Building Economic Resilience in Western Colorado’s Oil and Gas Communities

This report summarizes the second in a series of reports that seek to understand the opportunities and challenges facing US oil- and gas-producing communities as they seek to build economic resilience against an uncertain energy future. Although numerous state, federal, and international policies have emerged to support coal communities affected by a changing energy mix, far less research or policy attention has focused on oil and gas producing regions. The purpose of this report series is to understand local priorities for economic development in oil and gas communities across the US and assess how state and federal government can support those local priorities.

This report documents the perspectives of a wide range of local stakeholders interviewed by the authors during a 3-day research trip to Garfield, Mesa, and Rio Blanco County in western Colorado. During those interviews, the authors asked interviewees to describe their views about promising opportunities for economic development and diversification, whether existing federal policies supported those strategies, and what changes could improve the alignment of federal resources with local priorities for economic development.

These interviews revealed six main findings:

1. Federal and state transition policies have focused on coal communities. Although there is some geographic overlap (in Rio Blanco County), most of the oil and gas communities we visited are not directly supported by state and federal programs designed to deliver an equitable energy transition. However, these communities are likely to need state or federal support, particularly if efforts to reduce greenhouse gas emissions accelerate.
2. Economic diversification is underway in cities with access to robust transportation infrastructure, but the path towards economic resilience is less clear in remote communities that lack ready access to regional and national markets for traded goods. Most interviewees highlighted the economic potential of outdoor recreation and local entrepreneurship, but noted that replacing the tax base provided by the oil and gas industry would be a major challenge.
3. Recent federal legislation offers unprecedented resources to support investment in rural communities. However, local leaders often forgo federal funding opportunities because they are too large, complex, restrictive, and competitive.
4. Local officials are encouraged by state and federal programs that build long term capacity by supporting new staff. These programs allow local stakeholders to take on new opportunities such as larger state or federal grants.
5. A lack of affordable housing is a major impediment to greater economic resilience. High housing costs due to a combination of factors make it difficult for certain industries to attract and maintain a workforce.
6. Many interviewees believe that the state’s use of oil and gas revenues and other policies “designed for Denver” fail to support regional priorities. Local stakeholders would prefer to see more of the revenue generated by oil and gas production reinvested in the producing region (although such a strategy could further entrench dependence on fossil fuels).

These findings, in turn, lead us to several conclusions:

• New resources will likely be needed to help some communities, particularly the remote city of Rangely, which grew up alongside the Rangely oil field. These resources may include support to develop an economic diversification strategy or social safety net programs in case economic diversification strategies are not viable.
• If its oil and gas production continues to fall, much of the region will likely need support to stabilize its public finances, particularly for county governments and school districts. Workers in the oil and gas industry may also require retraining and social safety net supports while they acquire new skills.
• Whatever form policies take, federal support will be more effective if it is tailored to the capacity and needs of affected communities. This includes:
  • Providing smaller, more flexible grants (e.g., funds to hire additional staff) that can help small communities build capacity and access larger opportunities;
  • Providing concierge-type services for local governments to help them navigate federal opportunities, as Colorado is doing statewide; and
  • Reducing the complexity of applying for and managing federal grants, often a major barrier for low-capacity rural communities.
• Efforts to build a more resilient economy, whether in western Colorado or elsewhere, are unlikely to succeed without quality affordable housing options. Like elsewhere in the United States, housing costs have become an acute challenge in this region of Colorado. Although we are not housing policy experts and are not able to offer specific policy options, some type of intervention appears necessary to address this challenge.

In 2023, the United States was the world’s largest producer of oil and gas, with major production regions spanning 10 states with vastly different energy and climate policies (EIA n.d.(a)). The workers who are employed by the industry and the public revenues that are generated by oil and gas taxes contribute significantly to regional livelihoods and public services (Raimi et al. 2023). Although extensive research has documented the local impacts of the long-term decline of coal extraction and power generation (e.g., Weber 2020; Morris, Kaufman, and Doshi 2021; Blonz, Roth Tran, and Troland 2023), the effects of a long-term shift away from oil and gas has received much less attention from both researchers and policymakers.

Oil and gas production in Colorado has grown precipitously since 2010, now accounting for roughly 4 percent of the US total for both oil and natural gas (EIA n.d.(c)). This growth has occurred exclusively in the Denver-Julesburg basin northeast of Denver, while in the Piceance basin on the western slope of the Rockies, production has fallen (Shale XP n.d.). Despite this decline, the oil and gas industry remains a centerpiece of the regional economy in Northwest Colorado, particularly in Garfield, Mesa, and Rio Blanco Counties, where we focus our analysis.

