DENVER — A study released Wednesday found that a statewide ban on hydraulic fracturing would cost $12 billion in lost gross-domestic product, 93,000 fewer jobs and a tax hit of $985 million between 2015 and 2040.
The research, conducted by the Leeds School of Business at the University of Colorado Boulder on behalf of local economic-development groups, comes as the first major analysis of the impact of proposed anti-fracking initiatives on the state’s economy as Colorado voters dig in for a statewide fracking feud.
A slew of proposed anti-fracking initiatives aimed at allowing localities to ban fracking are moving toward the Nov. 4 ballot. Supporters of oil-and-gas development have countered with proposals that would, for example, prevent towns that ban fracking from reaping the economic benefits.
While debate rages on whether fracking is harmful to the environment—the Environmental Protection Agency has yet to find an example of groundwater contamination resulting from fracking–the study leaves little doubt that a fracking ban would be devastating to the state’s economy.
Starting in 2015, a fracking prohibition would result in an economic hit of $8 billion and 68,000 fewer jobs in the first five years.
“Over the long run (2015-2040), GDP would be lower on average by $12 billion (2.6 percent) and employment would be down by 93,000 (2.2 percent) jobs,” said a press release accompanying the 28-page study.
As a result, state and local governments would lose $567 million per year in annual tax revenues for each of the first five years, according to the study.
The ripple effect would hit supply-chain industries that support oil-and-gas development as well as economic sectors such as real estate and retailers.
The study assumes a 95 percent reduction in new extraction as well as continued production from existing wells.
The research comes as pro-business groups and lawmakers attempt to head off a slew of proposed anti-fracking initiatives moving toward the November ballot. The leading measures would not ban fracking statewide, but would allow towns, cities and counties to block oil-and-gas development.
Other proposals would establish the minimum distance between oil-and-gas operations and homes, schools and other occupied buildings at anywhere from 1,500 feet to a half-mile.
The state and the Colorado Oil and Gas Industry have filed lawsuits against towns that have voted to ban fracking, arguing that state rules approved by the legislature and the Colorado Oil and Gas Conservation Commission trump local ordinances.
While fracking has been the target of the environmental movement, industry officials point out that a ban on fracking would essentially eliminate oil-and-gas development. More than 90 percent of wells use fracking, a process that shoots a mix of water, salt and chemicals into rock to stimulate extraction.
The study reports that 87 percent of oil-and-gas activity in Colorado takes place in just five counties, but that the “employment and tax benefits are much more widespread.”
The research, which used an economic modeling program developed by Regional Economic Models Inc., was conducted on behalf of the Common Sense Policy Roundtable, the Denver South Economic Development Partnership, and the Metro Denver Economic Development Corp.