Building Economic Resilience in Western Colorado’s Oil and Gas Communities

This report summarizes the second in a series of reports that seek to understand the opportunities and challenges facing US oil- and gas-producing communities as they seek to build economic resilience against an uncertain energy future. Although numerous state, federal, and international policies have emerged to support coal communities affected by a changing energy mix, far less research or policy attention has focused on oil and gas producing regions. The purpose of this report series is to understand local priorities for economic development in oil and gas communities across the US and assess how state and federal government can support those local priorities.This report documents the perspectives of a wide range of local stakeholders interviewed by the authors during a 3-day research trip to Garfield, Mesa, and Rio Blanco County in western Colorado. During those interviews, the authors asked interviewees to describe their views about promising opportunities for economic development and diversification, whether existing federal policies supported those strategies, and what changes could improve the alignment of federal resources with local priorities for economic development.These interviews revealed six main findings:Federal and state transition policies have focused on coal communities. Although there is some geographic overlap (in Rio Blanco County), most of the oil and gas communities we visited are not directly supported by state and federal programs designed to deliver an equitable energy transition. However, these communities are likely to need state or federal support, particularly if efforts to reduce greenhouse gas emissions accelerate.Economic diversification is underway in cities with access to robust transportation infrastructure, but the path towards economic resilience is less clear in remote communities that lack ready access to regional and national markets for traded goods. Most interviewees highlighted the economic potential of outdoor recreation and local entrepreneurship, but noted that replacing the tax base provided by the oil and gas industry would be a major challenge.Recent federal legislation offers unprecedented resources to support investment in rural communities. However, local leaders often forgo federal funding opportunities because they are too large, complex, restrictive, and competitive.Local officials are encouraged by state and federal programs that build long term capacity by supporting new staff. These programs allow local stakeholders to take on new opportunities such as larger state or federal grants.A lack of affordable housing is a major impediment to greater economic resilience. High housing costs due to a combination of factors make it difficult for certain industries to attract and maintain a workforce.Many interviewees believe that the state’s use of oil and gas revenues and other policies “designed for Denver” fail to support regional priorities. Local stakeholders would prefer to see more of the revenue generated by oil and gas production reinvested in the producing region (although such a strategy could further entrench dependence on fossil fuels).These findings, in turn, lead us to several conclusions:New resources will likely be needed to help some communities, particularly the remote city of Rangely, which grew up alongside the Rangely oil field. These resources may include support to develop an economic diversification strategy or social safety net programs in case economic diversification strategies are not viable.If its oil and gas production continues to fall, much of the region will likely need support to stabilize its public finances, particularly for county governments and school districts. Workers in the oil and gas industry may also require retraining and social safety net supports while they acquire new skills.Whatever form policies take, federal support will be more effective if it is tailored to the capacity and needs of affected communities. This includes:Providing smaller, more flexible grants (e.g., funds to hire additional staff) that can help small communities build capacity and access larger opportunities;Providing concierge-type services for local governments to help them navigate federal opportunities, as Colorado is doing statewide; andReducing the complexity of applying for and managing federal grants, often a major barrier for low-capacity rural communities.Efforts to build a more resilient economy, whether in western Colorado or elsewhere, are unlikely to succeed without quality affordable housing options. Like elsewhere in the United States, housing costs have become an acute challenge in this region of Colorado. Although we are not housing policy experts and are not able to offer specific policy options, some type of intervention appears necessary to address this challenge.