In the years and decades ahead, oil- and gas-producing regions of the United States face numerous uncertainties, including the potential for ambitious climate policies designed to reduce demand for oil and gas, new technological breakthroughs, and the behavior of low-cost producers in the Middle East and elsewhere. At the same time, regional variation in production costs, access to markets, and other economic factors means that some US regions (e.g., the Permian basin) have advantages relative to higher-cost producers elsewhere in the nation. For those regions that face declining oil and gas production—whether due to policy, economic, or other factors—local residents and elected officials will naturally seek to build new economic drivers that can provide jobs, revenue for public services, and community character that for decades has been provided by the oil and gas industry.

Although state and federal efforts have begun to coordinate incentives and grant opportunities toward fossil fuel–dependent communities, this process remains in early stages and has focused predominately on coal (Clarke et al. 2024). As the energy transition unfolds, policymakers will need to consider whether and how to invest resources to ensure that oil- and gas-producing communities do not face the same type of long-term economic distress that has impacted other regions, such as Appalachian coal country or parts of the industrial Midwest (Betz et al. 2015; Autor, Dorn, and Hanson 2016).

This report seeks to understand—from a local perspective—what public policies can support economic resilience By “economic resilience,” we refer to the ability of local and regional economies to recover from negative eco-nomic shocks (Martin 2012)—in this case, from declining demand for and production of fossil fuels. in the oil- and gas-producing regions of western Colorado’s Garfield, Mesa, and Rio Blanco Counties. It is one in a series of reports that examines this issue across numerous US regions, including New Mexico (Raimi and Whitlock 2023), Central Oklahoma (forthcoming), and elsewhere. The report is based primarily on eight semi-structured interviews with a wide range of local stakeholders carried out in western Colorado in May 2024, supplemented by our analysis.

We begin with historical background on the contribution of the oil and gas industry to the regional economy of western Colorado, followed by an overview of relevant state and federal policies. We then briefly describe our methodology before turning to results.

2.1. Conventional Oil and Gas

Oil seeps were first recorded in northwestern Colorado in the late 1870s, though these discoveries did not bring immediate prospecting to the region. At this time, the region was populated by bands of Ute peoples and settler cattlemen, who followed the expansion of the Union Pacific Railroad into the territory from Wyoming around 1869 (Athearn 1976, p. ii). The migration of settlers increased tensions, as the Utes owned much of the land of northwestern Colorado under the Brunot Agreement of 1873, one of several treaties in which the tribe conceded land to the United States for mining elsewhere in the territory (Johnson and Branch 2021). By 1879, the assimilationist US Indian policy proved untenable, leading to violence and the forced removal of the Utes to reservations in Utah and Southwest Colorado. In 1882, Congress opened the Ute lands to agriculture and ranching, and cattle quickly became the largest regional industry (Athearn 1976, p. 86).

With white settlement came early experiments in oil and gas development, which were generally unsuccessful. The first gas well, drilled at Piceance Creek in 1890, ended with a burnt rig, while a second well was plugged and abandoned before it could produce commercially (Brainerd and Carpen 1962). The industry truly began roughly ten years later in the Rangely field of Rio Blanco County, though operations were limited and products marketed only in northwestern Colorado and northeastern Utah. (To this day, no pipelines cross the Rockies in Colorado, although several do in Wyoming.) From 1902, the year the first Rangely well was drilled, to the early 1920s, this lack of market access limited the expansion of the industry, but regional population growth and increased demand for petroleum soon began to attract new investments (Scamehorn 2002, p. 64).

From 1924 to 1938, there were 14 oil and 6 gas discoveries statewide, with the largest proportion of the resources found in northwestern Colorado (Brainerd and Carpen 1962). During this cycle of development, drilling was concentrated in Moffat, Routt, and Rio Blanco Counties and pipeline infrastructure built out to reach markets in Salt Lake City, UT, and Craig, CO. Additional reserves remained untapped, however, as demand in the more populous areas of the state, east of the Rockies, was met by fuels from Texas, Kansas, and New Mexico (Scamehorn 2002, p. 129). From 1941 to 1945, Colorado’s annual oil output increased from 3.3 million to 5 million barrels, largely from the Rangely oil field (Scamehorn 2002, p. 115).

Northwestern Colorado experienced an oil boom in the decade following World War II. The Rangely oil field reached peak production in 1958 at 82,000 barrels per day (Smith 2016), representing roughly half of the state’s total production (American Petroleum Institute 1959). Although operators experimented with various types of well stimulation such as water flooding and gas reinjection, Colorado’s oil output declined by approximately 20 percent through the 1960s to the early 1970s, with the Rangely field continuing to produce roughly half of the statewide total (Scamehorn, 2002, p. 116).

Figure 1 illustrates the cycles of development in Garfield, Mesa, and Rio Blanco Counties during the twentieth century. Although the energy crises of the 1970s and 1980s stimulated drilling activity, the major conventional oilfields continued to decline. This trend has generally continued through the current period, with most investments and drilling activity targeting unconventional natural gas and oil shale resources, which we discuss in the following section.

