Tax receipts are down, joblessness is up. The economic stability of small businesses and households throughout Colorado remains jeopardized by the COVID-19 pandemic and racial tensions that are fomenting destructive riots.
What a perfect time to suffocate the state’s second-largest industry — oil and gas extraction.
That is exactly what the new activist-run Colorado Oil & Gas Conservation Commission plans to do in the country’s fifth-largest oil-and-gas producing state. The commission last week approved a “preliminary final vote” establishing 2,000-foot setback rules for drilling and fracking operations.
That’s enough setback to render a significant amount of underground resources useless, but it is worse than that. The setbacks are not from any occupiable structure to the wellhead.
Instead, they are from any occupiable structure to the outside perimeter of any oil-and-gas producing property. In some cases, that will add another 400 feet. That makes the new setbacks almost as large as the 2,500-foot setbacks rejected by nearly 60% of voters when they opposed Proposition 112 just two years ago.
Voters rejected the setbacks because they are well aware the oil and gas industry pays good salaries that keep Colorado’s economy vibrant. Voters know oil and gas tax revenues fund education. Energy made Colorado’s economy the strongest in the country because the state’s oil and gas production quadrupled between 2005 and 2015.
Because oil and gas are so vital to our economic welfare, and to the country’s sovereignty and ability to avoid going to war, Colorado’s oil and gas regulatory agency has for generations been charged with protecting production.
After voters trounced Prop 112, doctrinaire left-wing politicians in the Legislature chose to overturn the will of the people they supposedly represent. They approved Senate Bill 181 in 2019. Incredibly, Democratic Gov. Jared Polis jeopardized his state’s economy by signing it into law.
The new law made the oil and gas commission’s top priority the protection of health, safety, the environment and wildlife resources the top priority.
Nothing in the new directive mentions protecting jobs, the economy, or tax revenues essential to health, education, transportation, public safety and various other essential services.
To carry out its new save-the-planet mission, the law requires the governor to stack the commission with commissioners specializing in environmental protection, wildlife protection, public health, and soil conservation or reclamation. Under these rules, the commission will consist of no one with expertise in economics.
By making health, safety and the environment the commission’s only priority, commissioners would be justified in doing whatever possible to shut down the industry. One can easily argue some form of environmental benefit in having no oil and gas production.
The new setbacks will make Colorado an expensive and undesirable state in which to extract energy. The state had the most onerous regulations in the country, and with this “preliminary final” ruling almost no one will want to invest in new drilling operations.
Oil-and-gas production pays at least $600 million a year to fund K-12 and higher education. Studies have shown the industry, directly and indirectly, supports 250,000 Colorado jobs. Thousands of those are jobs that pay blue-collar workers significantly more than they will make doing anything else.
Oil and gas companies occupy more than 20% of downtown office space in Denver, which we can expect to gradually go vacant as these regulations prevent companies from pursuing new operations when their existing wells stop producing. When they go vacant, expect to see the demise of restaurants, bars and coffee shops that depend on customers with good-paying jobs in nearby office buildings.
This attempt to cripple our second-largest industry will hurt Coloradans. It will probably take a toll on the environment and public health, as well, because nothing buys open space, conservation, and health care like money generated by an economy based on abundant and affordable energy.
Colorado cannot afford to suffocate oil and gas production. Doing so would hurt the state badly during normal times. In these times, as we struggle just to stay on our feet with visions of returning to normal, this move could make the country’s best economy rank among the worst.
Then we will see the devastation poverty wreaks on public health and the environment. We will long for the days we produced more oil and gas.
The Gazette Editorial Board