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Outdoors

Are Colorado’s oil and gas and recreation industries all that different? Economists say no — and we need to protect them both

Both industries have impacts on land and rural communities, but “we can coexist” in pursuit of economic diversity, say promoters of recreation and energy

Scott Winans, head of the Colorado Plateau Mountain Bike Association rides down a recently constructed portion of the Plunge Trail on the west side of the Grand Mesa Plateau southeast of Grand Junction.
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When the mines closed and the railroad left town in the 1980s, “pretty much everyone in Salida was unemployed,” Mayor P.T. Wood remembers. And when the West Slope oil and gas industry took a nosedive in 2014, sales tax revenue in Fruita plummeted 90%.

Both communities have filled at least part of the void left by the West’s traditional mining and drilling industries with recreation-based economies – anchored by kayaking and rafting in Salida, which sits along the Arkansas River, and by mountain biking in Fruita, with its miles of desert trails.

The story, however, isn’t a simple one, as economists and municipal officials caution that one can’t simply replace a drill rig with a mountain bike and that each of these economic sectors comes with strengths and weaknesses. 

Each, in its own way, also takes a toll on the land.

The extractive industries provide high-paying jobs but are vulnerable to boom-and-bust cycles. Tourism is sustained by seasonal and often low-paying jobs, as well as waves of travelers bringing traffic congestion to small towns.

“We look at recreation and oil and gas in a similar light,” said Mark Haggerty, an economist at Headwaters Economics, a Bozeman, Montana-based, non-profit research group focused on Western issues.

“We don’t see the ephemeral oil and gas jobs during booms or the seasonal and part-time recreation jobs as an end in themselves,” Haggerty said. “It isn’t a competition between the two. … The question is: If we have an opportunity in oil and gas or recreation, how can we leverage for a more diversified economy?”

“I’ve been here at Ross Reels [in Montrose] for 12 years and I’ve changed around jobs a lot. Right now I’m on reel assembly and I’m making nippers. No one taught me how to sharpen or create these, I learned by myself,” explained Kevin Morris, as he sharpened tiny blades to be used to cut fishing line. (Nina Riggio, Special to The Colorado Sun)

Amy Roberts, executive director of the Outdoor Industry Association, the industry’s main trade group, concurred. “You can create a travel and tourism economy around recreation and then think about what else you can bring in,” she said.

It’s not an either-or choice between drilling and recreation. On this, Roberts and Kathleen Sgamma, president of the Western Energy Alliance, can agree. 

“We can coexist,” said Sgamma, who represents an oil and gas industry trade group. “All jobs are valuable and needed. All economic development is great.”

Energy and outdoor industry make imprint on the economy

In Colorado, each industry has worked hard to show its economic bona fides and value to the state.

The Boulder-based OIA estimates the direct jobs for the recreation sector in Colorado at 227,000, with $9.7 billion in wages and $29 billion in consumer spending.

A study done for the Colorado Oil and Gas Association estimated the sector’s employment at more than 30,000 in the field with a total of 89,000 industry-related jobs. The Leeds School of Business at the University of Colorado put the industry’s overall impact on the state at $32 billion.

While the recreation industry may boast of many more jobs than oil and gas, there is a sharp disparity in pay between the sectors, according to Data USA, a collaboration between the Massachusetts Institute of Technology and the financial consulting firm, Deloitte.

The median service sector job earnings in Summit County, home to major ski resorts, was $22,235 in 2017, with service and recreation jobs accounting for 27% of employment, according to federal data analyzed by Data USA.

In Rio Blanco County, in northwest Colorado, drilling, mining and quarrying were the largest employers, more than 17% of the jobs, with average earnings of $69,286 in 2017.

The town of Fruita is reinventing its economy with small businesses riding the wake of the region’s reputation for excellent access to world-class mountain biking. (William Woody, Special to The Colorado Sun)

In Fruita, outdoor industry’s impact brings pros and cons

Still, when those highly paid drilling and mine jobs vanish as they did in 2014 in Fruita, so does their economic support to the local economy.

“Fruita has a large energy industry that has ebbed and flowed over the years,” said Mike Bennett, the city manager. “There were really good years and not so good years.”

One of those not-so-good stretches ran from 2014 to 2016 as the energy industry sharply contracted and the city’s sales tax did the same.

What buttressed Fruita was small-business activity, much of it tied to the city’s reputation as a premier mountain-biking destination and home of the annual Fat Tire Festival. Munchies Pizza and Deli has expanded, mountain-bike shop Over the Edge Sports invested in a second building, and Hot Tomato Pizza, opened by two mountain bikers, added Bestslope Coffee.

“Businesses are beginning to reinvest,” Bennett said. “It is exciting for the community to see that kind of growth.”

The city has also made its own investments, such as a bike track linking it to the 142-mile Kokopelli Trail, which runs all the way to Moab, Utah.

In the past few years, sales-tax revenues have been increasing 7% to 12% a year without oil and gas activity, Bennett said. Much of that growth is tied to mountain biking. “We appreciate visitors. We wouldn’t have half the business we have if people weren’t visiting,” he said.

Nevertheless, growth is presenting its own challenges. The city population has doubled in the past 20 years to 13,400. Schools have become crowded. (A new elementary school is opening, and the high school is being expanded).

“We are starting to see rising house prices,” Bennett said. “It’s not like the resort towns. It’s not a problem yet, but it’s definitely on the community’s mind. … One of the efforts the city is focused on is how to we attract complementary business that would allow people to live and work here.”

An oil-field equipment manufacturer is expanding a plant in town, and the local hospital, Family Health West, has also been growing. Still, Bennet said, “it can be a challenge for some of the workers in recreation and service businesses to find housing.”

