A study by the School of Mines suggests that the industry may top tourism as Colorado's largest By Zach Fox
Denver Post Staff Writer
Colorado's oil-and-gas industry pumped $22.9 billion into the state's economy in 2005, accounting for more than 6 percent of the state's gross domestic product, a report released Thursday found. The report, issued by an arm of the Colorado School of Mines, measured the economic impact of Colorado's natural resources for the first time. The study suggests oil and gas might be the state's largest industry.
"Our sense is we're comparable, if not larger, than the tourism industry, and I think that's a surprising aspect," said Bill Scoggins, president of the School of Mines. "I think most people thought tourism was the biggest industry by far." A Colorado Tourism Office study, which did not measure secondary effects associated with tourism spending, listed a direct economic impact of $13 billion in 2005 from tourism. The oil-and-gas study measures economic impact more broadly, however, including the sale of the commodities, the money spent to extract the resources, fees paid to landowners for the right to drill and taxes paid to the government. The study found that the amount oil and gas directly contribute to the state economy in sales alone, excluding taxes, is $15.4 billion. Sales include revenues earned by selling gas and oil to refineries, not the gasoline an individual pays for at the pump. The study also demonstrated the vast number of jobs the oil- and-gas industry provides the state: 70,779. Those jobs pay an average annual wage of $60,811. The employment numbers include some indirect listings, such as the amount of government-job salaries supported by the industry's taxes. Dag Nummedal, director of the Colorado Energy Research Institute, said the study should help increase appreciation for Colorado's natural resources, which he said also include wind and solar power, as well as tourism. "Our entire economy is based on natural resource. What I really hope we accomplished with this study is that we have quantified one sector of our natural resource," he said. The study did not account for the contribution of renewable energy to the economy, but establishing a baseline now for that industry could be helpful in the future, said Nummedal. Nummedal's Colorado Energy Research Institute is directed by the School of Mines, which helped coordinate the study. Booz Allen Hamilton consulting firm also worked on the study. The oil-and-gas report was mandated by the state legislature, and it took about a year to complete, costing about $180,000, said Lisa McDonald, one of the report's writers. The study included indirect and induced effects that impact industries other than oil and gas. Direct impact would include the sale of gas itself to refiners, whereas indirect effects include the increase in other industries related to oil and gas, such as an increase in truck manufacturing to meet the demand of gas companies. Induced impact would be an increase in grocery stores resulting from the household income of employees from both the gas companies and indirect businesses, such as the trucking company. Considering gas and oil prices, as well as production, have risen since 2005 - the latest year accurate data were available - the industry's economic contribution now is likely much larger, said Greg Schnacke, vice president of the Colorado Oil and Gas Association. Susan LeFever, chapter director of the Sierra Club, and Rex Wilmouth, director of the Colorado Public Interest Research Group, declined to comment on the study because they had not seen it. Staff writer Zach Fox can be reached at 303-954-1755 or
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$22.9 BILLION ECONOMIC OUTPUT 70,000 JOBS $640.5 MILLION PRODUCTION AND EQUIPMENT TAX REVENUE $870.5 MILLION BUSINESS INCOME TAXES |
