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CU-Leeds study predicts bleak economic outcome for 2000-foot setback

Colorado’s gross domestic product could suffer a $4.4 billion loss in the next five years if the state enacted a proposed oil and gas development setback, according to a study released Thursday by University of Colorado Leeds School of Business.

The state’s current setback requires oil and gas companies to stage development at least 500 feet away from other structures. Democratic Rep. Jared Polis proposed a measure for the November 2014 ballot that would boost the setback to 2,000 feet—a distance the study said could devastate Colorado’s gas and oil industry.

Researchers from CU-Leeds analyzed two potential effects of the setback based on gas industry estimates: a 25 percent and 50 percent drop in new oil and gas activity.

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The study indicates that the lesser loss—a 25 percent drop in oil and gas activity—would result in a gross domestic product loss of $3.2 billion and 24,000 jobs from 2015 to 2040. The worst-case scenario—a 50 percent reduction in oil and gas activity—would yield a $6.4 billion drop gross domestic product and cut 49,000 jobs between 2015 and 2040.

“A 2,000-foot setback would significantly impact Colorado’s families,” Earl Wright, chairman of Common Sense Policy Roundtable said in a recent Colorado Business Journal article. “The study suggests that an average family of four could lose $3,344 of income annually.”

A portion of the study also indicated that the production drops would be triggered in part by spatial issues; just five counties account for 90 percent of permits issued from 2013 to 2014.

The study, completed in September, based analyses off the current oil prices at the time. Polis withdrew the measure in an August compromise, opting to seek enforcement of a 1000 foot setback and appointing an 18-person commission to suggest solutions “to minimize land-use conflicts that can occur when siting oil and gas facilities near homes, schools, businesses and recreational facilities.”

Read the full story in The Denver Business Journal by clicking here. 

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