Economic impact of oil and gas setback ballot measures

BY FREDA MIKLIN GOVERNMENTAL REPORTER

The growth of the oil and gas industry and its increasing importance as a source of jobs, gross domestic product (GDP), and state and local tax revenue in Colorado collided violently with concerns about operational safety on April 17, 2017, when an oil and gas well leak caused an explosion that destroyed a home and claimed the lives of two men in the Town of Firestone in Weld County. According to the Denver Post on March 22, 2019, “Colorado’s oil and gas industry and its employees pay almost $1 billion in state and local taxes.” As Dan Haley, president of the Colorado Oil and Gas Association said, “In Colorado, where it is nearly impossible to raise taxes, a billion dollars from a single industry is a significant revenue stream that should not be taken for granted.” Of course, that is cold comfort to the families of the two men who died in Firestone. To provide perspective and understanding of the impact of current proposals impose a 2,000 to a 2,500-foot setback for new oil and gas development, Simon Lomax and Chris Brown of the Common Sense Institute (CSI), a non-profit think tank “dedicated to the protection and promotion of Colorado’s economy” founded in 2010, prepared a research report on the historical economic impact of setback proposals. Lomax is CSI’s energy resources fellow. Brown is the organization’s director of policy and research. In 2014, a ballot measure proposed a 2,000-foot setback from occupied buildings. CSI’s report shows that measure was estimated to have resulted in up to 62,100 lost jobs, $8.1 billion in lost GDP, and $5.5 billion in lost personal income to our state over 15 years. It was withdrawn before the signatures collected were verified. In 2016, the proposed ballot measure increased the setback to 2,500 feet from not only occupied buildings, but also from “areas of special concern” that included “public and community drinking water sources, lakes, rivers, perennial or intermittent streams, creeks, irrigation canals, riparian areas, playgrounds, permanent sports fields, amphitheaters, public parks, and public open space.” Using that definition, the Colorado Department of Natural Resources (DNR) concluded that “approximately 90 percent of Colorado’s land would be unavailable for future oil and gas development.” CSI’s report estimated the cost of this measure would have been 140,728 jobs, $20.5 billion in GDP, and $16.4 billion in lost personal income to our state over 15 years. Proponents were unable to gather enough signatures to put it on the ballot. A 2018 ballot measure was similar to the 2016 one, seeking 2,500-foot setbacks, but it contained a slightly modified definition of the areas that would be included, resulting in the determination by DNR that “approximately 85 percent of state and private land would be unavailable for new oil and gas development.” CSI’s report estimated the cost of the 2018 proposal at up to 147,800 jobs, $26.3 billion in GDP, $18.5 billion in lost personal income, and $1.06 billion in lost tax revenue to our state over 12 years. Colorado’s voters rejected the proposal. There are presently five proposed ballot measures for the 2020 election that contain setback requirements of 2,000 and 2,500 feet from occupied structures and a “list of structures and geographical features found in urban, suburban, rural and uninhabited parts of the state.” It is not known whether or which will be on the ballot in November. What is known is that annual oil production in Colorado increased 183 percent between 2013 and 2019 while the price of oil decreased from an average of $98/ barrel to $57/barrel. Natural gas production increased 24 percent during the same time period while prices declined approximately 31 percent. (Source: U.S. Energy Information Administration). Complicating any effort to estimate the overall impact on the Colorado economy if new setbacks are imposed statewide is the unknown influence of the coronavirus pandemic on the financial outlook in the current fiscal year and the one beginning on July 1, for which a $3 billion shortfall has already been estimated. Fmiklin.villager@gmail.com