In Colorado, where media attention has focused on the potential impact of the newly legal recreational marijuana trade, the state is already seeing billions of dollars in wages, millions of dollars in tax revenue, and tens of thousands of jobs supported by another industry: oil and gas. According to a recent study by the Leeds School of Business at the University of Colorado Boulder, “The oil and gas industry provides economic benefits due to its integrated supply chain, high-wage jobs, and propensity to sell nationally and globally.” According to the study, Colorado saw $23 billion in economic activity from oil and gas in 2012.
The study found that the economic contributions of the upstream and midstream sectors totaled $126.5 billion in output between 2008 and 2012. The industry supported 31,900 workers in drilling, extraction, support, pipeline and related construction sectors in 2012. These workers earned $3.2 billion in wages, “earning twice the average wage for all industries in Colorado,” according to the study. Including non-industry workers, the researchers estimate oil and gas supported more than 93,500 jobs across the state.
The study, which was commissioned by the American Petroleum Institute (API), used publicly available industry data from agencies including the Bureau of Labor Statistics, the Bureau of Economic Analysis and the Colorado Department of Labor and Employment. The source of the industry’s growth in the state is innovations in hydraulic fracturing and horizontal drilling, API’s vice president for Regulatory and Economic Policy, Kyle Isakower, said in a news release.
University of Colorado researcher Brian Lewandaowski acknowledged that the Centennial State has grown as an energy producer over the past few years, “and that has had a measurable impact on employment, wages and funding for schools and public services.”
Lewandowski added that most of the actual production took place in just five counties. “But new business activity associated with energy–management, engineering, financial–was distributed across the state, creating jobs that pay about double the state average,” he said in the release.
The study also found:
The industry generated more than $410.3 million in 2012 for jurisdictions throughout the state from property taxes, severance tax and federal mineral lease distributions. Additional revenues stemming from oil and gas include income tax, sales tax, state land leases, bonuses and royalties, and the Colorado Oil and Gas Conservation levy.
In Weld County, the state’s largest producer of oil and third-largest producer of natural gas, $51.7 million in oil and gas tax proceeds covered 31.4% of the county’s 2012 general fund expenses.
“High levels of oil and gas production consistently result in high levels of oil and gas property tax proceeds, while low production tends to result in smaller property tax proceeds for the county,” according to the study. A notable exception to this is the city and county of Denver, which had low production in 2012 but generated $17.9 million in other taxes related to oil and gas activity such as corporate and personal sales taxes.
Weld County also received $94 million from oil and gas revenue, the most of any other county. “Again, the areas with higher revenues tended to be those with higher levels of oil and gas production.” In addition, nearly 200 school districts across the state received revenue from federal mineral lease distributions for a total of $2.8 in 2012.
In addition, the study looked in-depth at six school districts and found that oil and gas proceeds in three of them accounted for more than one third of the total property tax revenue in each of those districts. In a Garfield County district, oil and gas contributed 82% of total property tax revenues. That represents $3,771 per student, according to the study.
The study comes as Colorado’s oil and gas industry continues to be tested by activists who say that hydraulic fracturing has negative effects on the environment and human health. In August, the state narrowly avoided a ballot measure that would have placed a moratorium on the practice by forming an 18-person task force “charged with crafting recommendations to help minimize land use conflicts that can occur when siting oil and gas facilities near homes, schools, businesses and recreational areas.”
The industry also contributed millions to public safety, government, health and human services and public works. Public safety led the pack with $37 million from oil and gas.