2.2. What is Oil Shale?

Confusingly, oil shale and shale oil refer to two separate kinds of hydrocarbon resources. Oil shale is a rock that contains kerogen, a substance that can be converted to oil through a chemical process called pyrolysis. Shale oil (also known as “tight oil”) refers to the petroleum “locked” in pores of shale deposits, which are typically accessed via horizontal drilling and hydraulic fracturing. Today, shale oil is produced at a large scale in the United States, while oil shale is not.

2.3. Unconventional Resources

As the conventional oil industry grew through the first half of the twentieth century, some developers began to pursue unconventional means of obtaining the resource, particularly through distillation from shale beds found at or near the surface. Both the Utes and early settlers knew of the presence of oil shale, but it would take the federal stocktaking of domestic energy supplies during the First World War to jumpstart a land rush (Hason and Limerick 2009, p. 7). Although the Piceance Basin contains immense quantities of oil shale, the high costs required to coax marketable products from the rocks has led to multiple booms and busts dating back to the Great Depression (Hason and Limerick 2009, p. 9).

Despite the failure to achieve commercial success, one important legacy of oil shale exploration is the federal government’s continued involvement in the region. By 1924, representatives from Colorado had convinced Congress that federal investment in research to extract oil from shale rock could assure a contingent fuel supply for the US Navy. The federal Bureau of Mines chose Rulison as a site for an experimental oil-shale plant due to its proximity to a large tract of shale that President Woodrow Wilson designated solely for the military (Scamehorn 2002, p. 152). Experiments at Rulison ran for four years and proved that recently developed technologies could distill viable quantities of oil from shale rock. Sixteen years later, in 1944, when war invigorated interest in boosting domestically produced liquid fuels, another experimental site established near Rulison (the Anvil Points facility) picked up where the Bureau of Mines left off. The plant was operational for roughly a decade, but—like the original site—did not result in commercial-scale production (Hason and Limerick 2009, p. 10).

In the wake of the oil crises of the 1970s, two major policy shifts revived the oil shale industry, this time attracting major corporations and the migration of a significant workforce to the region. The first policy was President Carter’s Energy Security Act of 1980, which invested billions of dollars in Union Oil’s Parachute Creek Project and Exxon-Tosco’s Colony Oil Shale Project, both in Garfield County (Andrews 2006). The second was a Supreme Court decision which validated private claims to oil shale-rich tracts the Department of Interior had disputed, contending that decades of inactivity violated the condition that leases contain minerals that are “presently marketable” (Hason and Limerick 2009, p. 14).

“Colony” was an apt term for the new projects. Exxon, Chevron, Unocal, Mobil, Tennaco, and Occidental all planned to take advantage of the recently established federal Synthetic Fuels Program to build out facilities across the Piceance basin. Exxon projected a future labor demand of 22,000 workers, the construction of an entirely new town, and a massive diversion of water from the Missouri River Basin (Hason and Limerick 2009, p. 16). Operating at scale would have required digging six of the world’s largest surface mines. In anticipation of these projects, the region underwent dramatic transformations: the population of Parachute quadrupled over three years, Grand Junction expanded the region’s airport, and building permits in Rifle increased more than tenfold (Ridgway 2023). Wages became inflated across many sectors of the local economy, leading to a further influx of workers.

The anticipated boom also led to the expansion of the regional coal industry. Colorado’s Public Utility Commission and the Colorado Ute Electric Power Association predicted a nearly 12 percent rise in electricity demand in the years following oil shale’s development (Bankr. D. Colo. 1990). After the bust, the growth in electricity sales came in 7 percent less than projected, leading to a “death spiral” into bankruptcy for the association and the worsening of a greater electricity “glut” in the western United States (Miller 1991).

In early 1981, oil prices fell sharply, and Exxon shortly withdrew from the Colony project, effectively ending the prospect of large-scale oil shale development (Andrews 2006). Locals dubbed May 2, 1982, the day of Exxon’s announcement, “Black Sunday.” From 1983 to 1985, roughly 24,000 people, about 20 percent of the population, left Garfield and Mesa Counties (U.S. Census Bureau 1983; Hason and Limerick 2009). In 1985, Congress abolished the Synthetic Fuels Corporation, abandoning the federal role in developing oil shale at large scale. However, the resources remained relevant for US energy and defense policy. Although production data are difficult to find, press reports indicate that the longest-operating plant continued to function until 1991, producing 4.6 million barrels of jet fuel for the Department of Defense from 1981 until its closure (AP 1991). In addition, Congress passed legislation in 2005 that directed the Secretary of Defense to devise a strategy for production from oil shale and other unconventional resources in the event of a future supply crunch (Andrews 2006).

