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Think of economic impact before banning fracking

By Brandon Ratterman

Around the nation, self-described environmentalists have made hydraulic fracturing (fracking) and their perceived negative impact on the environment growing points of contention. In Colorado this debate led to several community-based moratoriums and talks of a statewide ban on fracking. But if a few organized, anti-fracking organizations realistically want to shut down an entire industry, they need to acknowledge the economic effects of those actions. Luckily, the University of Colorado (Boulder) recently published the economic and fiscal benefits of Colorado’s O&G industry, which is summarized in the paragraphs below.

In 2012, the O&G industry contributed a total of $29.6 billion to Colorado’s economy in direct and indirect activities. Of the total,  $9.3 billion is directly related to oil and gas production, which requires the most efficient extraction technology (hydraulic fracturing) to be competitive.

The value added from the O&G industry supports 111,500 Colorado jobs.  Of those jobs, the 29,000 employees that are directly involved in drilling, extraction and support jobs earned over twice as much as the average Colorado employee. In total, the O&G industry paid almost $6.5 billion in wages to Coloradoans in 2012.

The oil and gas industry also provided benefits to those outside of the industry through state and local funding. In 2012, Colorado state and local governments, school districts, and special interests received a total of $1.6 billion in revenues from the O&G industry. Of that $1.6 billion, O&G severance tax—which is a fee for extracting a non-renewable resource—contributed $163 million alone.

The economic and fiscal benefits from the oil and gas industry need to be remembered as statewide actions are considered. If the plan to ban fracking across Colorado is implemented, tens of thousands of Coloradans will be without a job. Likewise, the Colorado economy will be without tens of billions of dollars in revenue, of which over one billion will be cut in state and local government(s), schools and special interests. With effects of this magnitude, it would be advisable for Coloradans to disregard documentaries in this matter and independently research the environmental effects of “fracking.”

Brandon Ratterman is a research associate with the Energy Policy Center.