Citizens should understand cost/benefit of oil/gas
By Natasha Léger
Published Thursday, August 17, 2017 9:24 am
The public is being asked to absorb the environmental and public health risks associated with oil and gas development, based on promised economic benefits. Unfortunately, Delta County, like many other counties, supports oil and gas projects without conducting a cost-benefit analysis, and most importantly without a public debate on perceived costs and benefits. This type of analysis should be conducted openly and transparently at the county level, so that the public can trust the decision-making process and trust that our elected officials have exercised proper due diligence in assessing industrial projects that will have long-term economic, environmental, and public health impacts.
Citizens for a Healthy Community (CHC) kickstarted this much needed process with its recent report, Economic Impact of Oil and Gas Development on Delta County. The Western Slope Colorado Oil and Gas Association (WSCOGA) wasted no time in firing off a 10-page letter to the county commissioners criticizing the report. WSCOGA did not disagree with CHC's basic findings, but instead implied that Delta County would receive millions of dollars in severance tax and federal mineral leasing royalty benefits that CHC did not account for.
Delta County collected $112,000 in 2016 from oil- and gas-related activities in the county, including severance tax, property tax on production of 1.4 million mcf (one thousand cubic feet) of natural gas, pipelines and oil and gas equipment and facilities. How can WSCOGA imply millions of dollars of direct revenues when the portion of the NFMMDP within Delta County could generate as much as $158,100 in federal mineral royalties and as much as $118,259 in state severance tax, but,
• Only 15 percent of severance tax collected is directly distributed to the county of origin (less than $18,000 per year).
• Less than 10 percent of federal mineral royalties collected are directly distributed to the county of origin (less than $16,000 per year).
• Only about 1 percent of federal mineral leasing royalties collected (under $1,400 per year) are directly distributed to the Delta County School District.
WSCOGA accused CHC of cherry picking the oil and gas revenue sources addressed in the report to the disadvantage of the industry. However, the CHC report over-compensated for the complexity of severance tax distributions. Adjusting the revenue findings for that over-compensation, along with the minor contributions stated above, WSCOGA's criticisms reveal that CHC's NFMMDP revenue estimate would decrease by $24,580.
Just as our community is being asked to absorb environmental and public health risks based on the promise of economic benefits, the public is being asked to believe those economic benefits are guaranteed, when only a few people truly understand the actual processes behind these collections and distributions.
Irrespective of your position on energy development and natural gas production, the public deserves to know the real costs and benefits of proposed industrial projects, not just what the industry wants us to believe.
Interim Executive Director
Citizens for a Healthy Community