BlueGreen Alliance report documents hefty role of oil and gas in Colorado and New Mexico economies. And why it won’t last.
Story/photos by Allen Best
What a difference a decade can make. Consider coal. In 2008 it was riding high, responsible for nearly half of all electrical generation in the United States. Trains from Wyoming’s Powder River Basin were like a conveyor belt to other parts of the country, one right after another. A decade later, coal was about a quarter of the pie and it has continued to shrink since.
Might oil and gas operations in Colorado and New Mexico see a similar decline? A new study commissioned by the BlueGreen Alliance documents the economic ascension of the oil and gas sector in the two states during the last 10 to 20 years.
The report, The Colorado and New Mexico Oil and Gas Workforce: Economic Contributions and Future Options, also cites evidence the boom might soon enough turn into a bust. Recent announcements by major oil companies may suggest what will come. BP announced last August it would cut oil production 50% by 2030 and increase its renewable energy-based electricity production by a factor of 200%. ConocoPhillips last October announced plans to achieve net-zero carbon emission targets by 2050.
If internal-combustion vehicles will not vanish by 2030, manufacturers have started pivoting. Several auto manufacturers have made public statements that they plan to rapidly transition significant portions of their manufacturing capabilities to electric power. On Thursday—several days after the report was released—General Motors announced it has set a 2035 target date for phasing out gasoline- and diesel-powered vehicles from its showrooms globally. Vehicles that run on fossil fuels account for roughly 98% of GM’s sales today and all of its profits.
Colorado and New Mexico, says the BlueGreen Alliance report, should think carefully about this coming decline of the oil and gas sector.
“We should be as proactive as possible in addressing and mitigating those effects,” says Chris Markuson, director of Colorado and state economic transition policy for the BlueGreen Alliance. He described the need for “really thinking structurally about the mechanism that the government can provide to protect workers in an ever-changing economy.”
The BlueGreen Alliance website describes itself as uniting “America’s largest labor unions and its most influential environmental organization. Co-chairs of the board of directors are Michael Brune, executive director of the Sierra Club, and Thomas Conway, international president of the United Steelworkers. The steel-workers union and the United Association of Plumbers and Pipefitters includes members engaged in the fossil fuel sectors of Colorado and New Mexico.
“Colorado’s clean economy is growing, and as demand for fossil fuels drops we need to be ready to help out workers and communities that will be impacted,” said Dennis Dougherty, the executive director of the Colorado AFL-CIO. “With the right economic investment and community engagement, we can make sure that workers and communities are protected.”
The analysis performed by Ben Webster, a Ph.D. economist with the Environment and Natural Resources Policy program at the University of Colorado-Boulder, describes a 41% growth in oil and gas workforce in Colorado from 2010 to 2019, a time when improved technologies allowed exploitation of shale formations in the Wattenberg field along the northern Front Range.
In New Mexico, the growth of the oil and gas workforce was even greater, 64%, largely the result of the success of the Permian Basin that overlaps Texas and New Mexico.
For all this growth, the oil and gas sector jobs as of 2019 represented just 1.2% of all jobs in Colorado. But those jobs paid well. Total earnings of oil and gas workers in the state’s economy was 2.4%. In other words, oil and gas sector employees had income double the state average.
New Mexico’s numbers look somewhat the same. In 2019, oil and gas workers represented 3.4% of the total New Mexico workforce and captured 5.8% of total earnings. This outsized effect was consistent through the prior decade.
As in most industries, the pay ranged substantially. The highest earners were in the oil and gas extraction, where average income in 2019 was almost $190,000. The lowest earners in Colorado in 2019 were those who manufacture equipment or work in machinery, where the average income was almost $70,000.
The income differential in New Mexico was less than in Colorado. Webster speculated that this is because Colorado has headquarters for oil and gas companies, and hence pay for the executives will be attributed to Colorado. Those corporate headquarters would also explain why Denver, with perhaps not a single drilling pad, was the second largest among Colorado counties in terms of oil-and-gas sector workers.
These are direct jobs. There are indirect jobs, too. In Colorado, the cumulative loss of the various sectors, direct and indirect, would be nearly 138,000. “This is the equivalent of 5% of the entire Colorado workforce losing their jobs,” Webster writes in the report.
In New Mexico, he says, this cumulative effect of direct, indirect, and induced jobs would be responsible for 13% of the state’s workforce losing their jobs.
Between the two states, nearly 250,000 jobs could be lost in coming decades.
Reading these numbers, you might conclude that both states need to alter policies to remove restraints on drilling. Some people would surely like that. In some parts of Colorado, you can almost routinely find signs that ask rhetorically “Why does Polis hate oil and gas,” a reference to the Colorado governor elected in 2018.
Both Colorado and New Mexico have more nuanced approaches to oil and gas. Polis, for example, won applause at the Colorado Oil and Gas Association summer conference in 2018 when he said he opposed a proposed ballot measure the industry found unnecessarily limiting.
There is a growing call to end hydrocarbon extraction. The group 350.org Colorado issued a press release Wednesday calling for Colorado to phase out oil and gas operations in 10 years.
This is from the Jan. 28, 2021, issue of Big Pivots, an e-magazine tracking the energy transition in Colorado and beyond. Subscribe at bigpivots.com
Greenhouse gas emissions from the oil-and-gas sector drive the call. 350.org and allied groups recently issued a report, Avoiding a Roadmap to Climate Catastrophe, that found the oil and gas sector is responsible for 70% of Colorado’s greenhouse gas emissions. The state estimates the sector is responsible for 17.3%.
“You can’t frack your way to climate leadership,” said Jeremy Nichols, the climate and energy director for WildEarth Guardians. “If Gov. Polis is serious about climate action, he needs to enact policies that wind down and ultimately phase out oil and gas production in Colorado.” The Sierra Club was also among the signatories of the letter sent to Polis.
The BlueGreen Alliance was not a signatory. It supports a transition to a clean-energy economy, but advocates protection of the interests of workers in this transition. “Oil and gas job losses must be substituted with jobs that have similar economic value,” the report says.
Transitioning will be more easily done in some places than others. Weld County—Greeley is its county seat, but it also includes Fort Lupton and other towns—is Colorado’s poster child of a fossil fuel-dependent economy.
Somewhat predictably, the BlueGreen report recommends economic diversification of local, county, and state economies. It also calls for modification of federal aid packages to workers impacted by covid. There is no doubt that the oil and gas sector workers were affected, as evident in the giant losses of the oil companies in 2020.
The report urges several actions, among them close study of the Just Transition report to Colorado legislators completed in December. Among the recommendations is authorization and funding of an energy transition workforce relocation program.
See stories: Colorado Aims for Just Transition
And also, When the Coal Plants Finally Close
Of course, Colorado legislators haven’t yet figured out how to fund efforts to assist coal mine and coal plant workers whose jobs will be lost during the decade.
But this report does signal the interest of labor and environmental communities to begin having a conversation about what happens next.
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