Diversification and growth in the Colorado economy will keep the current energy boom from driving up wages and hiring as much as it did during the 1970s.
But in some counties, energy-industry development could displace non-energy jobs and sources of income, leaving those economies more vulnerable in the long run.
“Energy is important but less important than it used to be in the past. Diversity leads to stronger long-term growth over time,” said Ben Alexander, associate director at Headwaters Economics, an independent, nonprofit research group based in Bozeman, Mont.
Headwaters found that between 1970 and 2005, counties with the heaviest dependence on energy activity had slower income growth than more economically diversified counties.
The data reflects what is known in economic circles as the “resource curse” or the tendency of resource-rich economies to be less robust.
In counties with more diversified economies, like Garfield and Mesa, the study found that energy-production activity could strangle other industries over time.
Employers in Glenwood Springs are struggling to find tourism and other service workers, confirmed Bruce Christensen, the city’s mayor.
Energy workers also are taking up hotel rooms, leaving them unavailable for out-of-state groups that have visited the area for years, making it likely they will go elsewhere.
The key to long-term success is to keep energy development on pace with what the labor force and local infrastructure, including housing, can support, Alexander advises.
The unemployment rate in Garfield County is about 2.2 percent, Alexander said, adding that it’s around 3 percent in Mesa County.
In theory, those low rates and higher wages should draw workers to the Roaring Fork Valley to meet demand. But high housing costs are preventing that from happening, Alexander said.
The workers most likely to pick up and move to chase higher wages are those with more limited resources. And many can’t afford the cost of living once they arrive.
General contractors who have tried to move crews to Garfield County from the Front Range quickly learn they can’t house their own workers, Christensen said.
Many also lose their employees to higher-paying oil-and-gas jobs, Alexander said.
Energy-industry representatives argue that the benefits of energy activity far outweigh the negatives.
“We believe — and demonstrate daily — that the energy industry can coexist with other industries and with the Colorado lifestyle we’re proud of,” said Meg Collins, president of the Colorado Oil & Gas Association.
A study last summer from the Colorado Energy Research Institute at the Colorado School of Mines found oil-and-gas activity generated $22.9 billion in 2005, making it the state’s dominant industry at 6.1 percent of total output.
Energy jobs also are among the best-paying in the state, and energy production is a major contributor to state coffers.
Alexander said income is a better measure than production because it represents money that stays in the state. Corporate profits are more likely to migrate out of state.
The Headwaters study, looking at income and employment, found that the entire mining sector, which includes energy, represented about 2 percent of the state workforce.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
