Drained of energy
Colo. among states most at risk economically in federal extraction ban
Colorado, Wyoming and New Mexico are the states most at risk economically if a ban on extracting coal, natural gas and oil from federal lands ever takes hold, according to an analysis from the U.S. Chamber of Commerce.
Colorado stands to lose 50,000 jobs, $124 million in state royalties and $8.3 billion in economic activity following a ban, the U.S. Chamber’s Institute for 21st Century Energy said in a report Wednesday.
“There are real, serious and disastrous impacts down the road,” Karen Harbert, institute president and CEO, said of an outright ban, which is gaining traction in Democratic circles.
Supporters of the “keep it in the ground” movement have swarmed Bureau of Land Management oil and gas lease auctions, citing concerns about carbon emissions and climate change and a desire to preserve public lands.
Bernie Sanders made a ban on extraction on federal lands and waters a part of his platform in his presidential campaign, and Democratic nominee Hillary Clinton has also voiced support, leading the U.S. Chamber to run a “what if ” scenario.
Of the 50,000 Colorado jobs at risk, about 15,300 represent direct jobs and 34,700 indirect jobs. The state would have to backfill the lost royalty revenues, which go primarily to schools and local governments, the analysis says. About 1.5 million acres of federal land in the state are used to produce coal, natural gas and oil — almost all on the Western Slope, which is already struggling economically.
Nationally, the study estimates a federal extraction ban would eliminate a quarter of the nation’s coal and petroleum produc--
tion, claim 380,000 jobs — including 100,000 direct jobs — remove $11.3 billion in federal and state revenue and shave $70 billion off annual GDP.
But Micah Parkin, executive director of the environmental group 350 Colorado, who is called out by name in the chamber’s report, said the analysis “ignores the true cost of current pollution from federal fossil fuel production, which contributes significantly to climate change that has enormous human and economic consequences.”
She also said the report fails to acknowledge the economic and revenue growth related to “replacing dirty energy with clean renewable energy systems.”
Oil and gas operators have already begun to move their drilling away from public lands and offshore to private land, where they face fewer restrictions. Depressed natural resource prices have accelerated that trend.
Weld County, for example, now accounts for 90 percent of the state’s oil production and recently surpassed Garfield County as the state’s top natural gas producer.
The U.S. Chamber study assumes an immediate federal ban on all production and the voiding of leases. The 2016 Democratic Party Platform describes a more gradual approach: “We will phase down extraction of fossil fuels from our public lands.”
But even allowing current production to play out and limiting future drilling and mining carries an opportunity cost economically.
In June, the U.S. Geological Survey said the Piceance Basin’s Mancos Shale formation in western Colorado held 66.3 trillion cubic feet of natural gas, about 40 times what it had estimated back in 2003. Much of that land is under the purview of the U.S. Bureau of Land Management.
If skyrocketing oil and gas prices ever forced a change of heart in the electorate and a future administration, it could take years for activity to ramp up again on federal lands and offshore, Harbert said.