History repeating: oil downturn arouses concerns, but few '80s comparisons so far.

• Author: Best, Allen
• Position: ENERGY OUTLOOK

As Yogi Berra said, it's deja vu all over again. Prices for oil and gas have plummeted. Drilling in the Denver-Julesburg Basin has been halved. Layoffs in Colorado's energy sector have occurred almost weekly. Can massive office vacancies in downtown Denver be far off?

It happened before, when Colorado's energy economy tanked in the early 1980s. The vacancy rate in downtown Denver's overbuilt office towers rose to 31 percent in 1986. Recovery took years.

But it's not deja vu, say many economic analysts and business executives in Colorado. Metropolitan Denver, in particular, has a much more diversified economy far less dependent on oil and gas production, but with emerging bio-pharmaceuticals and clean tech sectors. Metro Denver has also become more attractive to companies as a place for headquarters. It has become a national, not just a regional, city.

Too, the circumstances of this energy downturn are very different than those of the 1980s. Denver in the 1970s and early 1980s was a time of rapid economic expansion. More than 50 million square feet of office space were built in downtown Denver during that time, tripling the existing supply, according to "A Brief Economic History of Colorado," by Wilson D. Kendall.

The energy boom fueled the ascent. Reduced oil imports from the Middle East in 1973 and 1979 caused the price of oil to spike to near $40 per barrel in early 1980, the equivalent of $115 today. Oil executives were flying from Denver to oversee operations in Wyoming, Montana and North Dakota. Phil Anschutz was maneuvering his ranch over the Overthrust Belt on the Utah-Wyoming border into the wealth that would allow him to later invest in real estate, sports franchises and the Union Pacific railroad.

Then, in 1982, as the nation entered a recession, the sharpest economic downturn since World War II, oil prices began plummeting. They eventually reached less than $10 a barrel. From early 1982 to late 1983, drilling rigs active in the Rocky Mountain region fell from more than 600 to about 200, points out Kendall in his 2002 paper commissioned by the state demographer's office. Even more dramatic was the collapse of the oil shale industry in northwest Colorado. On a Sunday in May 1982, Exxon, the largest of the oil shale companies, announced it was cutting its losses and leaving. Others eventually followed. On the Western Slope, 30,000 jobs disappeared in just a few years.

Hard-rock mining very nearly disappeared, too. In the 1970s, the Climax Mine near Leadville was the second largest consumer of electricity in Colorado, behind only the steel mill in Pueblo, and employed...