Colorado’s quiet economic reliance on oil and gas By EPN Staff Colorado has steadily built a public reputation for embracing the renewable energy and battery, storage and grid modernization sectors, but oil and gas have quietly remained a powerful employer and critical economic engine. The state, which ranks No. 4 in the U.S. in oil production and No. 8 in natural gas production, holds 4% of the nation’s recoverable oil reserve and almost 4% of the nation’s recoverable natural gas reserve. Those figures suggest the industry, which will shoulder a new tax starting July 1, will continue to play a major role in Colorado’s economic success. Why it matters Last year, the Colorado General Assembly passed Senate Bill 24-230, which will impose a new fee on oil and gas producers to fund public transit. The bill is expected to generate $109 million between July 1, 2025, and June 30, 2026; that total is projected to jump to $175 million the following year. That sum will represent an additional economic impact from an industry that already is a significant job and revenue driver. State and local governments receive an estimated $1 billion a year in revenue from oil and natural gas producers, according to the Colorado Oil and Gas Association. Oil and natural gas producers pay three types of taxes, including a state severance tax paid to state and local governments, local ad valorem tax paid to county and municipal governments, and a Colorado Oil and Gas Conservation Commission levy. Oil and gas production directly employs 54,420 jobs and supports roughly 303,000 jobs in related fields such as truck drivers, petroleum engineers, and manufacturers, according to the American Petroleum Institute. Jobs in the renewable energy and battery, storage and grid modernization sectors accounted for about 22,000 jobs in 2023. The bigger picture Oil and gas production generates jobs and tax revenues especially in northeast and Western Slope counties. According to the Department of Energy, Colorado produces 477,000 barrels of oil a day, most of which comes from Weld County. The state has roughly 40,000 oil and natural gas wells, of which the majority (90%) are in Weld, Yuma, Garfield, Las Animas, La Plata, and Rio Blanco counties. Colorado’s two petroleum refineries process 103,000 barrels a day into petroleum, diesel, kerosene, asphalt, and other products. Colorado uses approximately a fourth of the natural gas produced in the state and exports the rest. A majority of homeowners also use natural gas to heat their homes. More detail Most natural gas extraction occurs in the Niobrara and Denver basins in the northeastern part of the state, the Piceance, Niobrara, San Juan, and Paradox basins in the west, and the Pierre Raton basin along the New Mexico border. Crude oil comes mainly from Niobrara shale in eastern Colorado.
