With a new pro-fossil fuels administration headed to Washington, Republicans in the state Senate are seizing the opportunity to shore up Colorado’s sluggish mining and natural resources economy.
Republican Sen. Ray Scott of Grand Junction will chair a five-member Select Committee on Energy and the Environment that could deal with “the increased workload an evolving relationship with Washington could bring,” according to a Senate GOP press release.
“The changes in attitude and approach we’re expecting from the Trump administration will only add to the importance and relevance of the work this select committee will do,” according to Senate President-elect Kevin Grantham of Canon City.
The committee is expected to hold hearings on energy policy, but any legislation proposed must still be heard by the Senate’s Agriculture, Natural Resources and Energy Committee. The select committee’s role will be to handle “the growing demand for more study, deeper discussion and innovative policy ideas,” according to Scott’s statement. What that discussion and study will entail or what innovative policy might be proposed isn’t immediately clear. Scott did not return a call for further comment.
Joining Scott on the committee: Republican Sens. John Cooke of Greeley and Kevin Priola of Henderson, as well as Democratic Senate Minority Leader Lucia Guzman of Denver and Sen. Matt Jones of Louisville.
Guzman today named Jones deputy minority leader for conservation, clean energy and climate change, a new position. He will be the Democrats’ point man on energy and conservation-related legislation. Jones has been the Senate Democrats’ leader on supporting the clean energy industry, including how to address climate change.
“Regardless of what direction the new Administration wants to take our country in the areas of renewable energy or fighting climate change, Colorado needs to stay ahead of the curve as it has done for years,” Jones said in a statement today. “It is integral to our identity and our brand as a state to have clean air, clean water, and protected public lands, all of which are major reasons why we have such a booming tourism industry.”
Guzman told The Colorado Independent that while she doesn’t yet know what the committee will do, Democrats have their own goals on energy. “It is a major interest of our caucus this year to support renewable and clean energy and to continue to work on concerns about climate change,” she said.
But Republicans like Cooke, who comes from oil-rich Weld County, said the time had come to put “Colorado energy consumers first by embracing energy policies guided by practical reality, not extreme ideology.”
“Energy is one of the two or three top economic engines driving Colorado’s economy, so we must find a way to support those jobs and revenues while also protecting the natural places that make Colorado special,” Cooke said in the release. “Reliable and affordable energy are too important to Colorado’s energy consumers and business climate to not pursue a truly all-of-the-above approach, which includes coal, oil and gas, renewables and maybe even nuclear.”
Will the new committee butt heads with Gov. John Hickenlooper? Hickenlooper, a former geologist, has been seen as pro-oil and gas, but he also has said he plans to keep Colorado on its current path. Last month, the governor said the state will proceed with its version of the Clean Power Plan regardless of may happen in Washington. He also has said he opposes auctioning off Colorado’s public lands for commerce and industry.
Colorado is a top 10 state for natural resources and energy production, but those activities have been in a slump for the past two years, with less demand for coal and low oil prices.
Mining industry gross domestic product, a key measure of the value of its output, has declined by 56.6 percent in the past two years, down $10.8 billion between the first quarter of 2014 and the first quarter of 2016, according to a September economic forecast from the Governor’s Office of State Planning and Budgeting. That same forecast noted that in 2014, there were 68 oil and gas drilling rigs operating in the state, when oil was valued at about $105 per barrel. Today, with oil at about $52 per barrel, there are only 25 active drilling rigs in the state, according to the Colorado Oil and Gas Conservation Commission.
The forecast also noted a Kansas City Federal Reserve Bank survey in July of the oil and gas industry in Colorado, Kansas, Nebraska and Oklahoma. That survey estimated oil prices would have to increase to about $64 per barrel for drilling to pick up again.
And any changes favoring the industry won’t likely show up for at least a year or more.
An annual economic outlook report from the Leeds School of Business at CU-Boulder said today that Colorado would rank among the top 10 states for job creation in 2017. The report predicts the state’s economy to add more than 63,000 jobs in every non-agricultural sector except energy in 2017.
The number of jobs in natural resources and mining will drop slightly in 2017, although Colorado is still in the top 10 nationally in gold, coal, molybdenum and oil and gas production, the report said.
In 2015, the oil and gas industry employed about 31,000 workers; in 2017, it’s anticipated that the industry will provide jobs to about 23,000 workers. The industry shed 25 percent of its jobs in 2016, the report said.
Oil production is expected to generate about $5 billion this year, with natural gas at about $4.1 billion. The total expected from the oil and gas industry is around $9.6 billion, down from $15.8 billion just two years ago. Severance taxes, the taxes paid to the state by the industry for “severing” the oil and gas from the land, are projected to total about $19 million this year, a 93.3 percent decrease from 2015, according to the Leeds report.
Those severance taxes pay to mitigate the impact of oil and gas production on local communities, and those dollars also pay for Colorado Water Conservation Board projects. The board is charged with implementing the state’s water plan.
In 2017, there is little expectation for change in the natural resources sector, both in Colorado and nationally, even with a Republican Congress and a Republican president. But, the Leeds report said, the industry may become more optimistic about new investments in the long term, and the Trump administration and Congress are likely to relax regulations on federal lands and to approve projects such as the Keystone pipeline.
Photo credit: Jimmy Thomas, Creative Commons, Flickr.