Lessons of Black Sunday
ASPEN – Lifelong Rifle resident Bunny Rohrig has seen more boom-and-bust cycles sparked by the gas and oil industry than she cares to remember.Right now, as manager of one of only two motels in town, she’s capitalizing on the boom. But she doesn’t let herself get too confident – she knows eventually there will be another bust.”With energy, they can pull out tonight,” said Rohrig, manager of the Rusty Cannon Motel for 23 years.Rohrig’s caution, bordering on a sense of dread, seems to pervade the mood in Rifle, at least among old-timers. No matter how good the economy is humming along – and it’s humming very well in Rifle right now – they can’t forget May 2, 1982, a date known in infamy as Black Sunday. That’s when Exxon abruptly pulled out of its Colony oil shale projects in western Garfield County, crippling the economies of Rifle, Silt and Parachute and sending real estate prices plummeting for almost a decade. An estimated 2,200 jobs were eliminated overnight.Rohrig said she saw the same boom-bust cycle on a smaller scale in the 1970s, and numerous times when she was a kid.Black Sunday almost lead to her financial ruin. She was part of a group that decided to construct the motel in 1981. They made the decision to go with 89 units rather than 45 despite the oil shale bust.Business was fine for the first year, she said, but after that it was “horrible” for 11 or 12 years. “It was a lot of praying,” Rohrig said.Sales tax skyrocketRight now it’s difficult to imagine an end to the gas boom in Rifle. The Rusty Cannon gets about 75 percent of its business from gas field workers during the winter and 50 percent to 60 percent during the summer. The industry has helped fill the rooms for the last three years.Rohrig is grateful for the business the energy industry has generated, not only for her but for her hometown.”It keeps all these stores going,” she said. “If it wasn’t for these workers, you wouldn’t see the hustle and bustle.”
It’s difficult to get a grip on the gas industry’s exact contribution to the economy of western Colorado. Rifle saw its sales tax revenues leap 59 percent for January through November 2004 compared to the same period in 2003, for example. But it’s impossible to tell how much of that spending was done by gas field workers.It’s easier to quantify how much the two biggest gas producers in Garfield County have pumped into government coffers through property taxes. In 2003, EnCana Oil and Gas USA and Williams Production, along with some smaller energy companies, paid $12.52 million in property taxes to local governments and special taxing districts in Garfield County.Roughly half of those tax revenues, $6.5 million, went to the school district that serves the western half of the district.Due to gas well development and higher assessed valuations, property tax bills for energy companies are soaring. EnCana will pay about $13.6 million in property taxes and Williams will pay $13.5 million, according to a recent article in the Glenwood Post Independent.Capitalizing on the boomLinda Hunter is one of the store owners who has enjoyed the hustle and bustle created by the gas boom. The former Aspen resident has owned and operated Shale Country Liquors for the last 10 years.She said she lost some business recently when Rifle’s fifth liquor store opened. But overall her business was up 5 percent or so in 2004, in large part because of new business from the gas fields.”I see at least two or three new people every day,” she said. “For me as a retailer, (business) is only going to go one direction – up.”Nevertheless, she has conflicting thoughts about the gas boom. While Hunter is naturally thankful for the extra business and she credits the folks it brings to town as “good, hard workers,” she also worries that the industry will pollute the environment in an area she loves.Numerous other business in Rifle tap into direct benefits of the gas boom. Concrete companies pour a lot of cement foundations for gas equipment, trucking companies haul heavy equipment to well sites, fencing companies build enclosures around pads.Harry Colborn, who operated Harry’s Heavy Haulers for 16 years out of Basalt, relocated to Rifle in 1998. Soon after the move, he quit the trucking business in favor of rental and sales of construction equipment and accessories. The gas boom took off a few years after his transition, putting him in the right place at the right time.The energy industry has a fondness for renting the equipment it needs and subcontracting for the help it requires. “It seems likes it’s a business that doesn’t want to buy things,” Colborn said.Even a place as well-endowed with natural gas as the Basin will see an end to the drilling that’s taking place at a blistering pace right now.
EnCana Oil and Gas USA, one of the two biggest producers in the South Piceance Basin, acquired the Mamm Creek Field south of Rifle in 1998. The company has engaged in full-scale operations for three years. It drilled about 500 new wells in 2003 and 2004 and expects another 250 to 275 this year, according to Walter Lowry, director of community and industry relations.EnCana is now engaging in “infill drilling” where it is drilling new gas wells in gaps between existing ones. Lowry made a rough estimate that drilling will continue for three to five years in the Mamm Creek Field.Jeff Johnson, a consultant for EnCana, said there aren’t a lot of experienced workers in the field right now because of slow times in the industry in the late 1980s and early ’90s. Workers tend to be in their 50s and older or 25 and younger.Johnson noted that many of the management level workers in the fields were trained in prior booms in the fields around Vernal, Utah and Wyoming. Now the boom is in western Colorado, at least temporarily.While that benefits entrepreneurs, it feeds the unease among some people in Rifle. Colborn rents everything from bulldozers, the biggest of which rents for $4,000 per week and $11,500 per month, to fork lift attachments. His shop also services trucks and other equipment that works in the field.Normally at this time of year his business, Rifle Equipment Inc., would lay people off. Instead he recently added a fourth mechanic and he has kept his staff of 16 employed.Colborn has also invested a significant amount of money purchasing new equipment. If gas prices rise and the energy companies curtail activity or pull out, Colborn might be sitting on equipment he cannot rent.”That’s my gamble,” he said.It’s not all gasThe gas industry can’t get all the credit for Rifle’s strong economy. Gary Miller, whose Miller’s Dry Goods has been located downtown for 23 years, said his business is flourishing even without significant foot traffic from the gas fields workers. “Those guys work too much to come in here to shop,” Miller said. “This is nothing compared to what oil shale was,”
Miller went into business in 1982 at the height of the oil shale project.Many of the workers during the oil shale days bought homes in Rifle, Parachute and Silt. Miller recalls them shopping more, too.”Those guys didn’t work the number of hours that these guys are working,” he said, comparing the oil shale workers of the 1980s to the gas field workers of today. “They had nights off and you’d see them around town.”Although the gas boom has attracted hundreds of workers from throughout the western states, there is no doubt that Rifle remains “a bedroom community that supports Aspen,” Hunter said. Driving west on I-70 between Glenwood Springs and Rifle any weekday morning at 6 a.m. and it proves her point. The road is filled with headlights of a steady stream of commuters heading to jobs in Glenwood Springs, Vail and particularly Aspen. Many of those workers are in the construction industry, according to town residents.Jay Rickstrew, president of Alpine Bank in Rifle, said the town is growing, in large part, because it is an affordable place to live. People who live in the region want to own their homes. Rifle is one of the places that’s affordable, and that residential growth fuels growth for retail shops, restaurants and service businesses.The gas boom, Rickstrew said, is “definitely a portion” of the strong economy, “but it’s not all of it.”Israel Shapira, a Carbondale resident who is developing commercial buildings in downtown Rifle, said he started making investments in town 2 1/2 years ago because he thinks the town has such a positive future. He said his assessment has nothing to do with the gas industry.He said Rifle is often affiliated with the working class and service workers for Aspen. But it also has a sizable population of professionals.He redeveloped a dilapidated historic hotel, which was close to condemnation, into a relatively high-end restaurant, another eatery and office spaces. There are no vacancies in the building. Now he’s constructing a new commercial building across the street.Shapira said land use consultants have advised him that Rifle is posed for strong economic growth due to its central location in western Colorado, ample space for development and affordable prices. He’s confident of that assessment to seek other investment opportunities.Vail, Colorado