. Consequently, the economic and social impacts of Chevron and its employees' charitable contribu ons are truly ongoing.
SparkPoint Services. http://sparkpointcenters.org/financial-services.
Economic Impact: West Contra Costa County

Impacts from Chevron's Richmond Expenditures in West Contra Costa County, 2009 - May 2013
Expanding the scope of analysis from the city of Richmond to West Contra Costa County, which includes ci es such as Kensington, El Sobrante, and El Cerrito, the total impact of Chevrons spending in Richmond grows larger. Direct investment of $288 million from 2009 to 2013 generates a total economic output of $399.1 million in West Contra Costa County. Not surprisingly, indirect and induced output is greatest in Petroleum Reneries, at $14.5 million, with Architectural, Engineering, and Related Services next at $8.8 million. By taking the total output generated by Chevrons spending and removing the value of intermediate inputsthat is, purchases of goods and services that are importedwe nd that Chevrons spending generates a total of $220.1 million in value for the West Contra Costa County economy, of which $203 million is concentrated in Richmond, as shown in the table above. Of this $220.1 million, $157.4 million comes from wages and earnings generated for workers in the region. Construc on of Other New Nonresiden al Structures receives the greatest increase in this labor income, at $58.0 million, while Architectural, Engineering, and Related Services receives the greatest increase in labor income through indirect and induced eects, at $5.2 million (and $41.1 million in total). Oces of Physicians, Den sts, and Other Health Prac oners receives an increase of $1.7 million in labor income, nearly all of which comes through induced eects. As workers see their wages and earnings rise, they are able to spend more of their income on health and dental care, which increases the income of workers in the health care sector, in turn. Chevrons spending supports 2,420 jobs in West Contra Costa County, 681 (or 28.1%) of which, come from indirect and induced eects. As with output, much of these eects come in Architectural, Engineering, and Related Services, or 73 jobs in all. Food Services and Drinking Establishments received a large benet, as well, with 59 jobs supported through indirect and induced eects. As wages and earnings increase for workers in West Contra Costa County, much of this extra spending will go to restaurants and bars, encouraging these establishments to hire more employees. While most of these jobs are concentrated in Richmond2,218, as shown aboveover 200 jobs are supported in other areas of West Contra Costa County.
10
Impacts from Chevron's Richmond Expenditures in West Contra Costa County, 2012
Based on an analysis of spending in 2012, Chevrons expenditures support a total of 506 jobs per year in West Contra Costa County. In addi on to the $76.5 million in economic output generated in the City of Richmond each year, these expenditures generate an addi onal $5.4 million annually in economic output in other parts of West Contra Costa County, for a total of $81.9 million. Furthermore, while Chevrons expenditures generate an es mated $30.6 million in labor income for workers in the City of Richmond each year, these expenditures generate an addi onal $2.1 million for workers in other parts of West Contra Costa County, for a total of $32.7 million. Because Chevrons 2012 expenditures in 2012 were the lowest in the 2009-2012 period, these es mates represent a lower bound of the annual impacts of Chevrons spending. Lastly, as they have for the City of Richmond, Chevrons opera ons also generate substan al tax revenues for the County of Contra Costa. Since 2009, Chevrons opera ons have contributed an es mated $67.9 million, or an average of $13.6 million per year, to the County of Contra Costas tax base.

Impacts from Chevron's Charitable Contribu ons in West Contra Costa County, 2012
11
Chevron and its employees 2012 contribu ons to non-prot organiza ons and schools in Richmond generate a total of $7 million in economic output for the city of Richmond, but an addi onal $700,000 for other areas of West Contra Costa County. Of the $7.7 million in economic output generated by these contribu ons, over 32%, or $2.5 million, comes from indirect and induced eects, as those contribu ons s mulate economic ac vity in sectors such as Real Estate (approximately $270,000 in indirect and induced eects) and Management, Scien c, and Technical Consul ng Services (approximately $150,000 in indirect and induced eects). Outside of the $3.6 million in labor income that is generated in the city of Richmond, and addi onal $500,000 in labor income is generated in West Contra Costa County from Chevron and its employees charitable contribu ons. As with Richmond, nearly all of these wages and earnings come in the form of employee compensa onapproximately approximately $3.9 millionrather than income for business-owners. Charitable contribu ons in 2012 support an addi onal six jobs in West Contra Costa County beyond the 75 jobs supported in Richmond. Most of the 81 total jobs supported by those contribu ons are in Grantmaking and Giving Organiza ons and Civic and Social Organiza ons, although those contribu ons also support some jobs in Food Services and Drinking Establishments, Other Private Educa onal Services, Real Estate, among other sectors.
Economic Impact: State of California

