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West Slope leaders: Oil and gas slump poses greater economic hurdles here than Front Range

Ryan Hoffman
rhoffman@citizentelegram.com

Multiple metrics indicate the decline of the natural resource extraction industry has not had the far-reaching economic impact in Colorado that it did in previous downturns. The state as a whole is faring much better economically.

However, that message — conveyed by a state economist at a Garfield County Energy Advisory Board meeting in Rifle on Thursday — does not translate in many communities on the Western Slope.

“This is rural western Colorado and we feel it much more than Denver or Boulder,” Annick Pruett, a Rifle city councilor, said to Luke Teater, an economist with Gov. John Hickenlooper’s Office of State Planning and Budgeting.



Teater, the featured educational speaker at the meeting, presented data touching on the oil and gas industry’s role in Colorado’s economy, its impact on employment and its significance as it relates to state revenue.

While the industry, which accounted for 2.4 percent of the state’s overall economy when not factoring in support services in 2015, has declined, the hit to the state’s economy has been less severe than in the past, especially compared to past rescissions such as one in the 1980s, Teater said.



The industrial sector of Colorado’s gross domestic product, which includes mining, manufacturing and utilities, has declined by roughly 21 percent since 2014, falling from $44.9 billion to just under $35.5 billion. That, according to Teater, is largely due to the decline in mining because manufacturing and utilities have remained relatively stable.

Over that same time period, the non-industrial sector of Colorado’s GDP has grown by $21 billion, or nearly 8 percent.

Another telling statistic is the year-over-year percentage change in job growth. The mining sector saw a drastic decrease from 14.5 percent in December 2014 to 13.9 percent in July 2016. Despite the dramatic decline in mining employment, statewide employment growth slowed only slightly, going from 3.8 percent to 2.9 percent during that same time period.

That is not what happened in 1986 when an oil-price led recession hit Colorado. That indicates the state economy has diversified since then, Teater said.

“Colorado has just got an increasingly diverse economy, as compared to even 10 or 15 years ago,” he stated.

Those economic trends, however, do not reflect what is happening here on the Western Slope, several people said at the meeting.

Asked by Patrick McCown of Williams Midstream, an energy company, about the value of the jobs that appear to be canceling out losses in the mining industry, Teater said most of the job growth in Colorado generally has been jobs that are above median income.

He cited technology firms in Boulder and elsewhere on the Front Range as examples of those quality jobs being gained in Colorado.

“Generally it’s been pretty good job growth and not just minimum wage service-type jobs,” Teater said.

The booming economy on the Front Range, though, seems like a different world compared to the energy industry dependent West Slope, said Tom Ruggard, a Parachute trustee who represents the town on the Energy Advisory Board.

“I understand what you’re saying, tech jobs in Denver and … Denver has been going gang-busters for a few years, but this area hasn’t. … So it’d be nice to see what Western Slope numbers are instead of what Front Range added into it is, because it’s two different worlds. That world over there is way different than this world over here,” Ruggard said.

Parachute and other communities are preparing for projected steep declines in severance tax dollars and federal mineral lease money — revenue generated from the natural resource extraction industry.

In Parachute, which has been hit harder than other communities in Garfield County, the town is preparing for a combined decline of $102,000 in those revenue sources, according to a draft 2017 budget document.

At the county level, Garfield is preparing for an anticipated $17 million decrease in property tax revenue. The decline in assessed property value, primarily related to oil and gas production, will impact other special districts dependent on that revenue as well.

The disparity between booming urban areas and struggling rural areas is a reality that economists and others are grappling with in Colorado and across the country, Teater said.

“It’s just a question that I don’t think anybody has a great answer to yet, as far as why that’s occurring that way. There are guesses but at this point they’re just hypotheses,” he stated.

Although, Teater does not directly make policy decisions in his role as an economist, Pruett, in referring to the data on year-over-year job growth, asked him to take a message back to the Front Range.

“We feel it really, really, really, hard here and we’d like you to take that message back to Denver, because that flat line (in job growth) is not what’s happening here.”


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