Oil shale development was not the only instance of federal energy policies encouraging new kinds of fossil fuel extraction in the region. In 1957, the Atomic Energy Commission created Project Plowshare, an effort to repurpose nuclear weapons for peaceful applications. After failed early proposals to use detonations for large-scale excavation projects, the Atomic Energy Commission experimented with nuclear well stimulation (i.e., nuclear “fracking”), conducting three tests before local opposition, economic factors, and concerns over radioactive natural gas resulted in the program’s termination in 1977 (LLNL n.d.). Two of the three tests occurred in Colorado’s Piceance Basin: Project Rulison in September 1969 and Project Rio Blanco in May 1973 (Scamehorn 2002, p. 140). Today, these sites are managed and monitored by the Department of Energy’s Office of Legacy Management (US Department of Energy 2024a; 2024b).

The most commercially successful form of unconventional oil and gas development in the region has been from so-called “tight sands” such as the Williams Fork formation (the same formation targeted in Project Plowshare). Beginning in the late 1990s, and reaching a peak in 2008, developers increasingly turned to directional drilling combined with hydraulic fracturing to produce natural gas, primarily from wells in Garfield County (Figure 3). This activity had significant local economic impacts, including substantial boosts in employment and tax revenues. From 2003 to 2009, oil and gas property grew from roughly 30 percent of Garfield County’s tax base to more than 70 percent (Raimi and Newell 2016).

However, drilling peaked in 2008, followed by production several years later, as a combination of declining natural gas prices and new opportunities in shale plays such as the Haynesville and Marcellus steered drilling rigs away from western Colorado. Nonetheless, oil and gas property continues to account for more than half of the local tax base in both Garfield and Rio Blanco Counties in 2022 (DOLA 2023a). Today, the Piceance basin remains a major natural gas producer, although both oil and gas production across the region have been declining for over a decade, with relatively little drilling activity in conventional or unconventional fields (Figure 4).

The current contribution of the oil and gas industry varies considerably across counties in the Piceance basin. In Mesa County, where relatively little production occurs, the city of Grand Junction boasts a diverse array of economic drivers, led by real estate, health care, and financial services. In 2022, the mining sector accounted for just 5 percent of countywide economic output, down from 8 percent in 2017 (BEA, 2023).

The story is very different in Garfield and Rio Blanco Counties. In Garfield County, the mining sector (dominated by oil and gas) accounted for 26 percent of output in 2022, a share that has remained relatively steady over recent years, except for 2020’s Covid-19 induced shock. In Rio Blanco County, the mining sector (again dominated by oil and gas) accounted for 68 percent of output in 2022, up from 58 percent in 2017 (Figure 5).

Employment in the oil and gas industry has modestly declined in recent years, but remains substantial, particularly in Rio Blanco County, where the share of total employment has hovered around 15 percent. Like most fossil fuel–producing regions, mining employment in western Colorado has a disproportionate impact on local economies because jobs offer relatively high, family-supporting, wages. The average salary for oil and gas extraction in Rio Blanco, Mesa, and Garfield Counties was roughly $134,000 in 2023, compared to an average of $58,000 dollars across all sectors (Headwaters Economics 2024). However, not all oil and gas workers live in the communities where they work, dampening the local economic benefits of these high-paying jobs.

3.1. State Efforts to Build Economic Resilience

Colorado’s statewide economy is healthy and diverse, but several regions depend heavily on coal, oil, and gas for jobs and tax revenue. Resilience for coal communities has been a major concern for the state since Colorado established statutory greenhouse gas reduction targets in 2019. In concert with those targets, lawmakers created the Office of Just Transition (OJT, the first such office in the nation) to confront the fiscal and employment fallout of closing Colorado’s remaining coal-fired power plants (JTAC 2020). Among the actions taken by the office relevant to this report, Rio Blanco County (which neighbors coal-reliant Moffat County) has received funds to promote outdoor recreation, establish a business center, and more (OJT 2024). The OJT has also negotiated a community assistance agreement with Tri-State, a utility retiring a coal plant in Moffat County, for $70 million in aid, the transfer of water rights, and the solicitation of future bids for a natu-ral-gas power plant in the county (Jaffe 2024). State efforts to address the potential effects of a declining oil and gas sector have only recently begun, with legislation passed in 2023 that tasked Colorado’s Office of Future Work to prepare a study evaluating the skill transferability of oil and gas workers, assess retraining strategies, and identify programs and policies that could ready the workforce for new employment opportunities (Colorado General Assembly 2023a).

In the 2024 session, policymakers enacted additional legislation that makes it easier for coal communities to benefit from state enterprise zone tax credits and enhances state-led efforts to use existing rail assets in coal communities (Colorado General Assembly 2024a). The year before, legislators created a new state office to help build local government capacity (Colorado General Assembly 2023c), though this policy does not directly target coal, oil, or gas-producing regions.

