Will Colorado's Oil Economy Go Boom Or Bust? History Has Answers
The year so far has been a veritable roller coaster of low oil prices, layoffs and production cutbacks across Colorado. Only recently has the price of crude begun to rebound with Feb. 3 marking the highest settlement rate in 2015.
Experts are quick to weigh in with predictions over what the future holds for the oil and gas industry. Many hope to divine answers from key indicators like rig counts and drilling permit applications. Another set of answers can be gleaned from Colorado's last oil bust in the 1980s.
Fort Lewis History Professor Andrew Gulliford witnessed the state's oil shale bust firsthand from his perch as a fourth-grade teacher in Silt, Colorado. On May 2, 1982, Exxon terminated its Colony Shale Oil Project, immediately laying off more than 2,000 workers near Parachute.
"There were realtors who by the end of the week just thought it was going to get better," he said. "And it didn't for a decade, or two decades actually."
Gulliford wrote about the changes in his 1989 book, Boomtown Blues: Colorado Oil Shale, which outlines the stages of an oil bust. Interestingly, it follows Elisabeth Kübler-Ross's five stages of grief: denial, anger, bargaining, depression and acceptance.
"It's a grief process. You're used to making good money, you've got friends, you've got neighbors and all of the sudden, people are having to leave," he said.
To Gulliford, those most vulnerable were blue collar workers, who were used to high-wage jobs and suddenly couldn't find work. County commissioners were also left holding the bag.
"The honeymoon's over," Gulliford said. "What was promised? And who will be there to maintain all these miles and miles of roads that were built to access the well heads?"
If the price of oil continues to be low in 2015, state and local tax coffers won't be as full as they once were. So far, Greeley – the seat of Weld County – hasn't seen a huge drop in sales tax. If it happens, Gulliford explained that maintaining existing infrastructure could be challenging if conditions worsen.
Curiously, one silver lining for the industry are new regulations being considered by the Governor's Oil and Gas Task Force. Another could be enforcement of existing environmental regulations like Colorado's 2014 methane rules.
"The oil and gas industry has kicked and complained about these regulations," said Gulliford. "Enforcing these regulations is going to help them keep their jobs. Part of the plus side if we can slow down enough to look at this as an opportunity for better environmental controls, there's jobs in that."