Rural Colorado Economic Status - Mid 2009

[BayAreaHillbilly]

Can you say, double dip?

[Idunn]

The mention of Peak Oil got my interest. It will have a lot to do with what transpires in Colorado and the inter-mountain west in the next few decades. To put it bluntly, Peak Oil is as real as a heart attack and we are within it right now. It will only be in retrospect, in a few years, no more than a decade, that hindsight will prove 20/20 in establishing an exact date. But all relevant data that Dr. M. King Hubbert correlated decades ago suggests we are very near the crest presently.

What that means is that all known oil reserves have been half depleted by mankind, with oil on the downside of this curve increasingly dear and expensive, to extract and in cost. There is a wealth of information detailing this statistical reality, but I've included references below that should prove eye-openning to those not apprised. But don't just believe a movie, do a little research.

The implications for Colorado will be many and varied. Foe one thing, the notion that this state's population will double from roughly 5 million today to 10 million in 2050 is certainly fantasy. All else being equal, it might. But the majority of what exists presently in Colorado by way of civilization and population is hugely dependent upon relatively cheap energy. And that means oil. From agriculture, to transportation, to water supplies, electricity, you name it, we are dependent upon a finite resource whose value is not appreciated, whose price has been held artificially low, and which will not remain this way. Quite simply the State of Colorado will be dramatically different in the coming decades, in economy, in housing, population, everything, due this one factor.

There is no point arguing with facts. More than a few have no notion of this impending dilemma or, if so, wish to acknowledge it. No matter. A good many politicians are on their side, with this nation and a good many others studiously intent on increasing extraction rates and continuing business-as-usual. This is entirely possible and likely in the short term. What will result is a plateauing and even slight increase in oil supply, with the eventual decrease thus all the more precipitous. What cannot be worked around is the amount of oil in the ground. Even as there are occasional new discoveries, they pale in comparison to the size of those found many decades ago. I've heard the date as late as the early 80's, but the actual date of peak confirmed reserves was probably 1962. The bell curve of what can be extracted from proven reserves only follows by several decades, as it did in the US in 1971, and has in already has in a large number of other nations to date.

Were I considering the economy of Colorado and myself, a significant part of that equation would be what it would take to power it and the true cost. Tar sand extraction of oil in Alberta, Canada is doing a huge amount of environmental harm. It is also not terribly cost effective. Oil shale on the west slope of Colorado resides in the same leaky boat and, as with Canada, has considerations of how much water is available to allow it. This even more of a consideration here, with absolute restrictions on what is available. Not to mention that the very climate the use of such fossil fuels is ruining also results in less and less of the water they need to do so.

If you don't believe me, look beyond one's favorite pundit (likely biased and wrong) to facts as they are. If unduly sobering, a good stiff drink afterwards might help.

DATA

1) 'A Crude Awakening: The Oil Crash,' 2006*
2) 'Crude Impact,' 2006*

*Both these documentary films are available from iTunes, and elsewhere.

3) University of Colorado professor, Dr. Albert Bartlett


YouTube - The Most IMPORTANT Video You'll Ever See (part 1 of 8)

ps. I particularly like the story (true) of how some passengers on the Titanic refused to bother with lifeboats, dismissing the entreaties of those within them by pointing to the printed brochure of the Star Line that the ship was "unsinkable."

[proveick]

Back to the topic of rural colorado economic status, Salida lost one of it's two furniture stores, a Gambles hardware store this week and 3 restaurants so far this year. A buddy of mine closed is restaurant in BV in Sept. Starting to look like a ghost town. Kind of a slow and painful death. RP

[brightdoglover]

I ate at a restaurant in Salida in July (the Twisted Cork?) and it seemed kind of upscale, and I wondered about its future. Very pretty place.

[jazzlover]

There is a wire service article today about the 10 states in severe fiscal crisis (the version from the Christian Science Monitor is here: Pew report: nine states join California in facing fiscal crisis | csmonitor.com ) While Colorado is not yet on this "10 worst" list, it has plenty to worry about, and will likely join the group soon. Why? Because the same factors denoted in the article that are likely contributors to sending a state to the fiscal dustbin are alive and well in Colorado. To quote the article's list of problem areas:

• Unbalanced economies. States that depend on a particular industry or two, such as automobiles or home construction, can be at greater risk in recession.

• Budgets out of kilter. The recession puts almost all states in a bind, but California, Illinois, Michigan, New Jersey, Rhode Island, and Wisconsin have a history of persistent shortfalls, the study said.

• Limited ability to act. In Arizona, California, Florida, Nevada and Oregon, the ability to raise taxes or cut spending is limited by their state constitutions, ballot measures passed by voters, or other legal impediments, the Pew researchers found.


• Putting off decisions. The study said that lawmakers “punted” responsibility in California, Illinois, and New Jersey. They passed responsibility to state voters or governors to make tough calls, or used borrowing or accounting methods to put off tough budget decisions.

Missing from the list is another factor that should be a cause of real concern for Coloradans. If one removes from the list the one-industry Rust Belt states like Michigan and some pretty business-unfriendly states like New Jersey, what is left are states that ALL had or have explosive population growth rates. Maybe now somebody will figure out that real estate bubbles and out-of-control population growth don't really promote prosperity, but actually cause just the opposite.

Now, a fiscal crisis in state government severely impacts all areas of Colorado, but one must realize that the impact will be disproportionately great on the rural areas. Those areas are most reliant on state and local government spending as a percentage of their local economy. When state funding craters, it causes direct losses in state spending in those rural areas and also impacts both the allocation and quantity of local revenues that are available. The secondary loss of income to local business is also disproportionately great in the rural areas.

Bottom line: the economic s***storm that has been late coming to rural Colorado is likely to arrive soon with a vengeance, and will likely last for a long time--probably well after some of the rest of the US economy is improving. This is yet another example of how, in my opinion, Colorado's economy--especially the rural economy--is returning to patterns more typical of its prior history, but not seen for several decades of late.

[proveick]

Many of the restaurants and hotels have been for sale for years. It's true what the locals say, what ever happens in the "world" (the rest of the country) happens here (Chaffee County) about 9 months later. There is a new Hampton Inn that's going to be finished soon, 100 + rooms. Going to no doubt put some of the other hotels out of business. And indeed the pad thai is very good at the twisted cork. Next time you pass through try laughing ladies, also very good. RP