As Colorado and America emerge from the worst of the COVID-19 pandemic, it is imperative that communities and businesses are given every chance to roar back to vibrancy. As a small-business owner and co-founder of Small Operator Society, a coalition of more than 65 small oil and gas companies across the state, I have been confident that Colorado’s economic recovery would be driven by the oil and gas industry. It is one of the state’s leading employers and economic drivers. That’s why I was deeply disappointed to learn that Colorado’s U.S. Sen. Michael Bennet voted three times last week to stop our recovery before it can even begin.
Bennet voted three times to increase taxes on small businesses like mine. Among the provisions he voted for is the elimination of Intangible Drilling Costs (IDCs), an industry-specific tax provision that serves as an important cost-recovery mechanism. What IDCs are not, as proponents of ending them allege, is a subsidy. They are ordinary business expenses, nearly three-quarters of which are labor expenses that are immediately deductible for every other industry in Colorado and across America. Importantly, IDCs do not change how much an operator pays in taxes — only when. And their elimination could be severely damaging for an industry that just faced its most challenging year in history.
Colorado’s oil and gas industry as recently as 2018 supported more than 340,000 direct, indirect and induced jobs. On average those jobs pay seven times the minimum wage and pay 70% higher than the national average. The industry also provided more than $47 billion in economic impact to Colorado that same year — in addition to the billions of dollars it provided the state in taxes, rents and royalties, all of which fund critical social programs like public education and first responders. The entire state will face immediate hardship if Washington politicians succeed in eliminating IDCs and raising taxes on the oil and gas industry. It will cost jobs, income, and critical revenue for key social programs. And it won’t just be the oil and gas industry that will see those job losses — for every oil and gas job lost, an additional 2.5 jobs will disappear in other industries, like transportation and retail. As Colorado is America’s fifth-largest oil-producing state, we are hopeful that Bennet was unaware of these job-killing effects before he cast his vote.
Again, IDCs are not a subsidy of any kind. Much like research and development, IDCs are necessary to determine the commercial viability of natural resources. That aspect is crucial for our smaller operators who might not have unlimited resources but employ real people who depend on our industry to provide for their families. We hope that our elected representatives understand the continued importance of oil and gas to the state economy, with an emphasis on protecting small businesses along the way.
Colorado’s oil and gas industry is the lifeblood of communities across the state. Our operators work tirelessly to provide the products that everyone uses safely, responsibly and affordably. Last year was devastating for communities in every corner of Colorado as the pandemic sent demand plummeting and our rigs were laid down. Storefronts across our towns and cities shuttered, many for good. But for those still hanging on, and for those forced to start over, our focus should be on recovery.
We are in it together as Colorado’s economy works to rebuild what has been lost over the past year, and we have every chance to come back stronger than ever. But none of that can happen if the government steps in to pick winners and losers. We’re hopeful that Bennet reconsiders his decision to support ending IDCs, and encourage our fellow Coloradans to urge him to do the same.
Sam Bradley is co-founder of Small Operator Society, a coalition of more than 65 small oil and gas companies that currently operate more than 15,000 active wells across Colorado.