S&P Global Ratings says it’s too early to tell how new oil and gas regulations will affect credit quality

Financial service group S&P Global Ratings says it’s too early to tell how Colorado’s new oil and gas regulations will fiscally impact local governments. 

The group said in a news release it doesn’t foresee any impact statewide to credit ratings.

“We will monitor issuers affected by any significant local government action, if it occurs, as a result of this legislation, particularly individual issuers that have a sizable amount of assessed value derived from the oil and gas sector,” S&P Global Ratings said.

Senate Bill 181, which was signed into law by Gov. Jared Polis on Tuesday, changes the mission of the Colorado Oil & Gas Conservation Commission, the state’s regulatory body, to prioritize health and safety over industry development. The legislation also allows local governments to regulate oil and gas development, something the industry fears will impact jobs and the economy.

“As of now, the fiscal impact to local governments statewide is undeterminable, as we cannot anticipate which cities and counties will adopt local governing rules as a result of SB-181, and whether those local governments will have significant oil and gas activity,” the group said. 

S&P Global Ratings said it doesn’t expect local governments where oil and gas production is high to regulate production under the new law, since doing so would reduce revenue, and “the impact of regulation would likely be detrimental to the entity’s budget.” 

The oil and gas industry in the state contributes $1 billion in tax revenue annually and employs 89,000 people, according to an industry study.

A different study estimated that the state would lose 120,000 jobs and $8 billion in tax revenue if local governments took advantage of the new regulations and shut down half of new oil and gas production in the state.


Kabir Ismail is a blogger, website developer/administrator and a comrade.

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