Official ties economic recovery on West Slope to natural gas costs
DENVER — The Western Slope economy isn’t likely to rebound fully until national commodity prices for such things as natural gas return to prerecession levels, according to a University of Colorado economic forecast released this week.
In his annual Colorado Business Economic Outlook, CU economist Richard Wobbekind said the state will see a gain in jobs in 2011, but it won’t come anywhere close to making up for the 140,000 jobs the state lost during the past two years.
Wobbekind said such industries as construction, government, manufacturing and information will continue to lose jobs over the next year, but other sectors will see an increase, however slight.
“The overall economic picture for Colorado in 2011 is slow, steady growth, much like the national economy,” he said. “We would all like a more rapid recovery, especially in terms of jobs, but we’re just not going to see that yet.”
On the Western Slope, Wobbekind said such places as Mesa County were late to enter the recession and have remained among the hardest hit when it comes to jobs. He said that primarily was due to factors neither the region nor the state could do anything about: a dramatic drop in natural gas prices.
According to the U.S. Energy Information Administration, the wellhead price for natural gas fell from a high of $7.96 per thousand cubic feet in 2008 to a low of $3.78 in September. This year, the price had crept up to $4.36 per thousand cubic feet during the summer only to fall to September’s low.
The number of active drilling rigs in the state in 2008 was 113, dropping to 46 last year. This year, however, it increased to 63, according to the latest drilling activities report from the Colorado Oil and Gas Conservation Commission.
During that same period, though, the number of active wells continued to increase, going from nearly 40,000 wells when the recession began in 2008 to an expected 48,400 next year, according to commission data provided to legislative budget writers Tuesday.
Wobbekind said that’s a good sign, but the region’s economy will rebound slowly because of low gas prices.
While the Western Slope is expected to see improvements in other aspects of its economy, such as in tourism and cottage industries, the region’s ability to rebound will be slow as long as natural gas prices remain low, Wobbekind said.
As a result, the region’s unemployment rate is expected to hover around 9 percent well into next year.