Impacts from Chevron's Richmond Expenditures in the State of California, 2009 - May 2013
Although Chevrons Richmond expenditures generate $399.1 million in economic ac vity in West Contra Costa County, those expenditures generate a substan al amount of economic ac vity beyond the West Contra Costa County borders, as well. In total, Chevrons spending generates $525.7 million in economic output throughout the state of California. Indeed, the combined total of indirect and induced economic output generated by that spending, $237.7 million, nearly matches Chevrons ini al direct investment.
12
Of course, some of this economic ac vity involves imported goods and services from outside California. However, subtrac ng those imported goods and services, Chevrons expenditures s ll add $292.4 million in value to the state economy, primarily in labor income. Chevrons spending generates a total of $200.4 million in wages and earnings for California workers, of which 80.9% goes toward employee compensa on. Chevrons spending supports a total of 3,247 jobs in California, as well, many of which, as shown above, are in the Construc on sector. Indirect and induced eects nearly double the number of direct jobs supported by this spending. Chevrons expenditures also produce a substan al amount of state and local tax revenue, $24.4 million in all. A total of approximately $600,000 of these taxes are employee compensa on taxespayroll taxes, such as employee and employer contribu ons to unemployment insurance or other social insurance programs. The majority of these tax revenues fall into taxes on produc on and imports, which include sales taxes and property taxes that come as a result of economic ac vity s mulated through Chevrons expenditures. Household taxes such as residen al property taxes, income taxes, and vehicle license fees total $7.3 million throughout the state. Corporate income taxes and taxes on dividends represent a rela vely small por on of total tax revenues, at roughly $700,000. In all, Chevrons expenditures serve not only as a s mulus for business ac vity throughout the state, but as an important source of government revenues for state and local governments, especially in Richmond. Impacts from Chevron's Richmond Expenditures in the State of California, 2012
Analyzing the impacts of Chevrons expenditures in 2012, the companys annual expenditures support 679 or more jobs in California each year. Those expenditures also generate $107.9 million in economic output in the California economy and $41.6 million in wages and earnings for California workers, of which $34.8 million (83.7%) goes to employees and $6.8 million goes to business-owners. In addi on, Chevrons annual spending generates an es mated $5.2 million in state and local taxes each year. Once again, because these es mated impacts were analyzed using Chevrons 2012 spending, which was the lowest total spending in the 2009-2012 period, they represent a lower bound on the economic impacts of Chevrons spending each year. The actual impacts of Chevrons annual spending on jobs, output, tax revenues, and wages in earnings in the State of California could be signicantly higher.
13

Impacts from Chevron's Charitable Contribu ons in the State of California, 2012
Outside of the 81 jobs supported by Chevron and its employees charitable contribu ons in West Contra Costa County, those contribu ons support an addi onal 12 jobs in other areas of the state, or 93 total. The $5.1 million in direct output generated by those contribu ons more than doubles through indirect and induced eects, for a total eect of $10.9 million. The contribu ons support more economic ac vity throughout the California economy than is generated directly through Chevron and its employees own contribu ons. Once again, the increase in labor income for workers down the supply chain plays a large role. Induced outputthat output which comes from an increase in spending in the California economy as a byproduct of an increase in wages and earningsexceeds indirect output, which is the increase in spending by organiza ons and schools that received charitable contribu ons from Chevron and its employees in 2012. Although these contribu ons went to tax exempt ins tu ons, the economic ac vity they generated s ll yields a substan al amount of tax revenue for the State of California and local governments. Once again, the largest share of total revenues came from taxes on produc on and imports, such as sales taxes, at $264,000, while household taxes, such as personal income taxes, totaled roughly $206,000. Altogether, the over $489,000 in state and local taxes Chevron and its employees contribu ons generated is a substan al, if unexpected, boost to the state budget and municipal budgets in California.
14
Conclusion
Summary of Impacts from Chevron's Expenditures, 2009 - May 2013
Employment (# of Jobs) Direct Eect Richmond Total Eect West Contra Costa County Total Eect State of California Total Eect 1,739 2,218 2,420 3,247 Labor Income (Millions of $) 120.8 147.2 157.4 200.4 Value Added (Millions of $) 155.6 203.0 220.1 292.4 Output (Millions of $) 288.0 372.3 399.1 525.7 State & Local Taxes (Millions of $) N/A 16.3 18.3 25.2
Source: IMPLAN, Calcula ons by Beacon Economics Figures have been rounded.
Summary of Impacts from Chevron's Charitable Contribu ons, 2012

