Republicans in the Colorado legislature introduced a joint resolution earlier this month asking Governor Jared Polis and fellow Democratic leaders to reverse restrictive energy policies and address our national fuel crisis by unleashing domestic production.
Sponsored by Senators Jerry Sonnenberg and John Cooke as well as Representatives Hugh McKean and Richard Holtorf, the resolution asks state regulatory agencies like the Colorado Oil and Gas Conservation Commission (COGCC) to streamline permit issuance and boost local oil and gas production for use both at home and for our allies abroad.
Republicans should be commended for the resolution, and Governor Polis and his Democratic colleagues at the gold dome would do well to take it seriously.
Domestic production matters
The current calamity in Europe shows us that it is no longer tenable (if it ever was) to hamstring domestic producers while asking foreign despots to address spikes in oil and gas demand, be it Russia, OPEC, Venezuela, or any other human-rights violating petrostate.
Meanwhile, consumers in Colorado and nationwide are feeling the economic pressures of historic inflation and the particularly painful crunch of high energy costs. Inflation already reached 7.9% this month, a 40-year high. Gasoline costs are up 38 percent year-over-year, while utility gas is up 24 percent, according to the Bureau of Labor Statistics.
Coloradans are hungry for some much-needed economic relief, and local industry is poised to provide it if given the proper conditions to succeed.
Colorado is the country’s 5th largest oil producer and 7th largest natural gas producer, despite being a minor source of nationwide emissions, contributing just 1.7% of U.S. greenhouse gas emissions annually, according to the Energy Information Administration.
And what do we get in return for our insignificant share of emissions contributions?
A 2021 study prepared by PricewaterhouseCoopers (PwC) found that Colorado ranked among the highest states for the share of total economic contributions by the natural gas and oil industry, generating $46.1 billion—or 11.7% of the state’s total GDP. It also found that the industry supported 340,000 total jobs, 8.6 percent of the state’s total employment, as of 2019.
In addition to the obvious national security upside and economic benefits to the state, local industry has the opportunity to ensure that locally produced oil and shale gas is the cleanest in the world. Our producers operate under aggressive emission-reduction targets and methane monitoring standards far beyond other global sources, and they have performed admirably while hewing to those standards.
According to the Colorado Oil and Gas Association, since 2013 the state’s oil and gas industry “cut its emissions of Volatile Organic Compounds (VOCs) in the Denver Metro/North Front Range (DMNFR) ozone nonattainment area by nearly 50-percent, all while oil production quadrupled statewide.”
Struggling with regulatory constraints
Yet despite the industry’s past success, recent overzealous legislative and regulatory constraints have left it struggling to respond to current supply shocks.
For example, 2019’s Senate Bill 181 alone changed the mission of the state’s industry regulators and spawned a litany of new rules for energy production that added upwards of $500 million to the cost of operating in Colorado.
Its effects on the industry’s productive capacity have been marked. As the Colorado Springs Gazette editorial board points out:
“Within six months of the bill’s enactment, approval permits for oil wells plummeted by 57%; approved well-drilling permits dropped 58%. According to data from the Colorado Oil and Gas Conservation Commission, approved permits have continued to plummet since 2019 falling to only five location permits approved for the entire year. Previously, the commission approved nearly 30 permits each month.”
A return to a streamlined permitting process, while not an immediate fix, would provide a more certain regulatory environment for producers, something any business requires in order to keep costs low. That would allow for a nimbler response to fuel supply crises, the likes of which the globe is currently facing, and consumers are experiencing each time they arrive at the pump.
Weakening the grip of petro-gangsters
The goals laid out in the joint resolution are not just sensible, but also broadly popular among the American people. A new poll from Consumer Energy Alliance finds that 60 percent of Americans support increasing the domestic production of oil and gas in response to the current energy crisis.
And while opponents of the measure caution against extending our reliance on fossil fuels over the long term, we can and should be able to walk and chew gum at the same time.
One might consider it a pragmatic approach to address our immediate fossil fuel needs by empowering local industry and weakening the grasp of foreign petro-gangsters on global energy markets, while at the same time working to make long term investments in alternative zero-carbon sources of firm, dispatchable baseload power.
And Colorado Republicans have attempted to do just that this session. Beyond the joint resolution, Senate Republicans introduced a bill to consider advanced, small-scale nuclear reactor technology for the state as a future source of reliable, zero-carbon energy.
Unfortunately, the supposedly climate conscious Democrats in the state Senate killed the bill. However, they now have another chance help shore up domestic energy security and independence. Let’s hope they choose to work with their Republican colleagues this time and take the joint resolution seriously.
Jake Fogleman is an energy policy analyst at the Independence Institute, a free market think tank in Denver.
