Colorado's Proposal Could Cost Californians $4.5 Billion

By Loren Faulkner | September 28, 2010

Colorado's Proposal Could Cost Californians $4.5 Billion

Colorado is considering a big cutback in drilling for natural gas and oil in the state. Governor Bill Ritter has said he is trying to strike a balance between the energy needs of consumers and protecting Colorado's landscapes, water and air, public health, and wildlife. Public input will be forthcoming, with new regulations set to be in place by this November.

The Rocky Mountain News (March 31, 2008)reported:

"The new rules spring from legislation passed last year in the wake of concerns from hunters, landowners, local governments, and environmental groups that the industry's rapid growth was damaging wildlife habitat, overwhelming public infrastructure, polluting the air, threatening water supplies and — in the view of those living in the gas fields — jeopardizing public health.

"It also said that in 2007, Colorado had 6,400 new applications for drilling permits, and some 6,850 applications so far this year.

"The oil and gas industry counters that reduced natural gas production will be expensive. A study just released by ICF International says U.S. consumers could pay some $32 billion more for natural gas next decade if the proposal to curtail oil and natural gas drilling in Colorado are put into effect. The study also concludes: '... the news is especially grim in California — (Gov.) Ritter's rules would cost consumers there $4.5 billion, the most in the nation.'"

The entire ICF study can be reviewed at

Snapshot of Construction Materials and Fuel Pricing Increases

Kenneth Simonson, chief economist for the Associated General Contractors of America, closely monitors the U.S. construction activity. His issue of DataDIGest (Vol. 8, No. 21) pointed out the unusual price jumps in construction materials and fuel, as shown below:

"Price increases continue for construction materials. ... Data DIGest readers have sent reports of immediate price increases for asphalt and aggregate; roofing products and metal wall panels, effective June 1–August 1; "a steel guardrail increase of 40% since February [and] rebar for concrete barrier jumped 23% in the last 30 days;" "a serious round of increases [for vinyl chloride resin for polyvinyl chloride (PVC) which] will impact pricing for plastic pipe, vinyl siding, vinyl flooring and vinyl window pricing." On Tuesday, the July futures price of natural gas, the feedstock for PVC, hit the highest level since December 2005, following Hurricanes Rita and Katrina. There were also multiple reports of fuel surcharges. ...

"... the Energy Information Administration (EIA) reported that the national average retail price of highway diesel fuel dipped 1.6 cents per gallon from last week to $4.71, 68% above the year-ago level. Last year, diesel prices remained between $2.80 and $3 per gallon until late September, making it likely that surcharges based on year-ago prices will stay very high for the next several months.

"The Institute for Supply Management reported...that purchasing executives with manufacturing firms reported price increases in May for these items important to construction: aluminum, copper wire, diesel fuel, freight and fuel surcharges, and steel, including stainless and, structural. Steel was one of three items reported in short supply.

"The Federal Highway Administration reported on May 23 that vehicle miles of travel fell 4.3% from March 2007 to March 2008, the largest drop since records began in 1942. The drop in gas purchases will lower gas tax receipts in federal and state highway trust fund accounts, imperiling funding for new highway construction contracts."