Employment (# of Jobs) Direct Eect Richmond Total Eect West Contra Costa County Total Eect State of California Total Eect 62 75 81 93 Labor Income (Millions of $) 3.3 3.9 4.1 5.7 Value Added (Millions of $) 3.0 4.1 4.6 7.1 Output (Millions of $) 5.1 7.0 7.7 10.9 State & Local Taxes (Thousands of $) N/A 289.3 341.8 489.3
Source: IMPLAN, Calcula ons by Beacon Economics Figures have been rounded.
Chevrons ongoing opera ons in Richmond generate a signicant impact on the city, as Chevron employs over 3,900 workers in renery and non-renery jobs, but Chevron also generates a substan al impact in Richmond through its local spending. Chevrons spending supports over 1,700 workers directly at businesses throughout the city, and that spending supports close to 500 more workers in Richmond through its indirect and induced eects. This spending translates into 465 or more jobs each year for the City of Richmond. It generates over $372 million in demand in the Richmond economy, or over $76.5 million in demand annually, and generates over $147 million in wages and earnings for Richmond workers, a large majority of which goes to employees rather than business-owners. These impacts spill outside of the City of Richmond, as well. Over 200 jobs in West Contra Costa County outside of Richmond and over 800 more jobs are supported in the rest of California through Chevrons spending. In all, this spending generates over $525 million in economic ac vity in Californiaor over $107 million each yearas well as over $200 million in wages and earnings for California workers, or over $41 million each year. Chevron and its employees charitable contribu ons not only support organiza ons such as the West Contra Costa SparkPoint Center or the La na Center, which provide crucial skills and resources to local residents, but they also provide a signicant economic impact in Richmond, West Contra Costa County, and other parts of the state. In all, $5.1 million in charitable contribu ons in 2012 support 93 jobs in California, including 75 jobs in Richmond. Those contribu ons generate $10.9 million in economic ac vity in the state, and $5.7 million in wages and earnings for California workers, as well as provide nearly $500,000 in tax revenues for the state and local governments in California. Through its expenditures and the charitable contribu ons the company and its employees provide to Richmond organiza ons, Chevron serves not only as an important contributor to economic ac vity to the City of Richmond but to the en re State of California.
15
Appendix
Methodology
Chevron provided Beacon Economics with informa on on its expenditures from 2009 to May 2013 in Richmond, California, and its charitable contribu ons in Richmond in 2012. The expenditures, which cover a broad array of products and services, total $288 million, while 2012 charitable contribu ons totaled approximately $5.1 million. On an annual basis, Chevrons local expenditures totaled almost $60 million which support jobs and output at Chevron itself as well as at local vendors and suppliers throughout Richmond and the West Contra Costa County region. Using the amounts Chevron invested in Richmond or provided to local non-prot organiza ons from 2009 to 2013, Beacon Economics es mated the economic impact of the proposed investments in three areas: Richmond, West Contra Costa County, and the state overall. This includes an analysis of the employment, output, value added, wage and earnings, and tax eects of the expenditures and contribu ons for each area. To do this, Beacon Economics employed the IMPLAN modeling system. The IMPLAN system is an input/output model that can be used to es mate the short-run impact of changes in the economy through the use of mul pliers. The IMPLAN modeling system combines the U.S. Bureau of Economic Analysis' Input-Output Benchmarks with other data to construct quan ta ve models of trade ow rela onships between businesses, and between businesses and nal consumers. From this data, we can examine the eects of a change in one or several economic ac vi es to predict its eect on a specic state, regional, or local economy (impact analysis). The IMPLAN input-output accounts capture all monetary market transac ons for consump on in a given me period. The IMPLAN input-output accounts are based on industry survey data collected periodically by the U.S. Bureau of Economic Analysis and follow a balanced account format recommended by the United Na ons. IMPLAN's Regional Economic Accounts and the Social Accoun ng Matrices will be used to construct region-level mulpliers that describe the response of the relevant regional economy to a change in demand or produc on as a result of the ac vi es and expenditures of Chevron. Each industry that produces goods or services generates demand for other goods and services, and this demand is mul plied through a par cular economy un l it dissipates through "leakage" to economies outside the specied area. IMPLAN models discern and calculate leakage from local, regional, and state economic areas based on workforce congura on, the inputs required by specic types of businesses, and the availability of both inputs in the economic area. Consequently, economic impacts that accrue to other regions or states as a consequence of a change in demand are not counted as impacts within the economic area. The model accounts for subs tu on and displacement eects by dea ng industry-specic mul pliers to levels well below those recommended by the U.S. Bureau of Economic Analysis. In addi on, mul pliers are applied only to personal disposable income to obtain a more realis c es mate of the mul plier eects from increased demand. Importantly, IMPLAN's Regional Economic Accounts exclude imports to an economic area so the calcula on of economic impacts iden es only those impacts specic to the economic impact area, in this case as determined and dened by Chevron. IMPLAN calculates this dis nc on by applying the area's economic characteris cs described in terms of actual trade ows within the area. Impact studies operate under the basic assump on that any increase in spending has three eects: First, there is a direct eect on that industry itself. For example, the construc on, repair, refurbishment, and expansion of facili-
