Midterm Election Results | Colorado’s Anti-Fracking Initiative

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The US experienced historic highs in crude oil production throughout 2018, elevating the nation to a top seat in the global crude oil game. With volumes topping 11 mmbd, the US surpassed OPEC in terms of volume-based pricing influence and became a key player in global oil market fundamentals. Increased drilling capacity was made possible via technology and efficiency gains, elevating US crude oil production by 52 percent since the beginning of 2014.

 With this growing significance in the oil market comes significant legislation to ensure longevity of domestic drilling while adhering to, and addressing, environmental and public safety concerns. Such issues rose to the top of public discussion during the 2018 midterm elections last November. Of importance to US production trends was November’s much anticipated, and highly contested, anti-fracking ballot initiative.

 Colorado Anti-Fracking Ballot Measure

Colorado benefitted from technology and efficiency gains which increased daily oil production nearly 125 percent since 2014 (see chart below). Now comprising approximately 4 percent of total US production, Colorado’s growth as a producer has hinged on the adoption of hydraulic fracturing, or fracking, as the state’s primary means of oil extraction. This method, however, has perturbed environmentalists, as the nature of the procedure raises concerns of the impact of fracking on surrounding land and public health.

Learn more about fracking in our Beginner’s Guide Upstream Economics in the Crude Oil Industry.

The persistent contention surrounding Colorado’s fracking industry gained enough attention to place an anti-fracking measure – referred to as Proposition 112 – on the ballot of the state’s mid-term election. The proposal would have forced new oil wells to be positioned a minimum of 2,500 feet (compared to 500 feet currently) from homes, schools, and major water sources to prevent health and safety risks in the Denver-Julesberg Basin – the fastest growing production area in the Rocky Mountain region. Placing constraints on where oil companies could drill in Colorado would substantially halt the implementation of new wells, as large swaths of real estate would be off-limits, drastically impacting the oil and gas sector of Colorado’s economy while preventing future employment in the industry.

Initial polls leaned toward Proposition 112 passing, however the oil industry’s $41 million campaign against the proposal helped combat supporters of its passage, and ultimately prevented the initiative’s approval after proponents earned just 44 percent of the final vote.

Proposition 112’s failure to pass was welcome news to oil companies throughout the state, in addition to stakeholders in the surrounding states of Utah, Nevada, and Idaho who source much of their refineries’ crude oil inputs from Colorado due to the state’s rapid growth. From a price perspective, this likely limits any anticipation of crude oil and diesel price premiums in the mountain region, as supply pressure from the proposed fracking ban failed to come to fruition.

For more information about crude oil fundamentals and the current state of domestic legislature, please contact the Applied Knowledge Team directly.

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