Fruita’s big recreational draw is federal public lands, which make up 73% of Mesa County. These include the granite and sandstone cliffs of Colorado National Monument, Ruby Horsethief Canyon, a popular campground along the Colorado River and miles of trails on federal Bureau of Land Management property. “It’s a positive thing for all the recreation possibilities they provide,” Bennett said.

Rangely looks to a post-extraction future

Even in Rio Blanco County, where the federal government holds 85% of the land and drilling and mining are major economic engines, the town of Rangely, with a population of not quite 2,400, is aiming to turn itself into a tire-sport getaway for off-road vehicles with the help of the state’s Outdoor Recreation Industry Office.

Nathan Fey, director of the state outdoor recreation industry office, explained that Rangely “has historically been dependent on the natural resource extraction industry for economic vitality. This industry has seen a steady decline in the past several years, creating uncertainty for the future of the Rangely community.”

Access to federal land also is crucial to the oil and gas industry in Western Colorado. “In the West, due to checkerboard (land ownership), you almost can’t operate without touching on the federal mineral estate,” Sgamma said.

Conservationists have voiced concern over the impacts of oil and gas operations on wildlife, climate and air quality. A University of Wyoming study found oil and gas activity adversely affects mule deer foraging, and an analysis by Western EcoSystems Technology for environmental groups calculated that oil and gas leasing is covering almost two-thirds of the habitat of the “near threatened” greater sage-grouse.

Sgamma said that with the advent of horizontal drilling, the industry has been able to reduce its footprint by 70% by clustering activity, and it has been able to cut methane emissions by 14% even as natural gas production has increased 50%. As for the sage grouse, she said leases come with restrictions on operations to accommodate the bird.

Acreage leased by the oil and gas industry in the West has dropped to 25.5 million acres, down from 37.4 million in 2009, less than one-tenth of 1% of federal lands, Sgamma said.

While the impact of drilling on mule deer or sage grouse may be a concern to conservationists, it is less of a worry for the recreation industry.

“I don’t see an ‘us versus them,’” Roberts said. “There will be some conflicts on specific sites and on climate change. We would like to see the industry transitioning to other forms of energy, but that doesn’t mean there aren’t opportunities to work together.”

And when it comes to ecosystem impacts, the recreation industry doesn’t get a free pass, either.

A review of studies on recreation activities and ecosystems around the world found a range of impacts, with hiking and snow sports having the most pronounced effects, according to Courtney Larson, a scientist with The Nature Conservancy, who did the review while at Colorado State University.

“It is surprising, and it makes a pretty clear case that recreation is a land use, and that, if humans use land and if it is done in unsustainable ways, it will have impacts,” Lawson said. “The impacts are not usually visible.”

For example, the elk herd near Vail has dropped from 1,000 animals to 53 last year in the same period that trail in the area use has doubled. A Colorado State University researcher who studied the herd since the 1980s blames human intrusion, which includes hikers and backcountry skiers accessing area trails at all times of the day and night throughout the year.

Rafters paddle through rapids on the Arkansas River in Big Horn Sheep Canyon near Cotopaxi, Colorado on June 12, 2019. (Mike Sweeney, Special to The Colorado Sun)

Tourism can replace some extractive industry jobs

Tourism was a lifeline for Salida, said Wood, who arrived in the late ’80s to become a river guide. “The Madonna Mine on Monarch Pass was closing down,” Wood said. “The railroad was pulling out. The Climax Mine was cutting back. Tourism was just kind of getting going. It was a shifting economy.”

“Suddenly everybody in town was unemployed, and most of the stores on Main Street were empty,” Wood added.

But the river and nearby mountain trails increasingly drew visitors, and with them, those empty storefronts were filled with restaurants and galleries, as well as new people moving into the city. The challenge now is to move beyond the river and trails, Wood said.

One big boost was the Heart of the Rockies Regional Medical Center locating in town in 2008. The hospital had operating revenues of more than $77 million in 2018. “It’s become a huge piece of the economy,” Wood said.

Another element is what Wood called “micro-manufacturing,” including his own Wood’s High Mountain Distillery and Oveja Negra, which makes bike bags and backpacks. “We are continuing to expand the diversity,” Wood said. “We all remember vividly when there was one big, single employer and what happened.”

To be sure, not every rural community can opt for a recreation economy. “The recreation opportunity is not evenly shared across the state,” Haggerty said “To develop a really recreation economy around a national park or a ski area is limited to a number of counties.”

But tourism is only one part of the recreation industry, said Roberts at OIA. Apparel, gear and equipment companies — from Oveja Negra’s sewing shop in Salida to international manufacturers like Patagonia Outdoor Clothing and Gear — make up a large part of the sector.

“When you are working for one of the companies, it is like working for any other company” with better pay and more certain hours, Roberts said.

Grand Junction, for example, is home to ski-lift maker Leitner-Poma and Bonsai Design – a designer, builder and operator of ziplines, challenge courses and other outdoor adventure installations. Montrose is home base for Mayfly Outdoors, a maker of fly-fishing reels whose owners are developing a 150-acre campus for outdoor businesses.

“We are not trying to pivot from an extraction-based economy to a tourism-based economy,” said Sarah Shrader, owner of Bonsai Design. “We want a full recreation-based economy.”

“We know oil and gas will come back, and that’s OK,” Shrader said. “The Western Slope has just embraced that we need a more sustainable economy.”

The federal tax overhaul in 2017 defined Montrose as an Opportunity Zone, opening the door for investment in projects such as the Colorado Outdoors 164-acre mixed-use development on the banks of the Uncompahgre River in Montrose. (Nina Riggio, Special to The Colorado Sun)
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