The oil industry impacts every community near its operations. Each community has unique concerns, issues, and opportunities, but many impacts are shared. Market booms raise questions about housing, water, and service provision to quickly increasing populations, while busts create concerns about funding basic infrastructure needs, city services, and how to plan for a very uncertain future. Duchesne and Uintah Counties and Roosevelt City are no exception. They are experiencing the benefits and difficulties of the industry in a unique and shared manner.
Interviews with community leaders, business owners, current residents, and former residents, demonstrated the impact of oil on the culture of the Uintah Basin. Oil rig work is backbreaking, driving trucks entails long hours, and rough roads can make any job in the oil fields difficult. The characteristic of oil work, combined with the history of hardworking ranchers have created a resilient, hardworking culture that is pervasive across the communities in the region and helps community members as they find ways to weather tough economic times.
The surrounding mountains and desert landscapes provide recreational opportunities for residents that are an important feature of community life. Residents hunt, fish, hike, and ride in the mountains and desert. They understand and care about the surrounding land because, for many, that land anchors them to the Basin. The people here know that developing oil and gas and preserving pristine natural beauty are not mutually exclusive. They work hard to accomplish both ends through responsible development and wise decisions about when, where, and how to develop.
Local decisions improve local outcomes: community members have the most to lose or gain and understand both the land and industry from experience.
Population booms and busts make providing the right level of infrastructure difficult. During boom times, community assets (roadways, parks, sewers, and water systems) can almost always seem inadequate, while busts can make funding these assets difficult. Two specific areas of concern are roadways and water.
Oil development has a very high impact on roadways in Uintah and Duchesne County. While oil production on federal lands typically occurs off paved roadways and on federally maintained roads, oil production on private property increases the impact of oil traffic on locally maintained roadways and collector streets that bring traffic to the highway. The Basin’s cold winters and warm summers, heavy oil and gas truck traffic, and increasing traffic from population growth result in a constant need for road repair.
Water is also a primary concern for the relatively dry region. Fracking and other oil developments require significant amounts of water. Ranching and agricultural developments throughout the region also use significant amounts of water, and often have historic water rights. These water demands, combined with a fast-growing population, create concerns that continued growth of the oil and gas industry and local populations could lead to conflict over water management in the future.
In high production periods, the oil industry generates significant tax revenues that help counties and cities fund capital projects and services. Increased property values, federal mineral leases royalties, sales tax revenue, and transient room tax revenue from filled hotels all fill government coffers. Costs also rise as city services and infrastructure extend to, and are used by, more people more frequently. However, costs do not rise proportionally because most of the infrastructure exists already.
In low production periods, decreased population, empty hotels, decreased sales tax revenue, and less federal lease royalties result in less revenue for communities. This poses budgeting problems for community leaders as they try to budget for projects that require long-term commitment from a community’s funds. These issues are most apparent when high production drops quickly. In these situations, planning for next year can be based on completely different funding assumptions. This can cause fiscally responsible decisions today to have negative fiscal consequences tomorrow..
Demographics & Socioeconomics
Leaders from both Uintah and Duchesne counties estimated that oil and gas make-up roughly 60 percent of the local economy. As a result, population and employment follow the ebbs and flows of prices and production of natural resources. This leads to very different demographic shifts in booms and busts.
During high production, housing capacity is a problem, leading to exceptionally high prices. Since many temporary workers stay for long periods in hotels, rooms are difficult to find unless booked months in advance. This makes tourism a difficult strategy in boom periods. At the same time, unemployment plummets, income per household jumps, and opportunities for entrepreneurs abound.
When energy prices go down, unemployment rises, housing becomes vacant, blight becomes problematic, and property values fall, leaving those who purchased during the boom in fiscally difficult situations. Income contracts, job losses are common, and many peoples’ hours are reduced from having significant overtime to full-time or even part-time work. This makes paying for homes and vehicles purchased in the boom very difficult and many residents experience financial trouble.
Between 2014 and 2015, Utah’s Department of Workforce Services (DWS) estimated that the Uintah and Duchesne counties have lost a combined 1,089 jobs due to low oil prices. Many local leaders estimate that the real number is actually closer to 2,000 or 2,500 since DWS does not have data on many small businesses involved in the oil fields. These leaders also pointed out that DWS’s estimate did not account for the large contingency of workers who went from regularly working overtime to 40 hours or less a week.
Residents, elected officials, and private industry leaders consider economic diversification key to the future success of the Basin. The Basin has progressed since the 1980’s, and there are significantly more opportunities now than in the past; however, diversifying the Basin’s portfolio with businesses that can pay enough to keep workers from leaving to work in the oil and gas industry is difficult. Distance from population centers and limited access by air, rail, or major freeway also make diversification difficult.
Planning for the future
Fluctuating development pressure, population size, and governmental revenue make planning for the future exceptionally important—and exceptionally difficult—in the Uintah Basin. This mostly affects long-term planning, but also significantly affects short-term budgeting. Basin leaders must consider how a fluctuating oil industry will affect their ability to fund long-term projects across an inconsistent revenue stream, and how to incorporate a variable population while planning 10, 15, and 20 years down the road.
In addition, despite bringing in significant amounts of revenue, the industry makes planning next year’s budget difficult. Budgeting six months into a production upswing for the following year can cause reasonable conclusions about next year’s spending capacity to run a community far over budget. Like many workers in the industry, having an economy based on oil and gas makes the standard practice of planning based on past revenues a dangerous practice. Instead, leaders almost have to divine the future as they make reserved estimates about the upcoming budget cycle. Adding to the difficulty, citizens generally oppose governments saving significant amounts of tax revenue, making the establishment of rainy-day funds politically difficult.
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