A lawsuit has halted a policy that would have cost New Mexico more than $ 1 billion in revenue by 2022.
ORNorth On June 15, 2021, U.S. District Court Judge Terry Doughty issued a preliminary injunction stop the Biden administration’s moratorium on new oil and gas permits on federal lands and in federally controlled offshore areas in the Gulf of Mexico. The lawsuit was filed by 14 states that they would lose out on significant oil and gas development if the moratorium remained in place indefinitely.
Ironically, of all the states hit by Biden’s moratorium, the increasingly deep blue New Mexico had the most to lose. According to an analysis by the American Petroleum Institute, New Mexico would be expected to lose 62,000 jobs and $ 1.1 billion in revenue from the moratorium. by 2022. Ranked third among all states in oil production and also a leader in natural gas production, New Mexico would have lost nearly half of total production in both if the moratorium had been maintained.
Wyoming, the next worst-hit state, would have lost just over half the revenue ($ 641 million) of New Mexico. And, with an annual $ 7.4 billion general fund budget, that’s a lot of revenue that New Mexico has to make up for. Unfortunately, in this world of “red” and “blue” states, self-interest was not enough for New Mexico Attorney General Hector Balderas to join the lawsuit.
So no thanks to any of our own elected officials (or former New Mexico Congresswoman, now Interior Secretary Deb Haaland), New Mexico is likely simply dodging a dagger aimed squarely at the heart of the state’s economy. Better yet, a combination of market forces and geological discoveries means that New Mexico’s oil and gas industries (such as the United States) could be entering an era of unprecedented prosperity, if the political forces deployed against them can. stay at bay.
Before the COVID-19 pandemic, oil production in the Permian Basin of New Mexico (which it shares with Texas) had been growing rapidly. As recently as 2010, New Mexico was the seventh largest oil producing state in the nation at 65 million barrels a year. By 2020 (despite the pandemic), annual production had increased to 379 million barrels.
Now, it looks like New Mexico is poised to overtake North Dakota to become the nation’s second-largest producer of crude oil. Data for March 2021 (the most recent available) from the Energy Information Administration shows that New Mexico produces 1.16 million barrels of oil per day compared to 1.11 million in North Dakota.
Like most of New Mexico’s post-2010 surge, the state’s continued growth is being driven by new discoveries accessible through new technology, notably “fracking.” Additionally, as the Permian Basin has already been producing large amounts of oil and natural gas for decades, the infrastructure to access and move the product is already in place.
As if all of these converging factors acting in support of the New Mexico oil and gas industry weren’t enough, while motorists may not be delighted, the prices at the pump clearly show that the industry is doing quite well at root of COVID-19. If Bank of America analysts are right, the boom is just beginning. They predict that by By 2022, crude oil prices could hit $ 100 a gallon. This means even more jobs and tax revenue flowing into New Mexico, and it means reliable (if not necessarily cheap) energy for Americans.
Ironically, despite all this good economic news for the state, New Mexico’s history of government by left-wing Democrats has left it in a very bad shape, thanks in large part to the intense lockdowns applied during the pandemic. Oil and gas and the money it brings in can help, but if the state’s political leadership doesn’t do a better job managing the boom, the next slump could be harder to handle.
According to the Data from the Bureau of Labor Statistics for MayNew Mexico’s unemployment rate is the second highest in the country at 8 percent. Worse still, due to the state’s poor performance on a variety of educational, economic and criminal classifications New Mexico was recently ranked the worst state in the US to live in. According to the data or not, the Land of Enchantment has some serious, deep-seated issues to deal with.
And while most problems are made easier with money rather than without money, a system in which politicians have many resources to spend regardless of the success or failure of their economic policies is not a great system. In fact, it is a system that has fueled terrible government in places like Saudi Arabia and Venezuela (to name just two misgoverned petro-states).
Will things be different this time for the poor man in New Mexico? The political and economic situation is extremely volatile and it is difficult to know. With the bounty of energy flowing, the Land of Enchantment could finally add a strong economy to its name. Political will has always been the missing ingredient.