If you were in Colorado in the mid-80s, you probably remember what was going on back then because of the low gas prices. There was a severe recession in the state as the oil prices went too low. The offices in downtown were getting empty, and the people were struggling with their savings and loans. It made thousands leave Colorado and look for better career chances somewhere else. It took the state’s economy a lot of time to recover from the recession.
Today there is a risk of repeating the same situation in Colorado. Although, the petroleum is not that essential for the economy as it was in the 80s, but still, energy is 11% of Colorado GDP. It is really important for the economic success of the state.
How Are Oil Prices Doing Now?
With the oil prices going under $30 there is a risk of going back to the depressed levels of the 80s, although to get to the same low point they must drop down to $22 per barrel. Some of the major drillers in Colorado revised their expenses and concentrated on more certain plays near Denver. But if the prices won’t go higher, some companies might have to close their wells and let the employees go. Additional cutbacks in the agriculture, mining sectors and energy are also expected, according to the experts.
On the other hand, the state’s economy is much more diverse than it used to be in the 80s. And the energy consumers will see some great savings because of the current situation.
Still, whatever Colorado can gain from the oil prices dropping so low (to compare, in June 2014 it was $104 per barrel), it will lose much more. The majority of wells are now working not making any money; many of them are operating at a loss. The future of the situation depends of how the major energy companies will cope with the price drop.