DENVER (CBS4) - As businesses and travelers sit idle during coronavirus stay-at-home orders, demand for oil has plummeted. The price for a barrel of crude oil went negative for the first time. Companies have so much surplus oil, they are running out of space to store it.
"It's hard to sit here today and say exactly what pricing environment will mean for operators, but it's not good," said Dan Haley, head of the Colorado Oil and Gas Association.
He says last year, the industry saw record production in Colorado. Now, they will likely have to shut in wells.
"As of last Friday, there were 16 drilling rigs operating across the state. Five years ago, there were about 75."
Haley says the industry employs more than 100,000 people - directly and indirectly - and contributed more than $31 billion to our economy in 2018.
State and local governments will feel the pain too. Hayes says the industry pays a billion dollars a year in taxes, including $600 million in severance taxes which goes largely to education.
"The first thing state government and local government can do is do no harm. That means when you're looking at regulations that are going to add cost, you need to be re-looking at those."
How bad it gets in Colorado will depend on how long the coronavirus closure continues, but Haley says the coronavirus crisis has taught us the importance of producing what we need here in the United States. He says energy independence has never been more important.
"I don't think as a country we want to go back to that period where we were beholden to cartels and dictators for energy."
OPEC and its allies struck an agreement last week to cut production, but it wasn't enough. Haley says the industry needs both Congress and our allies help buying oil for reserves.
President Donald Trump asked for $3 billion in the last stimulus to buy some of the unused oil for the Strategic Petroleum Reserve and Democrats stripped it from the bill.
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