Since 2005, average annual prices for crude oil have ranged from $56 to $100 per barrel (red lines in the chart below). Daily fluctuations are clearly much more volatile (blue lines in chart below), $30 to $146.
Lower crude prices will mean a barrel of oil will be in the range of $40 to $60 per barrel through mid-2015 as supply continues to exceed the demand.
In the near-term, lower crude prices will have a minimal impact on producers in Colorado. If lower prices continue through the middle of next year, contract workers and small companies will be the first to “feel the pain.” A reduction in production could have a ripple effect on other industries that begins with the construction, retail, and finance industries.
Consumers will experience a small benefit because of lower prices for fuel costs; however, the oil production companies will experience lower profit margins and the state will collect less revenue from severance taxes. Overall, the net economic effect of lower crude prices on the state will likely be negative.
