With five municipalities and Boulder County in Colorado voting to ban hydraulic fracturing, the Leeds School of Business at the University of Colorado – Boulder studied the economic effects of a statewide hydraulic fracturing ban.The research was conducted on behalf of several local economic-development companies, including the Metro Denver Economic Development Corporation, who wanted to show the worst-case scenario so the public would understand the size of the oil and gas industry in Colorado.

According to the report, which assumes a 95% reduction in drilling activities, the economic consequences of a ban beginning in 2015 would be an average $8 billion in lower gross domestic product and 68,000 fewer jobs in the first five years.

Over a longer time span (2015-2040), it would be an average of $12 billion lower gross domestic and 93,000 fewer jobs. The depletion in production would leave Colorado with an average direct revenue reduction of $567 million over the first five years, declining $985 million by 2040.

The ripple effect of reduced household spending would negatively impact all levels of the supply-chain, including retail stores, construction, educational services and health care.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright’s Energy Practice Group.