DENVER -- As oil prices plunge, the impact is weighing on global markets and businesses in Colorado.
"It’s definitely a bloodbath in Colorado and across the west as companies are having to shed workers and scale back production," said Kathleen Sgamma, President for the Western Energy Alliance.
Sgamma said with storage capacity for oil running short, producers are left with no choice but to shut in wells and layoff workers. The pandemic is also leading to a decrease in demand for oil.
"It will take time before the world economy recovers, and with it, that demand for oil. It’s going to be several months before we really see an uptick in certainly production or prices," said Sgamma.
The wells on Jordan Hungenberg's farm have already been shut in, meaning he will no longer receive royalty checks. Instead, Hungenberg is expecting much smaller checks to hold his current leases until production can resume.
"When you’re getting revenue from oil and gas, it provides some stability for you during those hard times. So this year we’re going to have to be a little careful, tighten the belt up a little bit and be careful what we spend money on," said Hungenberg.
The oil and gas industry employs tens of thousands of Coloradans and generates about a billion dollars in revenue for the state.
"So I think it will be a while before we really start to see some numbers and specifics around the impacts this is going to have but those tax revenues go to support schools and emergency services and local jurisdictions and so it’s going to have an impact and it’s going to be a long road to recovery," said Lynn Granger, Executive Director for the American Petroleum Institute's Colorado chapter.