16
es in Richmond will require Chevron to commit its own labor and resources to the construc on projects. Second, there is a chain of indirect eects on all the industries whose outputs are used by the industry under observa on. For a construc on project, indirect eects would include the demand and employment that is s mulated at rms that provide goods and services to this project, such as architectural/engineering services or suppliers of raw building materials. Third, there are induced eects that arise when employment increases and household spending pa erns are expanded. These induced eects arise because both Chevron and its suppliers will pay out wages to their employees associated with the construc on projects, and those wages will then be spent back into the local economy on household items such as food, gas, cars, and housing. Ongoing opera ons follow a similar line of reasoning. Opera ons of the Chevron facili es in Richmond require labor inputs as well as goods and services from a variety of local providers. These generate addi onal demand/output and associated wages that will then be spent back into the local economy genera ng addi onal secondary eects. It is clear that there are several aspects of the overall economic impact. First, there is an eect on value addedthe take-home pay of all the people aected will be supplemented by that amount. The secondary and ter ary eects of the industry on the rest of the local economy are not very large. Second, the employment eect, with some jobs created in the industry itself (either at Chevron or at its associated vendors), and the others spread throughout the California economy. Third, the output eect, where the dierence between value added and output is that the former concentrates on individuals paychecks, whereas the la er includes the costs of intermediate inputs. Na onal income accoun ng avoids double coun ng by excluding the costs of intermediate inputs. It is also important to note that capital investments made on dierent types of investment can lead to dierent mulpliers. Similarly, investments made within the same sector in dierent regions can generate dierent economic impacts. Why do mul plier eects dier across sectors? A sector can have a large mul plier if it induces economic ac vity in industries whose employees have a high propensity to spend from take-home pay. Also, if the sector does not import many materials from abroad or from out of state, then its mul plier eect on the local economy will be high. In essence, some of the spending in the local economy may leak out into other states and countries. This is why mul pliers even for the same industry can uctuate from region to region, depending on the local availability of inputs to that produc on process. If these inputs need to be more heavily imported into one region than another region due to the structure of those regions economies, then a similar investment into this sector would generate smaller overall economic impacts, as a larger por on of these investments into the local sector will result in a greater degree of economic ac vity leaking outside of the region. For instance, spending in manufacturing in West Contra Costa County will likely generate a larger total impact than spending in manufacturing in Alpine County, as West Contra Costa County already has a larger base of businesses in which to provide the raw materials that go into the manufacturing process than Alpine County given that the economy of Alpine County is primarily focused on agriculture. The same is true if a California business buys inputs from rms in dierent states. In sum, our analysis using input-output accounts is based on three important assump ons. First, there are constant returns to scale. This means that a 10% cut in spending will be ten mes as severeacross every sector in the economyas a one percent cut. Second, there are no supply constraints. This means that any marginal increase in output can be produced without having to worry about bo lenecks in labor markets, commodity markets, or necessary imports. This assump on is quite realis c in a free-market economy like Californias where there is some unemployment. It is even more realis c in mes of high unemployment, such as the current state of the labor market where there is s ll a signicant por on of under- or un-u lized resources across the state. Third, the ow of commodi es between
Economic Development Impact Analysis 17
industries is xed. This means that it is not possible to subs tute in the short-run the many dierent inputs that go into the target industry. Thus, our analysis covers the primary areas of economic impact that will accrue due to expenditures and charitable contribu ons by Chevron. First, the direct employment, output, and value added eects for each of our three areas a er accoun ng for "leakage" out of each area. Second, we es mate the indirect eects on all the industries whose outputs are used by the proposed investments as well as the induced eects arising when employment increases and household spending pa erns are expanded.
18
About Beacon Economics
About Beacon Economics

