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Oil and Gas Dispute

Gov. Bill Ritter was quite angry as he confronted the oil and gas industry for saying a proposed ballot initiative to increase severance tax revenues, would cause Coloradans utility bills to increase, as well as higher pump prices, and turn local governments against energy firms.

Ritter was speaking to the Rocky Mountain News editorial board affirming the initiative, which calls for the removal of an ad valorem tax credit which now allows energy companies to cut their state severance tax by a significant amount. At an event later that day, Ritter told the attendies the measure has garnered more than 137,000 signatures - nearly double the 76,000 needed to get on the ballot in November. If passed it will raise about $321 million a year - most of the money going to scholarships.

Ritter stated that Colorado's "minute" contribution to the oil supplies world wide as having no effect on the prices intodays market. As for natural gas, he said it is the transport of gas to markets outside of Colorado via new pipelines that has driven up prices.

He also critisized the industry for stating that thier actions will cause energy companies to resist local governments when they consider raising property taxes to fund schools or other local needs. Adding that energy companies should contibute to local communities in which they do busines if they care about the community. Ritter said he was expecting the industry to raise up to $20 million to attempt to block the measure – while its suporters would likely spend $5 million in favor of the measure.

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He also said he will not weaken his move to toughen drilling rules in exchange for industry agreeing to a severance tax hike. Company officials worry that thier proposal would likely double the severance tax burden.

Colorado would rise to become No. 2 as the highest taxation state, behind Wyoming among the nation's top nine oil-and gas-producers in the states, as Colorado currently ranks No. 3 for oil and No. 4 for gas taxation. Higher taxation implies higher costs of production, leading to higher oil and gas prices for customers. The Colorado Petroleum Association paid $50,000 for the study.