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Nathan Perry, PhD, releases unique regional economic contribution study

Researcher produces detailed model of employment effects on energy production in Colorado’s Piceance Basin

Grand Junction, CO — Colorado Mesa University Professor of Economics Nathan Perry, PhD, released a two-part study that analyzes relationship between rigs, natural gas prices and employment in the Piceance Basin, and in the second part creates an economic impact model designed to measure the regional contribution of the oil and gas industry. 

The study confirmed that for each change in rig count, employment changes by 208 jobs in the five county region of Mesa, Garfield, Rio Blanco, Delta and Moffat. 

Perry was able to use the approach to measure county-level effects. Mesa County experiences a high-side effect of 122 jobs per rig while Delta experiences job effect of just 15 per rig. Garfield County gains per rig were measured at 70, with Moffat County and Rio Blanco County at 15 and 16 respectively.   

“There is volatility in this sector, and the hope is the study provides local governments and businesses a planning tool to forecast for themselves based on rig counts and prices,” said Perry. 

The study also determined a similar metric for measuring job gains and losses around the price of natural gas. Perry revealed that for every $1.00 change in price, as measured by the Rocky Mountain Opal Hub, employment changed by 1,183 jobs. 

“In the case of natural gas prices, the biggest beneficiary is Garfield county whereas when it comes to rig counts Mesa County gains or loses the most," said Perry.

Perry declined to speculate on the inter-county variation but noted the dynamic warrants additional inquiry. 

The study also uses an economic contribution model to determine how the industry impacts other economic sectors. The total jobs supported by the industry was determined to be 10,959 or approximately 6.6 percent of total regional jobs. Representing just under 7 percent of total jobs the industry represents between nine and ten percent of the economies total GDP. The study identified direct industry effects, supply chain effects, and employment resulting from spending from the industry. Hospitals employ 156 jobs resulting from the energy industry while real-estate, restaurants and physicians employ 335, 570 and 96 jobs respectively. 

The study quantifies the economic contribution total in several categories including employment, labor income, regional GDP and total economic output. 

A full version of the report is available here.

 

Nathan Perry, Ph, offers quarterly economic impact reports for Mesa, Delta and Montrose counties available below.

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Written by David Ludlam