One potential opportunity for economic development in the Piceance basin that state policymakers have boosted is carbon management. The region has extensive CO2 sequestration potential and could reuse existing oil and gas infrastructure for injection and storage (Heimerl et al. 2024). Recent state law (i.e., Colorado General Assembly 2023b) has made carbon management projects eligible for certain grants and directs the energy office to develop a roadmap to spur the industry in Colorado. Reflecting this focus on carbon management, the state’s primary oil and gas regulator adjusted its priorities and changed its name from the Oil and Gas Conservation Commission to the Energy and Carbon Management Commission.

3.2. Federal Efforts to Build Economic Resilience

The federal government supports economic development activities across the country through a variety of mechanisms, including grants or loans for specific projects under programs administered through various agencies, geographically targeted subsidies, and the appropriation of federal funds to state agencies. In recent years, new legislation and executive orders have steered additional resources to fossil fuel–dependent (primarily coal) communities. For example, the federal Interagency Working Group on energy communities has established rapid response teams to build connections between local officials and federal agencies to better position coal communities to take advantage of federal funding opportunities (Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization 2023). Although one such team is active in Colorado, its focus is on the broader Four Corners region, and includes only one county in southwestern Colorado.

Another relevant federal policy is the “energy community” tax credit bonus under the Inflation Reduction Act (IRA). This credit provides additional incentives for developers investing in eligible clean energy projects if those projects are located in an “energy community,” which includes most of western Colorado. Although clean manufacturing investment has tripled nationwide since the passage of the IRA to the first quarter of 2024, relatively little of this investment has flowed to the region to date (Clean Investment Monitor n.d.), and it is unclear whether these tax credits played a role in driving the small number of solar and battery storage investments that have occurred.

Finally, several project-specific grants have been awarded to the region in recent years, mostly funded by the Bipartisan Infrastructure Law (BIL) of 2021. This includes some funds, such as $25 million to fund the plugging of orphaned oil and gas wells across the state (ECMC 2023), that are specifically designed to target energy communities. Other funds, such as $157 million for transportation infrastructure, $5 million for water projects, and $1.4 million in clean energy grants, are not specific to oil and gas–dependent communities (The White House n.d.). The federal CHIPS and Science Act of 2022 spurred the creation of Colorado’s CHIPS Community Support program, which aims to disperse the state’s semiconductor supply chain through rural areas, although the extent to which this program will benefit our region of interest is uncertain (OEDIT n.d.).

In May 2024, we conducted 8 semi-structured interviews with 19 individuals representing local governments, environmental organizations, economic development practitioners, the oil and gas industry, and a clean energy nonprofit (see Appendix for the full list). All conversations were held under a modified version of the Chatham House Rule, which states that researchers may freely use the information received but may not attribute comments to individual speakers or organizations unless they give explicit consent. In-person interviews took place in Grand Junction, New Castle, Meeker, Rifle, and Rangely, along with one virtual interview.

As described in Raimi and Whitlock (2023), we framed interview questions with a sensitivity to the political salience of climate and energy issues. For example, we generally avoided terms such as “just transition,” “energy transition,” or “climate policy,” and attempted to center the concept of “economic resilience” against future oil and gas industry volatility or long-term decline, regardless of their potential causes. For each interview, we asked the following questions:

1. How important is the oil and gas industry to the local and regional economy?
2. How, if at all, are policymakers and others seeking to build local economic resilience?
3. What are some barriers that stand in the way of building local economic resilience?
4. How, if at all, has recent federal policy, such as the Infrastructure Investment and Jobs Act, the CHIPS and Science Act, or the IRA, affected the local or regional economy?
5. What policy changes at the federal level would you like to see to enable greater economic resilience?
6. Are local stakeholders able to access federal resources for projects that strengthen the regional economy?

We explained that stakeholder’s responses would be used to help federal policymakers and agency staff understand the local priorities of the region and would be part of a broader effort to identify common and regionally specific issues among US oil and gas communities across the United States. The interviews typically ranged from 45 to 90 minutes. We did not record these conversations, as we felt that doing so would discourage interviewees from speaking freely. Though each interview included the questions above, we encouraged interviewees to raise other issues that they saw as relevant to the topic of building local economic resilience. Three additional researchers participated in each interview, raising additional pertinent questions as they saw fit. As noted in our acknowledgements, these researchers were Emily Grubert (University of Notre Dame), Noah Kaufman (Columbia University), and Eleanor Krause (University of Kentucky).

