Costs and Benefits of Oil and Gas for Colorado

Follow Us On Social Media

In this report, the Colorado Fiscal Institute analyzed both the costs and benefits of the oil and gas industry to Colorado’s economy. Our analysis found:

• The oil and gas extraction industry, along with the pipeline construction and transportation industries and support industries for oil and gas make up just 1.8% of total wages in the state, 3.4% of total personal income, 3.3% of GDP and less than 1% (0.7%) of total employment.
  
• While oil and gas operations in Colorado generate local, federal and state tax revenue, some of these taxes and fees are not a net benefit to the state because they go directly toward regulating the industry, including cleaning up pollution or compensating for losses caused by development. Additionally, a significant amount of these taxes are based on self-reporting by the industry. Recent state audits showed the industry paid only about 20% of what they would have owed without exemptions, credits, and undercharging.
  
• The most significant government revenue from oil and gas operations comes from property taxes, including $621 million in 2021. While this makes up 3.5% of total local school funding in Colorado, it is not evenly distributed. 70% of school districts receive less than 1% of total funding from oil and gas property taxes, and just a handful get more than 10% of their total funding from oil and gas property taxes.
  
• The industry creates significant health, environmental, and other costs that are paid by Coloradans, not the industry. While some serious impacts of oil and gas development are not quantifiable, many are. Pollution emitted by oil and gas operations in Colorado will cause well over $13 billion of damages between 2020 and 2030, based on calculations of the social cost of oil and gas pollution that are set in state law.
  
• Other health and environmental costs include emissions of volatile organic compounds (VOC) and Nitrogen Oxides (NOx), which lead to dozens of deaths in Colorado each year, high amounts of water usage, lower property values near oil and gas drilling sites, habitat fragmentation, and costs related to cleaning and plugging abandoned oil and gas wells, much of which is paid for by Colorado communities instead of the companies that made the mess.
  
• Pollution from oil and gas in Colorado contributes to global warming, which is already causing billions of dollars of damages to Colorado, harming the agriculture and recreation industries, and causing disasters. Climate-caused disasters alone have cost the state between $20 billion and $50 billion since 1980.

Read the full report

Read a one-page infographic with some of the most relevant data