A report commissioned by an oil and gas group found that the industry contributes nearly $1 billion in tax revenue to Colorado.
Colorado lawmakers are currently debating legislation that would overhaul how the state regulates the oil and gas industry, regulations that the industry says would be damaging to development and the state's economy.
The report, conducted by the Global Energy Management Program at the University of Colorado Denver and paid for by the Colorado Oil & Gas Association (COGA), found the industry accounts for 89,000 direct and indirect jobs and makes up $13.5 billion of Colorado’s gross domestic product (GDP).
"This report demonstrates how a strong oil and natural gas sector benefits all Coloradans by ensuring that everyone has access to the great outdoors, good schools, and infrastructure to meet the needs of our growing population,” COGA President and CEO Dan Haley said. “And in Colorado, where it is nearly impossible to raise taxes, a billion dollars from a single industry is a significant revenue stream that should be trumpeted.”
The report said $234.7 million in income taxes and more than $457 million in property taxes contribute to $993.3 million in tax revenue from the industry, which funds local and state government programs in education and infrastructure, among others.
“Unlike other industries, oil and natural gas extraction establishments pay royalties and taxes on the value production, in addition to taxes paid on earnings,” the report said. “The state receives royalties for oil and gas production from state and federal lands and severance taxes on all production in Colorado.”
Senate Bill 181 would overhaul how the Colorado Oil & Gas Conservation Commission regulates the industry by prioritizing health and safety over development, and would allow local governments to regulate drilling.
The bill passed the Senate two weeks ago, and the House Finance Committee approved it on Tuesday.
Republicans and conservative groups have lamented the fast pace of the legislation pushed by Democrats, who control both General Assembly chambers. Local government officials and industry groups also say the bill would prove detrimental to their counties and the industry, respectively.
A roundtable study that projects potential economic impacts of the legislation painted a bleak picture for the economy if the legislation passes, citing regulatory uncertainty.
The Common Sense Policy Roundtable released the study, titled “The Statewide Cost of Prohibitions, Restrictions and Regulatory Uncertainty in Colorado’s Energy Sector,” in partnership with several business groups earlier this month.
The study estimated that if the legislation were to shut down 50 percent of new oil and gas production, by 2030 the state would see 120,000 fewer jobs and $8 billion in lost tax revenue. It would also mean $158 billion in lost GDP over a decade, the study said.
If the legislation were to shut down 100 percent of new oil and gas production, it would mean 185,000 fewer jobs and $13.5 billion in lost tax revenue, in addition to $257 billion in lost revenue, according to the study.
“Just like Proposition 112, this bill has the potential to bring a significant sector of our economy to a grinding halt and eliminate more than $13.5 billion in tax revenue in just 10 years between 2020 and 2030,” said Chris Brown, CSPR’s policy and research director.
Proposition 112, which would have created a buffer zone between occupied buildings and energy development, was rejected by voters in November.