A recent report released by the School of Mines and Booz Allen Hamilton Consulting would lead Coloradoans to believe that the Oil and Gas industry is the largest industry in the state.  The report states that this industry provides $22.9 billion dollars of economic output, supports 70,000 jobs, and generates over $1.5 Billion in taxes. 

While the Oil and Gas industry is certainly a key factor in Colorado’s economy – it is by no means the largest.  In fact, Retirees actually contribute more to personal income; 23% of the total personal income in Colorado vs. the 1.6% from the oil and gas industry. 

Furthermore, the study assumed high revenue for the industry and did not consider any negative impacts from the gas and oil boom.  At the Cheyenne hub, the price of natural gas is $3 per thousand cubic feet (mcf), much lower than the price the report assumed of $7.39/mcf.  The report did not consider any of the price ranges of the market.  The report also did not consider any negative costs from the mining boost: increased road maintenance costs, increased crime and the resulting stress on local policing, increased truck traffic, increased infrastructure costs for local governments, loss in quality of life for local residents, destruction to wildlife habitats.   The report is rather a study of total revenue, not net revenue. 

It is important to note that about a third of the jobs related to the industry have nothing to do with drilling in Colorado (page 48).  And furthermore, most of the economic activity being created by drilling is not staying in the state.  In the Piceance Basin 73% of the economic activity is leaking out of the basin and 57% is leaving the state.  This starkly contrasts the immense local economical investments from developing renewable energy.  Additionally, none of the gas drilled in Colorado is actually consumed in Colorado.  Following all of this, slowing down drilling to protect places such as the Roan Plateau should not be considered a devastating blow to the industry.  Before any more assumptions are made however, a net study needs to be conducted, one that considers the range of oil and gas prices and the negative costs.    

Posted by Francesca Desmarais Energy Advocate