US Climate Policies Overlook Oil, Gas Communities

On a recent visit to Rangely, a charming small town nestled in northwest Colorado, my colleagues and I had the opportunity to engage with administrators of their highly regarded community college. We were there primarily to discuss the town's economy. As we left the scenic campus, we observed families driving off-road vehicles into the mountains – a favorite pastime for this outdoors-loving community. With an average household income exceeding $70,000 and a low cost of living, at first glance it seemed that Rangely was far from experiencing economic distress. 
 
However, beneath its surface prosperity lies an existential threat: Rangely owes its existence to an oil boom during World War II and today relies heavily on the oil and gas industry which contributes over half of its county’s economic output. 
 
This scenario isn’t unique; numerous towns across America depend on fossil fuel production for job security and public revenues that fund critical services such as schools. However, heavy reliance on any single industry is hazardous - more so when it involves one as volatile as oil which is prone to booms and busts. 
 
In addition to this inherent riskiness comes another formidable challenge — global efforts aimed at curbing climate change necessitates reducing demand for all fossil fuels since they contribute significantly towards greenhouse gas emissions responsible for global warming. The signs are already here: last year saw international agreements pledging transitions away from fossil fuels while electric vehicles have begun displacing traditional gasoline- or diesel-powered ones. 
 
During my tenure as an economist under both Obama’s administration early Biden administration, I assisted in formulating strategies designed not only to reduce greenhouse gas emissions but also support economically distressed communities. Unfortunately though no specific plans were made then targeting oil-and-gas-dependent towns like Rangely which face future economic uncertainties due largely their dependence on these industries. 
 
Recent legislation by Congress prioritizes aid for small towns but fails adequately address challenges facing those reliant mainly on oil or gas production due to three primary reasons. Firstly, there's a perceived lack of urgency as attention is disproportionately directed towards coal-dependent communities given the imminent and inevitable transition away from coal. Secondly, political motivations often downplay risks to oil and gas communities; Republicans tend not to plan for future declines in production, while Democrats prefer focusing on potential economic growth resulting from climate action efforts. 
 
Lastly, conventional economic policy tools are ill-suited to address challenges facing these communities. Rather than immediate relief through stimulus policies, what they require are comprehensive strategies that cultivate new industries aligning with their existing strengths which would enable them sustainably prosper into the future. 
 
Harvard economist Ricardo Hausmann likens this challenge to a game of Scrabble where each additional letter enables the creation more words—eessentially an evolution based on existing capabilities tailored specifically towards individual places’ characteristics. 
 
A shining example comes from Colorado’s Southern Ute Indian Tribe, who have set up a Permanent Fund using oil and gas revenues, promoting fiscal sustainability by aligning tribe assets with long-term financial goals, along with a Growth Fund diversifying revenue sources via investments in various businesses. 
 
At the national level, too, steps are being taken. A National Academies panel recently proposed creating a federally chartered corporation providing funding for displaced workers and critical infrastructure, along with ensuring access to economic opportunities. Initiatives like Colorado’s state Office of Just Transition could serve as models, though their current focus remains limited, mainly transitioning away from coal, but could be expanded to include towns like Rangely already receiving some support due to nearby coal closures. 
 
No universal playbook exists that can simply be applied across all small rural towns like Rangely; unique strategies need to be devised keeping in mind specific strengths and limitations of individual places. As part of the of the Resilient Energy Economies initiative, our group researchers aim to ensure policymakers receive necessary information assisting fossil fuel-dependent communities successfully navigate the energy transition ahead of us. 
  
The best time to build a resilient economy before a crisis arrives—it's high time America heeds lessons learned from Joseph’s biblical story and begins preparing for harder days to come despite currently experiencing abundant oil and gas production. Though risks are known, so far we're failing to prepare communities for these future challenges. 
 
This article is republished from The Conversation by Noah Kaufman, Columbia University.