Gushing fruits: surging oil and gas production has far-reaching economic impact.

• Author: Buchsbaum, Lee
• Position: ENERGY

The marriage of multi-stage hydraulic fracturing and horizontal drilling techniques has unleashed a veritable gusher of oil and natural gas in Colorado. With more than 51,000 wells, the state ranked fifth in the nation for gas and ninth for oil production in 2011. Last year, Colorado's producers set records as they extracted almost 50 million barrels of crude and 1.7 million cubic feet of natural gas from the state's rich oilfields.

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Historically a significant part of Colorado's economy. the industry today provides substantial economic benefits throughout the state due to its integrated supply chain, high-paying jobs--often in otherwise agriculturally dependent rural areas--and its national and global reach. According to an influential economic study conducted by the University of Colorado Leeds School of Business, in 2012 Colorado's oil and gas industry recorded $29.6 billion in production value, accounting for some 29300 direct drilling, extraction and support jobs with average annual wages in excess of $101,000. Combined with the oil and gas supply chain transportation, trucking, refining, wholesalers, parts manufacturers and gasoline stations--direct employment totaled more than 51,200 jobs. Total industry employment, a number derived from direct, indirect and induced figures, was estimated at 111,476 in 2012. Core oil and gas jobs and related employment accounted for about 1.9 percent of total state employment in 2012, surpassing the 2008 peak. These jobs pay almost 50 percent more than the state average for all other industries. Collectively the industry contributed slightly more than $3.8 billion in employee income to Colorado households in 2012, or 2.8 percent of total Colorado salary and wages.

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One of the most profitable industries on the planet, oil and gas is also subject to taxes and assessments often beyond what other industries contribute. Severance taxes (based on how much oil and gas is extracted) paid by the industry totaled S163 million in 2012. The industry's severance taxes, public leases, public royalties and property taxes contributed substantially to state and local revenues in 2012--totaling nearly $1.6 billion. Last year, the state received almost $80.7 million in state lease revenue from oil and gas--a record high. Combined, "oil and gas contributed over 8 percent of the general fund," said Tisha Schuller, president and CEO of the Colorado Oil and...