In the next section, we summarize our key findings and discuss major takeaways from these interviews and our analysis. In some cases, we note recurring themes raised by our interviewees even if they may be disputed by officials at the state or federal level. We do so because they reflect the perceptions of key stakeholders, even if those perceptions may not be complete. Where relevant, we also offer our own observations in reaction to the key themes identified during interviews.

5.1. Economic diversification is underway in cities with access to robust transportation infrastructure, but remote communities face a more challenging path.

Unlike most other regions where we have worked in the past (Raimi 2018; Raimi and Whitlock 2023), most interviewees expected that future oil and gas production would continue to decline, primarily due to the maturity of regional resources and state-level policies. This perspective may be shaped in part by previous boom and bust cycles, particularly the “Black Sunday” of 1982 (Section 2), which interviewees raised in nearly every conversation.

Nonetheless, interviewees consistently described the oil and gas industry as an important provider of government revenues (particularly for county governments and school districts) We contacted county commissioners in Garfield and Rio Blanco Counties seeking interviews but did not receive replies.and a source of high-paying jobs. Although many oil and gas workers, particularly those who work in drilling and hydraulic fracturing services, live outside of the region, others working in operations and maintenance positions do live in local communities.

Even in Grand Junction, the largest and most economically diverse community we visited, oil and gas was seen as a crucial contributor to the local economy. At the same time, the city and local economic development organizations have had some success attracting other sectors, including remote workers and some small-scale manufacturing in sectors such as health technology, aerospace, and mining products.

Officials cited high quality of life, access to robust transportation infrastructure (interstate highway and rail), and a skilled workforce as key contributors to the city’s growth. In terms of future areas of growth, interviewees referenced additional manufacturing, regrowing the region’s uranium supply chain, geothermal energy development, and repurposing local gas resources to power data centers.

One common theme that was particularly acute in Rifle, Rangely, and Meeker was that transportation infrastructure limitations can make it difficult to attract alternative industries. Specifically, winter storms can shut down I-70, the region’s key transport route, potentially deterring investment. But these communities also differed across numerous dimensions. Rifle has become less exposed to oil- and gas-related booms and busts largely because it offers relatively affordable housing for workers who commute daily to Aspen (particularly those in construction trades). In Meeker, local officials viewed themselves as somewhat insulated from the oil and gas industry, in part because the city offers unique quality of life benefits and has been able to grow alternative industries in recent years. In Rangely, declines in the local oil field pose a more acute risk. Local workforce development practitioners expressed that no clear opportunities existed to replace the economic benefits of the oil industry. Expanding sectors such as tourism and recreation could provide benefits but would not fully replace the high-paying jobs and tax revenue generated by oil.

In each community, interviewees noted how individuals can have an outsized impact on development. For example, Meeker’s healthcare industry has grown substantially primarily because a single specialty doctor wanted to live in the town. In Grand Junction, an individual convinced their firm to locate a manufacturing facility in the community because they valued the quality of life in the city. The risk with this type of “homegrown” development is that it is unpredictable and would be difficult for state- or federal-level policies to effectively replicate, particularly in places that lack the natural amenities of western Colorado. Indeed, one common theme is that people want to live in places with a high quality of life. Providing this foundation of public services, access to amenities, and other factors that enhance residents’ quality of life increases the likelihood that an individual entrepreneur or business will invest in a given community (Gottlieb 1994; Drucker and Goldstein 2007; Waltert and Schläpfer 2010).

5.2. Local leaders often forgo federal funding opportunities because they are perceived to be too large, complex, restrictive, and competitive.

Most economic development practitioners agreed that most federal grants were inaccessible due to their large size and onerous management requirements. To address this issue, interviewees took varying approaches, including hiring dedicated staff to handle grants, engaging external consultants, or forgoing grant opportunities entirely.

Municipal leaders described how the restrictions that come with federal funding limit the assistance they can offer to their communities’ businesses. While oversight of federal funds is important, interviewees argued that flexible funding would be more effective to boost local capacity, support local entrepreneurs, and achieve other economic development goals. The metrics federal agencies use to evaluate projects can also create challenges. For example, grant applications submitted by Colorado Northwest Community College (located in Rangely and Craig) are designed to improve educational offerings and attract students from across Colorado and the nation. However, some of these grants are evaluated based on whether they attract new permanent residents to a region and do not account for the economic benefits provided by temporary (student) residents.

In some communities, stakeholders explained how rejection fatigue has prevented them from pursuing other federal grants and opportunities. They felt that the competitive grant process discriminates against remote places, such as Rangely or Meeker, especially when they are judged against larger, better resourced cities, like Grand Junction. Stakeholders explained how the current system of disbursing grants created competition between cities, when coordination would be more productive

for regional economic development. In addition to these technical issues with grants, a lack of “boots-on-the-ground” support from federal agencies contributed to the sentiment that some federal policies (e.g., restrictions on new oil and gas leasing on federal lands) were disrupting local economies without offering commensurate support.

