REPORT: Oil and gas generates more than $600 million per year in revenue for K-12 and higher education

Oil and gas generates more than $600 million per year in revenue for K-12 and higher education in Colorado, new research shows

Key state lawmakers warn “we cannot ignore the contributions of oil and gas” and “how many people in Colorado are employed in this industry.”

Denver Pipefitters Local 208: “Positive changes in energy policy are possible – we just have to keep in mind all the connections between the energy sector and other things we care about, including good public schools and good jobs.”

DENVER (Jan. 29, 2019) – Colorado’s oil and natural gas industry generates more than $600 million per year on average in taxes and other public revenues for K-12 and higher education, reinforcing recent comments from legislators and other stakeholders about the importance of the energy sector to our state. Hostile measures against oil and gas development – as opposed to constructive regulatory improvements – will cut existing budgets for public schools and jeopardize plans for new investments such as higher teacher pay and expanded full-day kindergarten.

Those are the central findings of a new analysis from Vital for Colorado titled Books, Buildings and BTUs: The $600 Million Connection Between Public Education and Colorado’s Energy Sector. The 13-page briefing (available for download here) examines the biggest and easiest to identify oil and gas funding sources for K-12 and higher education in Colorado, one of the nation’s largest energy producing states. These sources include property taxes, state-owned mineral development, and taxes paid by tens of thousands of energy workers and their employers.

Conservatively, these diverse revenue streams poured more than $3.3 billion into K-12 and higher education between FY 2012-13 and FY 2016-17. During the same five-year period, the annual average from these revenue streams was $669 million per year. Importantly, these totals do not include severance tax revenues, which are used to support other public projects and services.

“Proposition 112 was convincingly defeated last year, but now anti-oil and gas groups are trying to pressure lawmakers and the Polis administration into giving them what they want,” said Peter Moore, CEO and President of Vital for Colorado, a coalition of state business leaders focused on energy policy. “These groups continue to ignore Colorado’s nation-leading regulations governing oil and gas development and they pretend the massive economic contributions made by the energy sector in our state simply don’t exist. The business community won’t stand for these misleading tactics, and we are encouraged that key members of the legislature are insisting on a factual debate as well.” 

In recent weeks, lawmakers and key stakeholders have signaled their interest in making changes to the way oil and gas development is regulated in Colorado, but in a way that preserves a major economic sector and the revenue it provides for essential public services, i.e.

• Senator Angela Williams (D-Denver): “[W]e cannot ignore the contributions of oil and gas and energy… If oil and gas pulls out of the state of Colorado, we will go into an automatic recession. We do not have the funds in our budget to backfill the economic impacts that would occur directly and indirectly.”
• Senator Lois Court (D-Denver): “I think it’s extremely important that we recognize how many people in Colorado are employed in this industry. I know in my district in East Denver, there are numerous people employed in [oil and gas].”
• Gary Arnold, Business Manager, Denver Pipefitters Local 208 and Economic Development and Labor Co-chair of the Polis transition team: “When fully funding public education is already a struggle, it would be irresponsible to attack a major source of school funding like oil and gas development… I believe positive changes in energy policy are possible – we just have to keep in mind all the connections between the energy sector and other things we care about, including good public schools and good jobs.”

According to the U.S. Energy Information Administration, Colorado is the fifth largest oil producing state in the country, and sixth in natural gas production. When all forms of energy produced in Colorado are converted to BTUs – a standard measure – natural gas is far and away largest source, accounting for 65% of total production, followed by oil at 21.5%. The taxes and other revenues generated by this oil and gas production are diffusely spread across the economy and collected by different government entities at the local, state and federal level.

“Because there isn’t a single line-item that brings all the different revenue streams together, oil and gas funding for public education and other government services can be overlooked and even taken for granted over time,” said Simon Lomax, research fellow for Vital for Colorado and author of the briefing paper. “In this analysis, we did not seek to identify every last dollar of K-12 and higher education revenue generated by oil and gas development. Instead, we examined the largest and easiest to identify revenue streams to provide policymakers with a better sense of the size and scope of these funding sources.”

“The facts clearly demonstrate that in a major energy-producing state like Colorado, oil and gas development is a major source of revenue for schools and other critical public services,” Lomax said. “To pretend otherwise defies common sense and is not a sound basis for public policy, no matter where you stand on the political spectrum.”