West Slope struggling with ‘clash of economies’
September 23, 2008
GLENWOOD SPRINGS ” At a time when many parts of the country are struggling with soaring unemployment, plummeting real estate values and an onslaught of property foreclosures, western Colorado’s economy sticks out as an oddball.
There are plenty of problems in the Roaring Fork Valley and lower Colorado River Valley; they are just the opposite of those in the rest of the country.
There is a shortage of workers rather than jobs. Home prices remain out of reach for most workers, even if values have temporarily hit a plateau.
Western Colorado’s economy is fueled by the oil and gas boom. Garfield County is a hotbed of drilling for natural gas, with 2,550 permits issued for gas wells last year, up 38 percent from 2006.
The upper Roaring Fork Valley remains an economic engine whose fires are stoked by recreation as well as construction and residency of second homes.
There is an irony at work, said Colin Laird, executive director of Healthy Mountain Communities, a nonprofit organization focused on collaborative approaches to solving regional problems. There is a national appetite for oil and natural gas at the same time there is a national appetite among retiring Baby Boomers for second homes in desirable resort areas.
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“They both are hitting us at the same time,” he said.
The region remains prosperous, even as much of the rest of the country suffers a general economic malaise. “We’re sort of insulated in a way,” Laird said.
But that two-headed economy also creates problems. The gas boom this decade has created hundreds of relatively high-paying jobs. Consequently, the resort sector struggles to find enough workers to load chairlifts, clean toilets and serve food.
Towns like New Castle, Silt and Rifle provided affordable housing for workers willing to commute to good-paying jobs in Aspen and Snowmass Village. Now those residents are sticking closer to home for jobs that often pay as well or better.
And the high demand for housing for workers heading both directions has evaporated the last remaining affordable options.
Call it a “clash of economies,” said Ben Alexander, associate director of Headwaters Economics, an independent, nonprofit research group that strives to improve community development and land management decisions in the West.
It’s not just the energy economy battling the resort economy, he said. High-paying jobs in the gas patch not only make it tough for employers in Aspen to find enough workers, it also makes it tough to find everything from carpenters to retail clerks in towns like Rifle.
“Every industry is competing against every other industry,” said Alexander.
Healthy Mountain Communities is hosting a symposium Friday, Oct. 24, in Glenwood Springs to explore the economic dynamics of western Colorado. The sixth annual State of the Valley Symposium is called “Economic Clashes and Regional Prosperity.”
Alexander will be one of the keynote speakers. Headwaters Economics has done extensive research into how energy development is changing the economy of the West. Garfield and Pitkin counties combine to make a fascinating case study, he said.
There are a number of possible scenarios that could evolve in the next few years to affect the regional economy, Alexander said. One could be a cooling of the gas industry, which he said is “really ripping” right now. National demand for natural gas is flat at a time when the U.S. supply is up significantly.
“We’ve got more than we can use right now, and we’ve developed more than we can use right now,” Alexander said.
Randy Udall, a Carbondale energy expert, said extraction techniques developed in Colorado and Texas are being applied to shale gas fields in Oklahoma, Louisiana, New York and Pennsylvania “with surprisingly positive results.”
It could result in lower natural gas prices and reduced drilling pressure in the Rockies, Udall said.
If that’s the case, gas companies may sit on more leases and develop them over a greater amount of time, Alexander said. Western Colorado would evolve more into maintenance and monitoring rather than drilling, and that would require less labor and potentially ease the shortage.
Another scenario, Alexander said, is development of more demand for natural gas. The use of coal at power-production plants is under fire because of its high release of greenhouse gases. Pressure may grow to use cleaner-burning natural gas, ensuring continued heavy exploration and drilling in places like the Piceance Basin, which includes western Garfield County.
A third possible scenario foreseen by Alexander is continued clashing between the economic drivers, prolonging competition for labor. If that happens, the resort economy of the upper Roaring Fork Valley and the economic sectors in Garfield County must adjust wages to compete with gas companies.
Headwaters Economics analysts were surprised to find there hasn’t been greater wage adjustment already, Alexander said. Average wages are only up in a few sectors of the economy, but not across the board. Meanwhile, soaring housing costs and general cost-of-living expenses have made it even tougher for workers who didn’t see their wages increase, Alexander said.
“I think there has to be more wage inflation,” he said.
In the bigger picture, Alexander wants to use next month’s symposium to help local decision-makers ponder how the two economic drivers can coexist and “how to foster and sustain economic diversity in the region.”
In addition to Alexander, the event will feature speakers Jim Westkott, a senior demographer with the Colorado Department of Local Affairs, and state Treasurer Cary Kennedy.
The cost to attend the 2008 State of the Valley Symposium is $75 and includes lunch and materials. It will be held from 8:30 a.m. to 4 p.m. at the Hotel Colorado in Glenwood Springs. Last year’s event attracted about 175 people, Laird said.
To learn more information or to register and pay online, go to http://www.hmcnews.org/sov2008.htm.