Report: Falling Oil Market Has Strange Effects on Colorado State Economy
2 min read
The downturn in the oil and gas industry is having some surprising side effects in Colorado — including a boom in the used office furniture industry.
“I have never seen this much used office furniture in Denver,” says Dennis Meyer, president of Office Liquidators.
For a sense of historical perspective, the office liquidation company has been busier in 2015 than at any other time in its 30-year history. That includes the Great Recession, the implosion of Enron, and the giant purchases made after the 2002 Winter Olympics in Salt Lake City. The reason? Falling oil prices.
Crude oil is currently selling for less than $50 a barrel, a far cry from the record $136 a barrel seen in 2008. So with the oil and gas industry downsizing in Colorado, and around the world, Denver is seeing an increase in the supply of office furniture. Last year, Houston-based Sabine Oil and Gas bought local company Forest Oil, which left behind a glut of cabinets, chairs, desks, and more.
In fact, Office Liquidators has so much inventory on its hands from oil companies that it’s giving away more than $200,000 in office furniture to local nonprofits and churches. Green Mountain Christian Church will receive $5,000 in free furniture, which the church’s pastor called a “tremendous blessing.”
Of course, the falling price of crude oil has been more problematic for oil and gas companies. In 2014, the U.S. was the world’s third-largest producer of crude oil, producing 8.7 million barrels of crude every day. In Colorado, the energy sector has helped drive economic growth in recent years. However, the recent downturn is finally having an effect on Colorado’s economy.
Upstream oil and gas operations, meaning the exploration and drilling of crude oil, are contracting in the face of lower prices. Colorado’s official revenue and economic forecast report for September predicted slower job and income growth, as well as a decrease in overall crude oil production statewide. This time last year, there were 43 more oil rigs in operation across the state, and the state report predicts the contraction will last until 2017.
Overall, Colorado’s economy is still growing despite the downturn, it’s just not growing very quickly.
The report concludes, “In addition, continued low oil prices may further reduce oil and gas employment and investment in the state, with possible broader economic impacts than those currently being experienced.”
