The strength of the local economy is in its diversity.

That message was delivered by experts on western economies who addressed participants at the State of the Valley Symposium presented by Carbondale-based Healthy Mountain Communities last Friday at the Hotel Colorado in Glenwood Springs.

“More diverse economies are not only more resilient, they also grow faster,” said Ben Alexander, associate director of Headwaters Economics, a Montana-based nonprofit research group.

The more dependent our economy is on the natural gas industry, the more

vulnerable we are to forces outside the area, he said.

“Natural gas futures have gone from $6 to $13 to $6 in the last year,” Alexander

said. “We’ve got to hedge against that volatility, and the best way we know is

diversity in the economy,” Alexander said.

Jim Westkott, senior demographer for the State of Colorado’s Department of

Local Affairs, urged his listeners at the symposium to protect the scenic values of

the region, the main attraction of the tourism economy.

“You’ve got to remember, us folks like coming up here,” said Westkott, who

lives on the Front Range.

“You have a very beautiful, valuable region,” Westkott said later. “Don’t sell it off.

You need a long-term economic strategy. You’ll get along just fine.”

Big, but not that big

Mark Haggerty, Alexander’s colleague at Headwaters Economics, said that of all the western energy-producing states, Colorado has the largest economy, and the percentage of Colorado’s economy contributed by the energy industry is the smallest of any of the states, only about 1 percent.

He suggested that Colorado needs to tax the energy industry at a greater rate

than it currently does, to put the state in a better position to mitigate the

environmental and infrastructure damage and social disruption caused by energy

extraction.

“This a source of wealth, and you ought to be generating net benefits for the

people of the region,” Haggerty said.

Though Alexander said demand for natural gas may soon decline, Vince

Matthews, of Colorado Geological Survey, said gas drilling probably won’t go away

in the near term.

“I believe we’re going to have a natural gas shortage in the United States.”

Matthews said. “This drilling in the Rockies has been successful, but when you look

at the national picture, we’re flat with what we were 10 years ago.”

Catering to retirees

Alexander said energy extraction and mining together, as of 2006, makes up

about 10 percent of local dollars. As a percentage of the local economy it is small compared to the contribution of retirees. The energy economy locally is about $180 million, whereas the non-work economy, fueled by investment and retirees, is more like $400 million, he said.

Westkott suggested developing a wider range of services for retirees.

“One of the things you have to remember is the boomers who are going to move here are going to go through a lot of different stages as their lifestyles change, as they get old,” he said. They will require different services, activities and products as they go through the stages of aging.

Despite its relatively small size, Alexander said, the energy industry is having significant effects on the region. One study Headwaters did in Mesa County, which also has seen a huge boom in gas drilling, showed that energy industry wages were growing at 7 percent annually while wages in other industries were growing at 1 percent. With that kind of money around, living costs rise to whatever level the best-paid workers can afford.

“All of a sudden, these folks are setting prices for a lot of commodities,” Alexander said.

In Garfield County, gas field wages are pulling workers out of the construction industry.

“This makes housing less and less affordable,” Alexander said.

But the worldwide economic slowdown may relax the housing crunch somewhat, he said.