5.3. Modest programs that fund new staff have been successful at building local capacity.

Despite hurdles in applying for federal funding, interviewees highlighted specific programs they felt were helpful in supporting economic diversification efforts. At the federal level, one program offered a promising model: the Capacity Building for Repurposing Energy Assets initiative, led by the Department of Energy’s Office of Fossil Energy and Carbon Management (FECM 2024b). This program, which provides funds to build local economic development capacity, may be appropriate to scale more widely across rural oil and gas communities where capacity limitations are often a challenge.

At the state level, virtually all interviewees viewed state matching programs as essential and spoke favorably of support from the Colorado Department of Local Affairs (DOLA). Specifically, stakeholders mentioned DOLA’s Regional Grant Navigators programs, which has funded 14 individuals to assist local governments and Tribes access funds from the Infrastructure Investment and Jobs Act and IRA. Interviewees stated that grant navigators have also had flexibility, and had helped their regions on other projects beyond the two major federal laws.

Interviewees stressed that programs which support new staff for a substantial tenure can have a multiplying effect—more capacity creates more opportunities. However, as we discuss in the following section, programs to hire new staff must contend with the region’s high cost of living, which has deterred public servants from taking up positions in recent years.

Another highlight was a recent grant provided by Colorado’s Attorney General’s Division of Community Engagement to establish a cybersecurity program at Colorado Northwest Community College’s Craig campus. Interviewees described how the funding opportunity supported an “organic” idea, and how there was close, boots-on-the-ground, coordination between the Attorney General’s Office and the college on how to implement the program. This process avoided impersonal applications, uncertainty, and the sense of procedural injustice that accompanies competitive funding opportunities.

5.4. Lack of affordable housing is a major impediment to greater economic resilience.

Interviewees made clear that affordable housing is a major challenge in the region, and addressing this problem is a prerequisite for local economic resilience. Across the region, interviewees reported that housing costs were deterring prospective workers and even leading to out-migration. Stakeholders blamed housing prices on several converging issues, including high construction costs and high interest rates that have deterred individuals from moving and priced out many first-time buyers. Region-specific factors also contributed: developers are much more likely to build in Aspen or Steamboat Springs, where projects are more lucrative than in smaller towns with more modest prices, creating a supply problem. Additionally, some expressed that an influx of remote workers may have also led to inflated housing prices in towns like Grand Junction and Glenwood Springs.

The situation is so severe that municipal leaders blamed the market for the shuttering of a local hospital wing after management could not attract enough workers. A business owner told another group of stakeholders that the lack of affordable housing was causing constant turnover in their workforce, impeding the growth of the business. Several teachers turned down offers because they couldn’t find a place to move their families. Collectively, housing emerged as one of the most salient issues in most interviews, indicating that housing supply is critical for any strategy for the region’s economic resilience. This dynamic reflects national trends, with metrics of housing affordability falling dramatically in western Colorado and across the nation in recent years (Federal Reserve Bank of Atlanta n.d.)

5.5. Interviewees believe that state policies fail to support regional economic development priorities.

As we have seen in other oil and gas producing communities (Raimi and Whitlock 2023), some stakeholders object to how the state uses public revenues generated by the oil and gas industry in the region. Specifically, numerous interviewees focused on a new fee on oil and gas production that they believed would primarily fund transit projects elsewhere in the state (Colorado General Assembly 2024c). Although the legislation calls for investments in “rural and urban areas throughout the state,” our interviewees believed that they would primarily benefit the Denver metropolitan region. One issue (that our interviewees did not note, but which we have observed is that investing more oil and gas revenues into the region could further entrench dependence on fossil fuels. Relatedly, several stakeholders mentioned a proposed rail line connecting Craig, a coal transition community on the Western Slope, to Steamboat Springs and Denver. Although this economic development project was not focused on their counties, interviewees interpreted it as a state strategy to support fossil fuel communities that would not replace the economic benefits of fossil fuels, largely because it would primarily support jobs in the outdoor recreation economy.

Although most stakeholders agreed that there is significant opportunity to expand the outdoor recreation economy, this sector is unlikely to replace the fiscal and employment benefits generated by oil and gas (Stiffler 2023). In 2022, the average wage in travel and tourism industries was $32,000 across Mesa, Garfield, and Rio Blanco Counties, and the outdoor recreation economy accounted for more than 15,000 jobs (Headwaters Economics 2024). As noted in Section 3, the average local wage in the oil and gas industry is $134,000. However, some interviewees stated that one benefit of jobs in travel and tourism is that they tend to be less volatile than commodity-based industries like oil and gas.

