CU Economists: Fracking Setback Initiative Could Cost Colorado 100,000 Jobs and Billions in Lost GDP
A ballot initiative to dramatically increase setback distances for oil and natural gas development that national activist groups like Food & Water Watch, 350.org and Greenpeace are attempting to place before Colorado voters this year could cost the state billions in lost GDP and place more than 100,000 jobs in jeopardy. That was the finding of a new economic assessment from the Business Research Division (BRD) at the University of Colorado’s Leeds School of Business done for the Colorado Common Sense Policy Roundtable (CSPR). From the report:
“The introduction of a 2,500-foot setback on oil and gas development activities would have a substantial effect on both Colorado’s oil and gas industry and the state economy as a whole. Results of the setback include prohibition of any oil and gas development on 90.2% of Colorado’s land, a compounding average annual reduction in total employment of 2.8% from 2017–2031, and a 3.4% average annual reduction in state GDP across the same period.” (Emphasis added)
The report details the devastating economic impacts that could result from the passage of the initiative to increase setback distances for new oil and gas wells in Colorado to 2,500-feet from “occupied structures” and “areas of special concern.” Based on Colorado Oil and Gas Conservation Commission (COGCC) data showing the proposal would bar natural resources development from more than 90 percent of the state’s surface acreage, CU economists found that the economic implications of the initiative would be staggering. From the report:
“Given a 90.2% reduction in new production beginning in 2017, the compounding economic consequence would result in a lower real GDP by an average of $7.1 billion and 54,000 fewer jobs in the first five years, and a lower GDP by an average of $14.5 billion and 104,000 fewer jobs between 2017 and 2031.” (Emphasis added)
Armed with this new economic data, Colorado business leaders are decrying the measure, calling it a “full attack” on the state’s oil and natural gas industry. Earl Wright, CSPR Chairman, drew attention to findings that show a dramatic decline in Coloradans’ personal incomes that would be felt from the resulting drop in economic activity. From a press release announcing the report:
“In addition to the heavy loss of jobs and GDP, this setback initiative would lead to a $10.9 billion decline in personal income over 15 years,” explained Earl Wright, Chairman of the CSPR. “An unintended consequence to the passage of this initiative would not only damage the potential of Colorado’s economy, but also could significantly reduce funding for education and infrastructure.”
This new report is just the latest round of bad news for the initiative’s backers. Earlier this year, Colorado’s Democratic governor, John Hickenlooper expressed his concerns that the measure could put Colorado taxpayers on the hook for “billions of dollars” in compensation to mineral rights owners who would be deprived of the opportunity to develop their property. Hickenlooper took issue with the initiative at a recent forum where he predicted that litigation arising from the impact on property rights would cost taxpayers “billions” in compensation to mineral owners. From the Denver Business Journal:
“2,500 feet, in my opinion, would invalidate people’s opportunity to extract natural resources that they own,” Hickenlooper said at the forum.
“I think if it passed we would be taken to court. We’d probably lose. And it would be considered a taking, and the state would probably be judged responsible and the costs [of compensation] would be in the billions of dollars” (Emphasis added)
The initiatives making their way through the process are the work of activists with ties to several national ban-fracking organizations that formed Coloradans Resisting Extreme Energy Development (CREED). Not long after forming their latest campaign organization, the group announced a series of ballot initiatives, including the setback measure. CREED’s efforts are so extreme that the Greeley Tribune editorial board has even compared the group’s actions of a “toddler” throwing a “temper tantrum.”
This new report only sheds further details on how the political agenda these groups are seeking to impose would not only threaten Colorado’s economy, but would have the effect of sidelining a significant portion of our nation’s energy reserves and employment.