The Uintah Basin began commercially producing natural gas and oil in 1925 and 1949. After reaching average daily crude oil production of 44,000 b/d in 1985, annual crude oil fell by more than half, to an average 20,000 b/d in 2002. However, Uintah crude oil production has roared back to life since, rising at a trend-line growth rate of 12% per year through 2014 before tailing off with the current drop in prices. The production growth in the Uintah Basin has been led by a number of companies, including Newfield Exploration (NFX), QEP Resources, Anadarko Petroleum, Crescent Point Energy, Bill Barrett Corporation, Linn Energy, Ultra Petroleum, and Petroglyph, among others. Unsurprisingly, energy production has been the lynchpin for Uintah County’s economy.
Table 1 shows the correlation between mining (oil and gas extraction) and other sectors in the economy. Correlation coefficients measure the strength of association between two variables. The value of a correlation coefficient ranges between -1 and 1. The greater the absolute value of a correlation coefficient, the stronger the relationship. A positive correlation means that if one variable gets bigger, the other correlated variable also grows. A negative correlation would see one variable grow while another correlated variable declines.
Table 1
Uintah County Industry Correlations and Market Shares
Correlation Coefficient
|
Labor Market
Share
|
|
Mining (21)
|
1.00
|
17%
|
Utilities (22)
|
0.55
|
1%
|
Construction (23)
|
0.88
|
8%
|
Manufacturing (31)
|
0.40
|
1%
|
Wholesale trade (42)
|
0.89
|
4%
|
Retail trade (44)
|
0.78
|
12%
|
Transportation and warehousing (48)
|
0.91
|
6%
|
Information (51)
|
0.60
|
1%
|
Finance and insurance (52)
|
0.88
|
1%
|
Real estate and rental and leasing (53)
|
0.91
|
3%
|
Professional and technical services (54)
|
0.87
|
2%
|
Administrative and waste services (56)
|
0.72
|
2%
|
Educational services (61)
|
-0.01
|
7%
|
Health care and social assistance (62)
|
0.75
|
8%
|
Arts, entertainment, and recreation (71)
|
0.24
|
2%
|
Accommodation and food services (72)
|
0.61
|
9%
|
Other services, except public administration (81)
|
0.76
|
3%
|
Public administration (92)
|
0.31
|
12%
|
The table shows that, with the exception of education, most sectors vary in sympathy with changes in the mining sector. In fact, 78 percent of the jobs in the county are subject to a correlation coefficient of 0.50 or more, which is a rough measure of statistical significance.
Table 2 shows the legal location of employers of Uintah County residents. Note that 11 percent of residents are employed by Duchesne County firms, and the major industry in neighboring Duchesne County is also oil and gas extraction. This understates the importance of the Duchesne County connection; it does not include the activity of Uintah County-based firms doing work in Duchesne County. The point is that the two counties act as an integrated unit.
Table 2
Where Uintah County Residents Work
Count
|
Share
|
|
Uintah County, UT
|
8,847
|
64.0%
|
Duchesne County, UT
|
1,521
|
11.0%
|
Salt Lake County,
UT
|
542
|
3.9%
|
Utah County, UT
|
399
|
2.9%
|
Summit County, UT
|
270
|
2.0%
|
Daggett County, UT
|
199
|
1.4%
|
Davis County, UT
|
163
|
1.2%
|
Cache County, UT
|
149
|
1.1%
|
Sweetwater County,
WY
|
147
|
1.1%
|
Weber County, UT
|
136
|
1.0%
|
All Other Locations
|
1,443
|
10.4%
|
Table 3 shows a list of employment multipliers for the Uintah Basin. Employment multipliers are the number of additional jobs stimulated by a change in employment for a base industry. For example, the oil and gas multiplier is 2.37, meaning that every one-job change in the oil and gas industry multiplies additional to a 2.37 job increase throughout the rest of the Basin economy. With the exception of the utilities and chemical manufacturing sectors (representing a very small share of the Basin economy), there is no other sector that has a multiplier remotely as large as that caused by oil and gas extraction.
Table 3
Uintah Basin Employment Multipliers
.Industry
|
Multiplier
|
1. Crop and animal production
|
1.59
|
3. Oil and gas extraction
|
2.37
|
4. Mining, except oil and gas
|
2.07
|
5. Support activities for mining
|
1.88
|
6. Utilities
|
2.36
|
7. Construction
|
1.62
|
8. Wood product manufacturing
|
2.68
|
9. Nonmetallic mineral product manufacturing
|
2.04
|
11. Fabricated metal product manufacturing
|
1.61
|
12. Machinery manufacturing
|
1.60
|
17. Furniture and related product manufacturing
|
1.64
|
18. Miscellaneous manufacturing
|
1.41
|
19. Food, beverage, and tobacco product manufacturing
|
3.17
|
25. Chemical manufacturing
|
2.11
|
27. Wholesale trade
|
1.53
|
28. Retail trade
|
1.25
|
32. Truck transportation
|
1.72
|
36. Warehousing and storage
|
1.34
|
45. Real estate
|
2.17
|
50. Waste management and remediation services
|
2.00
|
51. Educational services
|
1.27
|
52. Ambulatory health care services
|
1.53
|
53. Hospitals and nursing and residential care facilities
|
1.36
|
54. Social assistance
|
1.15
|
56. Amusements, gambling, and recreation
|
1.21
|
57. Accommodation
|
1.26
|
58. Food services and drinking places
|
1.16
|
Source:
Bureau of Business and Economic Research
Chart 1 shows the January 2016 U.S. Energy Information Administration (EIA) forecast for the price of a barrel of West Texas Intermediate (WTI) grade oil.. It should be noted that this grade of oil is scarce in the Uintah Basin. However, WTI is important because it is the American benchmark, and the price of Utah’s heavier crude is discounted against it.
Chart 1
Energy Information Administration 1/15/16 WTI Oil Price Forecast
(dollars per barrel)
(dollars per barrel)
Unsurprisingly, WTI’s price is a key statistical predictor of economic activity in Uintah County. Therefore, models estimating future Uintah County employment can be built around the anticipated future price of WTI oil.
Chart 2 shows a forecast of Uintah County employment based on the EIA oil-price forecast. This graph implies about a 13 percent peak-to-trough decline in county employment due to the collapse in oil prices.
Chart 2
Scenario: Estimated Uintah County
Nonagricultural Employment Based on EIA Oil Price Forecast
