Northern Colorado Business Report; March 26, 2014 By Steve Lynn
A statewide ban on hydraulic fracturing would trim 93,000 jobs, $12 billion in lost gross domestic product and annual reduction of $985 million in tax revenue for local and state governments over 25 years, according to a new study from the University of Colorado.
The 33-page study was done by researchers at the University of Colorado Leeds School of Business on behalf of a partnership between the Metro Denver Economic Development Corporation, Denver South Economic Development Partnership and Commonsense Policy Roundtable. Hydraulic fracturing, or fracking, is a contentious drilling technique that involves high-pressure pumping of fluid into a drilled hole to release oil and natural-gas from dense shale formations.
The Commonsense Policy Roundtable, a nonprofit free-enterprise think tank, has a seven-member advisory board with three members who work in the oil and gas industry, according to its website.
Brian Lewandowski, the study’s author and research associate at the school’s Business Research Division, said members of the groups supporting the report recommended the study be done, but did not influence the study’s results.
The study began in November as voters passed fracking moratoriums in multiple Front Range cities. Since then, groups have proposed ballot initiatives that would give local governments the authority to ban fracking and for-profit businesses such as oil and gas companies as well as pass increased buffers between oil and gas wells and buildings.
CU researchers and members of the other groups wanted to study the economic impact if a statewide fracking ban were enacted, said Lewandowski, the study’s author. The study was done because fracking is a pressing policy issue.
“That’s what we’d like to do going forward is take a look at which initiatives are floating to the top and do some additional analysis to try and quantify what the economic impact in those scenarios would be,” he said.
Lewandowski, and the study’s other author, Business Research Division Executive Director Richard Wobbekind, found that a fracking ban would cost state and local governments $567 million annually during the first five years starting in 2015 and $985 million annually on average through 2040. The researchers used publicly available data along with a modeling system developed by Regional Economic Models Inc. that they used to study economic impact during the time period.
A fracking ban also would upend the broader oil and gas industry supply chain that provides the industry with goods and services, according to the study.
The study assumed that a fracking ban would reduce new oil and gas development by 95 percent. It noted that 87 percent of oil and gas activity comes from five counties, but that employment and tax impacts span a greater region.
The five largest-producing counties represent 35 percent of oil and gas employment. However, the 31 smallest-producing counties represent 29 percent, and the 28 nonproducing counties account for 36 percent of oil and gas industry employment.
The study did not look at events or potential impacts to water, air quality, health or quality of life.