DENVER, Sept. 22 (UPI) -- The low price of crude oil is expected to contribute to further contractions in Colorado employment and state revenues, the government's fiscal report said.
The state revenue and economic forecast for September said revenue should increase 3.9 percent through fiscal year 2016, a 0.8 percent contraction, or $78.9 million, from a June forecast from the state.
"The lower forecast is mostly due to slightly slower job and income gains in the state than projected in June, the recent declines in the stock market, and further weakening in oil prices that will lower income tax revenue from royalty payments," the report said.
Data from oil field services company Baker Hughes show Colorado's upstream energy sector, as reflected in the number of drilling rigs in service, is relatively stable for the year. The 33 rigs across the state for the week ending Sept. 18 was relatively unchanged from the previous week, but down 43, or 56 percent, from the same week last year.
The state report said the impact of lower crude oil price have only recently been a factor in Colorado, though a decline in output is expected in the Niobrara shale deposit.
"As prices remain low and have recently dropped further, production has begun to fall and is expected to continue on its downward trajectory," the state report said.
A forecast from the federal Energy Information Administration shows oil production declining 2 percent through the rest of the year and another 4.3 percent in 2016.
Jobs are in jeopardy amid the slowdown, the state report said. With the industry pulling back in part because of lower crude oil prices, Colorado expects a job growth rate of 2.8 percent in 2015, nearly a full percentage point less than 2014.
Crude oil prices are about 50 percent lower than this time last year because of an excess of supply and weak global economic recovery.
"Economic momentum is a powerful force for generating continued growth, but it does not shield the state economy from the risks associated with a slowdown in global economic activity," the state's report said. "In addition, continued low oil prices may further reduce oil and gas employment and investment in the state, with possible broader economic impacts than those currently being experienced."