A second policy issue that stakeholders noted involved state air quality regulations. One recent law (Colorado Assembly 2024b) is designed to reduce ozone formation by reducing nitrogen dioxide emissions from oil and gas wells, and ozone has long been a burden in the Denver metropolitan region. However, the law also applies to operators on the Western Slope, which is regularly in attainment with federal ozone standards. In addition, one economic development practitioner argued that state air quality regulations in general were deterring investment more broadly because they were overly rigorous and changed frequently. However, they were not specific about which regulations had this effect, making it difficult to evaluate the veracity of the claim.

5.6. Federal and state transition efforts have focused on coal and thus had little local impact.

In general, interviewees did not perceive substantial economic benefits from the federal CHIPS and Science Act, BIL, or IRA. Impacts may not be seen because these laws are relatively new, and provisions that focus on energy communities primarily target coal. Federal spending may also flow through state agencies, obscuring federal involvement. For example, Colorado distributed federal stimulus funding through DOLA’s Innovative Affordable Housing Strategies and Strong Communities programs (DOLA 2023b). Subsidies and incentives may also be taken up by firms that do not disclose their tax credit financing to the stakeholders we interviewed.

Although our interviewees did not perceive significant benefits from recent federal laws, IRA and BIL have resulted in meaningful investments in the region. Federal data show that IRA and BIL have funded $165 million in public investments across the three counties, of which 92 percent has been highway and airport improvements (The White House n.d.). As of June 2024, roughly $100 million in private-sector low-emissions energy investments (all solar and storage) have occurred in the region (Clean Investment Monitor n.d.). For reference, the mining sector (which mostly consists of the oil and gas industry) accounted for $1.3 billion of the counties’ economic output in 2022 (BEA 2023).

Local stakeholders did note their experiences with two federal programs. First, several interviewees identified federal funding under BIL to support the state’s orphan well program (ECMC 2023). Although these federal funds will help decommission oil and gas wells in the region, some stakeholders argued that current state policies were insufficient to ensure that future decommissioning costs would fall on operators rather than taxpayers. Notably, recent state law SB24-229 (Colorado General Assembly 2024b) expands Colorado’s well-decommissioning efforts to plug marginal wells using fees on operators. It is unclear whether such fees will be sufficient to avoid future taxpayer liability. This line of reasoning extended to workforce retraining programs, which some environmental advocates believed the industry should provide directly to its workforce, rather than shift to the public sector.

Second, several regional institutions made an unsuccessful bid for a Tech Hub designation, an effort that was partially rewarded with a subsequent grant from the state government to conduct a more limited project on water infrastructure modernization. This lack of success contributed to a sentiment that rural communities are disadvantaged in competition for federal funding, a dynamic we noted in Section 5.2.

State policy discussions generally involved the OJT, which interviewees found largely unimpactful. This is not surprising because its focus is exclusively on coal-impacted communities, which have little overlap with our focus area. Nonetheless, economic development practitioners in Rio Blanco County, where the OJT is active, voiced concerns that the office was under-funded and under-staffed, rendering it unable to coordinate institutions around a “shared vision” of economic resilience.

Federal and state policies regulating the oil and gas industry had more salience with interviewees than those focused on building economic resilience in energy communities. This was true both for stakeholders concerned that these regulations would stifle oil and gas development as well as who advocated for more aggressive regulation.

Communities in Garfield, Mesa, and Rio Blanco Counties are economically reliant on the oil and gas industry, with considerable variation across cities and counties. To date, few state or federal policies have sought to build economic resilience in these communities. Our research, which is based on semi-structured interviews with a wide range of local stakeholders and our own independent analysis, suggests that making these communities more economic resilient will require a combination of new policies and changes to existing ones.

First, if demand for the oil and gas produced in the Piceance basin declines substantially in the near term, the region will likely need support to stabilize its public finances, particularly for county governments and school districts. Workers in the oil and gas industry may also require retraining and social safety net supports while they acquire new skills.

Second, new resources will likely be needed to help some communities, particularly Rangely, which was historically developed because of its proximity to the Rangely oil field. These resources may include support to develop an economic diversification strategy or social safety net programs in case economic diversification strategies are not viable.

Third, whatever form policies take, federal support will be more effective if it is tailored to the capacity and needs of affected communities. This includes providing smaller, more flexible grants (e.g., funds to hire additional staff) that can help small communities build capacity and access larger opportunities. It includes providing concierge-type services for local governments to help them navigate federal opportunities, as the State of Colorado is doing. And it includes reducing the complexity of applying for and managing federal grants, often a major barrier for low-capacity local governments.

Finally, efforts to build a more resilient economy, whether in western Colorado or elsewhere, are unlikely to succeed without quality affordable housing options. Like elsewhere in the United States, housing costs have become an acute challenge in this region of Colorado. Although we are not housing policy experts and are not able to offer specific policy options, some type of intervention appears necessary to address this challenge.