Guest “I feel shocked” by
Pepper Brooks David Middleton
Jan 24, 2021
New Mexico Officials Taken Aback By Biden Assault On Oil And Gas
Officials in the state of New Mexico professed to be taken aback last week by President Joe Biden’s day-one decision to impose a 60-day moratorium on all oil and gas-related leasing and permitting actions on federal lands. It is a decision that will have major ramifications on the state budgets of New Mexico and other Western states, especially if it is extended beyond its initial term and backed up by Biden’s promised ban on hydraulic fracturing on federal lands.
A little more than 2 years ago, in September, 2018, I wrote about the half-billion dollar windfall the State of New Mexico had just received during the course of a single sale of oil and gas leases on federal lands in the state. Those federal leases lie in the segment of the Permian Basin that spills over from Texas into the southeastern portion of New Mexico, part of the Delaware Basin play area that has become the hottest oil play in North America since 2016.
Like other oil and gas-producing western states, vast swaths of lands in New Mexico are owned by the federal government…
Some New Mexico officials are now trying to defend themselves by saying they didn’t anticipate the new President would issue such a ban, but such protests ring rather hollow given that they most assuredly did understand that Biden plans to move ahead with his fracking ban, which would for all intents and purposes have the same effect.
[T]he reality is that [New Mexico’s Democratic Governor, Michelle Lujan Grisham] and her administration can strive to “diversify” the state’s energy portfolio all they want, but the state will still lose hundreds of millions of dollars every year should the Biden administration succeed in shutting down her state’s oil and gas business.
To be clear: Neither the state nor the federal government collects any royalties on solar installations or wind farms. There is no severance tax to be collected from those alternative forms of energy with which to fund the state’s schools or hospitals, or to sustain the free in-state college tuition program Lujan herself established in 2019 thanks to New Mexico’s new Permian/Delaware Basin windfall.
These are just some of the actual potential costs of the Biden assault on the New Mexico oil industry. They are the things that happen in the real world, as opposed to the fantasies pushed by many politicians.
Elections have consequences. For New Mexico, the consequences of the 2020 election are only now starting to be understood.
“Elections have consequences”…
New Mexico’s hockey stick is very real.
New Mexico’s oil and gas production comes from the Permian and San Juan Basins (mostly Federal leases).
Unlike neighboring Texas, most of New Mexico’s oil & gas production and resources are on Federal leases.
Apparently unbeknownst to most New Mexico votes, oil & gas are vital parts of their economy.
How does the state benefit from oil and gas production?
Oil and gas development is a key part of New Mexico’s economy. In fiscal year (FY) 2013, the oil and gas industry provided 31.5% of New Mexico’s General Fund, which in turn funds schools, hospitals, and other government services. This is a conservative estimate, as it doesn’t include induced or secondary revenue generation. Early data suggests oil and gas’s contribution to the General Fund in FY 2014 may be as high as 38%. Oil and gas is directly responsible for 86% of the Severance Tax Permanent Fund and 96.6% of the Land Grant Permanent Fund. In FY 2014 the New Mexico State Land Office reported a record $726 million in revenue from oil and gas royalties alone for the state’s public schools, universities, and hospitals.
In addition, the oil and gas industry is an important employer in New Mexico. It is estimated that in 2012 9% of all employment in New Mexico, or 68,800 jobs, were directly or indirectly related to the oil and gas industry. In oil-producing counties such as Eddy County, the July 2014 unemployment rate was 4.0%, compared to the state average of 6.9%. Lea and Eddy Counties also had the second and third highest wages by county in 2013, with an average annual salary of $50,200, compared to the state average of $40,600.
While oil and gas production revenue is primarily generated in the southeastern and northwestern regions of the state, the revenue from oil and gas production benefits all reaches of New Mexico through General Fund disbursements, capital funding projects, gross receipts taxes, and ad valorem taxes that go to counties.
How will the state of New Mexico deal with the Biden assault on their economy? In typical Democrat fashion:
Governor Lujan Grisham Would Seek Fracking Ban Waiver If Warren or Sanders Elected
IPANM, Reuters & OilPrice.com (Nov. 1, 2019) – While IPANM would have serious concerns if a newly-elected President would seek a nationwide fracking ban, we are encouraged that New Mexico Governor Lujan Grisham recognizes the importance of fracking to sustain the state economy. The linked article below contains the following quotes from Gov. Lujan Grisham.
“Without the energy effort in this state, no one gets to make education the top priority,” said New Mexico Democratic Governor Michelle Lujan Grisham in Santa Fe on October 8. If Trump loses next year’s election, she said in a later interview, she would request the Democratic president provide her state a waiver exempting it from any drilling ban “to allow us to continue to produce in New Mexico.”
Meanwhile, OilPrice.com reports that due to threats of a federal fracking ban with a new president, oil companies are responding by accelerating fracking in SouthEast New Mexico.
Did she really think Biden would be any better than Fauxcahontas or Comrade Bernie?
via Watts Up With That?
January 27, 2021 at 04:33AM