Phil's Thoughts

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Five Things We’re Watching in 2016

The beginning of 2016 is a bit of a shock. National and international stock markets shudder with China’s pending recession. The Saudis continue to pump oil at prices like the 1970s, resulting in U.S. job losses just as we stand on the precipice of becoming both the No. 1 producer of natural gas AND, in 2016, the largest global producer of oil.
It feels like a Charles Dickens’ novel; the best and worst of times.

1.  Our No. 1 issue to watch in 2016 is the price of oil. The big news of 2015 are the two countries wrestling for dominance in the Middle East - Iran and Saudi Arabia. Low oil prices will increase tensions and belligerence among resource-dependent nations as their coffers reflect slowing revenues and reduced governmental programs for their citizens. From Russia to Venezuela to Nigeria and the Middle East, tensions will continue to test the patience of all nations.  
2.
 Next is the industry’s response to Congress’ recently passed spending bill. In it are two components with direct impact on our economy - the PTC and lifting the oil export ban. Both can bring additional growth in both Colorado cleantech and traditional energy. First, keep an eye on the Production Tax Credit for wind energy. The new bill extends PTC to five years, ending the unpredictability caused by the previous one-year extension. How quickly the oil industry can gear up for oil exports will determine its near economic future. We don’t expect an increase in oil prices through 2017.

3.  The 2016 Ballot. Amendment 69 – a single-payer amendment is being analyzed by us right now. Under the proposal, companies and individuals will be taxed to the tune of $25 billion annually to create a single-payer health insurance system, operated by the state of Colorado. The source is a 10 percent tax on businesses and individual workers. Corporations will pay 7 percent, while employees will pay three percent. Individual workers, not employed by companies will pay the entire 10 percent. 

4.  The opening of five FasTracks lines in 2016. Starting Jan. 4, the Flatiron Flyer, a rapid-transit bus system along U.S. 36 opened with celebrations at each city along the route. 

On April 22 we’ll see the long-awaited opening of the University of Colorado A Line, the commuter train to Denver International Airport (DEN). Coupled with other good news such as the redevelopment of the National Western Complex and the successful election that amended the DEN intergovernmental agreement between Denver and Adams County, the Northeast quadrant is building a head of economic steam for a bright future.

Also opening in 2016 is the B Line to Westminster, and the R Line through Aurora, that connects the South I-25 TREX line to the line to DEN. The G Line connecting Arvada with Wheat Ridge will pass through one of the next great places, the booming resurrection of Arvada’s Old Town.

5.  Affordable and attainable housing. For the past three years, the Metro Denver EDC and 50+ organizations, led by the Metro Mayors Caucus have fought for legislative reform of construction defects litigation. Today, over  2 million Coloradans live in cities and counties that have passed their own ordinances and plat notes to stimulate for-sale condominium construction. Recent rulings of the Appellate Court indicate that the existing practice of litigating construction defects is unfair. Yet, we have been unable to overcome opposition in the Colorado General Assembly. Unfortunately this stalemate has also stopped other legislation that can help those renters who are now struggling under the weight of among the highest rental rates in the nation. 

Caught up in this controversy is the possible, slowing Millennial migration to Colorado. This group of young people are putoff by rising rental and housing costs. Without changes in our state’s housing policies, the nation’s most sought after demographic will find Colorado less attractive and will hurt the economic growth that has propelled us to a place where opportunity is now available to so many.

Enjoy your year!

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About Phil Kalin

Phil Kalin joined Pinnacol Assurance as CEO in 2013. He has served as the chief executive of both public and privately-backed companies, including large hospital systems, as well as organizations focused on health care data, technology and education. He has been active nationally on health care topics related to insurance, data analytics, technology innovation, cost improvement and risk mitigation. Phil is providing an informed opinion on what we see in the Monthly Economic Indicators.

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About Pinnacol

Pinnacol Assurance is the Metro Denver EDC's Research Sponsor. Pinnacol is Colorado’s leading provider of workers’ compensation insurance. Pinnacol provides comprehensive, competitively priced coverage; immediate attention to claims; a highly qualified network of medical providers; and proactive safety programs to more than 55,000 Colorado businesses. Annually, Pinnacol supports nearly $500 million of Colorado’s economic activity, spends over 35,000 hours keeping Colorado worksites safe and provides compassionate care to over 40,000 Coloradans injured on the job.

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