Originally Published in The Pueblo Chieftain – August 23, 2020

Boulder County, San Miguel County, and the City of Boulder have lawsuits against the Oil and Gas industry. They allege environmental damage and climate change from carbon emissions related to the industry. Perhaps there is such damage, and perhaps not. I am not writing to argue the merits of the case itself, but rather to argue the economic and social damage that would occur should these lawsuits lead to a shutdown of the Oil and Gas industry in Colorado.

In economics, we like to investigate the costs and benefits of political or legal decisions. We believe that a thorough vetting of those will lead to better decisions and thus to better outcomes for Colorado residents and communities. Let us, for now, stipulate to the alleged environmental benefits of shutting down oil and gas exploration, extraction, refining, and transport. This will come at a cost that can be partially measured.

Current estimates show that the Oil and Gas industry generates $13.5 billion of economic activity in Colorado and supports about 90,000 jobs. That is not just a statistic, it represents 90,000 Colorado families that have a higher standard of living than they otherwise would have. Furthermore, the industry produces $1 billion in annual state and local tax revenue. This contributes about 80% of the money the School Trust pays to Colorado schools – including schools in the very counties and cities that are parties to the lawsuits. The Oil and Gas industry creates enormous economic benefits to Colorado, and shutting it down would create the inverse economic loss; a loss of $13.5 billion in State GDP, a loss of 90,000 jobs, and a loss of $1 billion in tax revenue.

But the lost would be much more than those first-round economic impacts. The loss would include the human and social damage from 90,000 unemployed workers, and the human and social damage from under-funded schools. National estimates show an increase of 10,000 to 40,000 deaths for every percentage point increase in unemployment, due to everything from suicide to depression to forsaken medical care. We do not know what that number might be for Colorado, but it certainly is greater than zero. There are real people with real families in real communities that depend on the Oil and Gas industry.

Proponents of shutting down Oil and Gas argue that the environmental benefits will far outweigh these economic and human costs. But will they? Earlier on, I stipulated to the alleged environmental benefits. That stipulation needs to be challenged.

Let us presume that the loss of energy from Oil and Gas will be made up by “alternative” energy sources – such as renewable fuels, solar, and wind. The actual science of these alternatives shows that, while there might be direct environmental benefits at the user end, the lifecycle from start to finish of these technologies creates more pollution and has a larger carbon footprint that does the Oil and Gas it replaces. That is astounding when you consider that the entire theory is to become more green, while in reality these are more brown technologies – they create more environmental damage than they save.

Furthermore, while there will be some new jobs created after the transition away from Oil and Gas, the net loss of jobs will be huge. Data from Europe show that, due to mandated green energy, the population is becoming “energy poor” – that is, the higher cost of energy from these technologies leaves precious little disposable income for other desires. The poor are hit particularly hard, as their energy budget consumes a larger and larger share of their income. Finally, the data from Europe show that for every new job created by green energy, two-and-a-half jobs are destroyed elsewhere in the economy due to higher prices.

These lawsuits, if successful, will not only create massive economic and human damage to the State of Colorado, but they will do so with little, if any, environmental benefit.

– Paul Prentice, Ph.D.
Professor of Economics and Business, Colorado Technical University
Senior Fellow, Independence Institute
Economics Fellow, Centennial Institute at Colorado Christian University