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Uinta crude

Published February 14, 2013 1:01 am

Cost should not fall on taxpayers
This is an archived article that was published on sltrib.com in 2013, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

It costs money to make money. The problem is when you spend the money and someone else makes it.

That is the possibility that Utah taxpayers face as the prospect of digging up maybe 100,000 more barrels of oil per day from new wells in the Uinta Basin may be frustrated by the fact that it will be so difficult, and disruptive, to get that raw material to refineries in North Salt Lake.

This material is particularly raw. Known as "waxy crude," the form of petroleum that has attracted so much attention in the Uinta Basin can't just be shoved through a traditional pipeline because it hardens to the consistency of a candle.

The immediate alternative is to load the crude into heated tanker trucks. But that would generate a great deal more heavy traffic along the narrow US-40 than even the industry thinks is doable. One, maybe two, semi trucks per minute, rumbling down the Main Street of some of the towns along that highway, is not something that anyone wants.

State Sen. Kevin Van Tassell, R-Vernal, suggested the other day that the state should put $3 million toward a study of the problem. Which could lead to a state expenditure of $1 billion to $2 billion for transportation improvements.

If the bottleneck isn't eased, state officials figure, production would be curtailed so much as to leave $30 billion worth of oil and gas in the ground for maybe 30 years. Which would mean a loss of $10 billion, and 27,000 jobs, to the state's economy, and $180 million in tax revenue over that time.

Here is where the pencils need to get really sharp.

The figures could be portrayed as being a net gain for the Utah economy, even if the taxpayers cough up a couple of billion they wouldn't otherwise need to spend for the purpose of shipping more crude out of the Uinta Basin.

That's a long-range way of thinking that isn't always applied around here to the long-term benefits of public investments in, say, education or health care.

This cost-benefit analysis needs to cast a wide net.

Every commodity boom leads to a bust. The resource runs out, or the price falls below the level needed to keep production going. In its wake are pitted highways, crashed local tax bases and environmental damage stretching from the Uinta Basin's water to the Salt Lake Valley's air.

If oil development in the basin requires billions in infrastructure, then the oil developers ought to pay for it. Perhaps through a much higher state severance tax, a levy that, in Utah, is among the lowest found in energy-producing states.

If the oil companies that stand to profit from increased production don't think it is worth that kind of investment, then we shouldn't think so, either.