March 10, 2020 12:36 PM UTC

Who Needs SB-181? Trump Cheers Plunging Oil Prices

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• by: Colorado Pols

Good for the consumer, gasoline prices coming down!

— Donald J. Trump (@realDonaldTrump) March 9, 2020

As the Denver Post’s Judith Kohler reports:

Oil prices plunged after Russia rejected Saudi Arabia’s plan for steeper cuts in production. Saudi Arabia proposed cutting production another 1.5 million barrels on top of existing cuts of 2.1 million barrels agreed to by the so-called Opec+ alliance to stabilize prices.

But when Russia balked, Saudi Arabia said it would increase its production. That sent prices plunging to about $28 per barrel over the weekend, said Bernadette Johnson, vice president of strategic analytics with Enverus, which provides data and intelligence to energy companies…

Companies in Colorado felt the blows. Occidental Petroleum, the dominant producer on Colorado’s Front Range, saw its stock closed at $12.51 a share, a 52% drop from Friday’s close of $26.86. Noble Energy, another major Colorado producer, saw its stock drop 29.8% Monday and Denver-based PDC Energy’s stock fell 48.2%.

In 2019, the Democratic majority in the Colorado General Assembly passed a landmark reform of the state’s oversight of oil and gas drilling, Senate Bill 19-181. The passage of Senate Bill 181 resulted in what can best be described in hindsight as a wildly inaccurate campaign of misinformation about the supposed “shut down” of the fossil fuel industry sought by Democrats and Gov. Jared Polis, and forecasts of economic devastation to oil and gas producing regions of the state that soon afterward responsible industry shills were forced to concede had no factual basis.

The much greater threat to the oil and gas industry’s profitable operation in Colorado, as we’ve been obliged to point out a number of times before and since the passage of Senate Bill 181, is the volatile and generally declining price of oil at global market rates. In the simplest possible terms, there is a minimum price of crude oil necessary for profitable extraction in Colorado. When oil prices were much higher over the past decade, drilling in Colorado dramatically increased. At $50 a barrel, where oil prices have been trading for the last couple of years, it’s much less so, and the pace of drilling has slowed.

At $30 a barrel, Colorado oil production isn’t worth it. Period.

With all of this in mind, the relatively modest reforms of SB-181 to prioritize public health and safety by oil and gas drilling regulators are at most a small incremental sliver of the total cost of producing oil in Colorado, and well worth the investment–over an industry whose success or failure is determined by global market factors beyond any one state’s control.

Also, President Donald Trump just said it’s all MAGA! Have fun blaming Jared Polis now.