Blog Post

Different Effects for Western Colorado Neighbors

Nov 22, 2013 | Daniel Raimi

Arid, snow-capped mountains line Interstate 70, the main artery in Garfield County along which hundreds of wells produce a fast-growing supply of natural gas. Production surged during a boom period of 2007-2009, but has slowed in recent years due to falling natural gas prices.

Production site north of Interstate 70 in Garfield County

Nonetheless, the county government has benefited handsomely from increased revenues from oil and gas taxes, though neighboring governments such as Rio Blanco County and some cities within Garfield County have not seen the same benefits.

Natural gas production in the Western Slope region of Colorado.

Cities that line Interstate 70 have experienced varying fiscal effects of new development in the region. Grand Junction, the largest city in the region, saw a substantial influx of oil and gas workers and businesses during peak drilling activity from 2007 through 2009, even though it’s about 30 to 45 minutes away from the major producing regions of Garfield County. But the city’s initial size meant the growth had a proportionately smaller impact on its financial picture.

Other cities on the periphery of activity, such as Glenwood Springs and Carbondale, have experienced small fiscal benefits from increased production activity, largely due to state oil and gas tax revenues allocated to them.

Three small cities that lie in the heart of the producing region, Parachute, Silt and Rifle, grew rapidly during the boom years but now struggle to maintain their populations because drilling activity has slowed.

Town of Meeker, county seat of Rio Blanco County

At the county level, the effects have been substantial. In Garfield County, the heart of regional production, new government revenues have far outpaced new costs, allowing the county to pay off its debt, build new buildings and invest tens of millions of dollars in other capital projects. Though new drilling has slowed, production has continued to grow to the county’s benefit.

While Garfield County now has a greater need to maintain existing infrastructure such as roads and bridges, county officials have substantially cut their costs by partnering with gas companies to maintain some of the heavily trafficked roads.

The story is different in neighboring Rio Blanco County. Production there is far lower than in Garfield County, even though it has grown recently from production on federal land maintained by the Bureau of Land Management. Colorado distributes a relatively small share of tax revenue from production on these lands relative to tax revenue collected from production on private land.

As a result, Rio Blanco County has seen increased costs from oil and gas development without a commensurate rise in revenue, making it difficult for the county to maintain roads and provide other services associated with the development. We will explore this dynamic in more detail in future reports.

This research was carried out at the Duke University Energy Initiative with support from the Alfred P. Sloan Foundation.