Beacon Economics, LLC is a leading provider of economic research, forecas ng, industry analysis, and data services. By delivering independent, rigorous analysis we give our clients the knowledge they need to make the right strategic decisions about investment, growth, revenue, and policy. Learn more at www.BeaconEcon.com.
Services
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Contacts
Sherif Hanna Managing Partner (424) 646-4656 Sherif@BeaconEcon.com Victoria Pike Bond Director of Communica ons (415) 457-6030 Victoria@BeaconEcon.com
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New Economic Study Shows Chevron Impact On Richmond California: Jobs Jobs Jobs

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This publica on was prepared by:

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Christopher Thornberg, Ph.D. Founding Partner 310.571.3399 Chris@BeaconEcon.com

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Chevron Employment Impacts

Total Output ($ Millions)

89.6 83.5 76.5 81.9

600 500 400 300 200 100

West Contra Costa County

West Contra Costa County

Direct Effect Charitable Contributions

Indirect & Induced Effects

Direct Effect Charitable Contributions

Indirect & Induced Effects

Source: IMPLAN; Calculations by Beacon Economics

Source: IMPLAN; Calculations by Beacon Economics

Employment Impacts of Chevron Charitable Contributions, 2012

2,500 2,000 1,500 1,000

Indirect & Induced Effects

Indirect & Induced Effects

Source: IMPLAN; Calculations by Beacon Economics

Source: IMPLAN; Calculations by Beacon Economics

Output Impacts of Chevron Expenditures

Output Impacts of Chevron Charitable Contributions, 2012

500 400 300 200 100 0

West Contra Costa County

West Contra Costa County

Indirect & Induced Effects

Indirect & Induced Effects

Source: IMPLAN; Calculations by Beacon Economics

Source: IMPLAN; Calculations by Beacon Economics

Economic Development Impact Analysis

Economic Development Impact Analysis

2009 33.9 25.7 22.0 9.0 3.2

2010 34.3 19.3 23.4 11.1 4.5

2011 34.6 27.0 17.1 8.8 4.8

2012 36.2 19.3 19.6 10.0 4.0

2013 39.6 22.2 10.7 7.7 3.6

Economic Development Impact Analysis

Economic Impact: City of Richmond

Economic Development Impact Analysis

Economic Development Impact Analysis

Chevron Annual Local Tax Payments

County of Contra Costa

Source: Chevron; 2013 represents estimated tax payments.

Economic Development Impact Analysis

Impact from Charitable Contributions

Chevron Charitable Contributions by Major Type

Civic and Community Education/College & Scholarships

Economic Development Youth and Public Safety

Economic Development Impact Analysis

SparkPoint Services. http://sparkpointcenters.org/financial-services.

Economic Development Impact Analysis

Economic Impact: West Contra Costa County

Economic Development Impact Analysis

Impact from Charitable Contributions

Economic Development Impact Analysis

Economic Impact: State of California

Economic Development Impact Analysis