Not too long ago, a ghost town stood where downtown Denver now flourishes. It was in the mid-1980s, when the price of crude oil nose-dived 67 percent in about a year and dragged the state’s economy down with it. Companies fled the city and major institutions shut down, leaving Denver with the highest number of empty offices in the nation. (One of the vacant desks at Buckhorn Petroleum belonged to a geologist named John Hickenlooper.)
Those who remember that bust can be excused for feeling a dreadful sense of déjà vu right about now, what with the price of U.S. oil hitting a 2015 low of $42.87 a barrel in August—down from $105.79 in June 2014—thanks to a glut in worldwide supply. (At press time, the U.S. Energy Information Administration was predicting it would rise slightly to $45 this month.) Gas prices close to $2 a gallon, which they are expected to reach this month, are great for shoppers who will have more cash to spend on whatever Star Wars toy is all the rage this Christmas, but not so much for the energy industry. Already, more than 90,000 domestic oil workers have been sacked. Colorado’s $280 million economy is the fifth fastest growing in the country, and oil and gas accounts for 11 percent of that, according to the Colorado Oil & Gas Association (COGA). So what happens to Colorado when the bust hits bottom?
The answer is business as usual. By business, economists mean other businesses. “In the ’80s, [we] were much more dependent on our natural resource base,” says Martin Shields, director of the Regional Economics Institute at Colorado State University. In the Centennial State’s current service-based economy, technology, health care and wellness, and financial services all outweigh energy. “Most sectors won’t be affected,” Shields says. “It’s not going to be a catastrophe for the state by any stretch of the imagination.” And COGA claims that even before oil started its slide, the industry had gotten leaner (read: fewer field hands) by consolidating wells, reducing infrastructure, and generally becoming more technologically advanced. You can’t have mass layoffs when you’re already operating a skeleton crew.
Plus, there’s a promising new gusher on the horizon: The U.S. subsidiary of a Canadian company is in the final stages of gaining approval to build a liquefied natural gas terminal in Coos Bay, Oregon. The Jordan Cove Energy Project would connect with northwest Colorado through the Ruby Pipeline and open up the Western Slope economy during the oil downturn by providing access to new energy-hungry international markets. It’s no wonder, then, that the Jordan Cove project has garnered the support of Colorado politicians—including the state’s most powerful former geologist.