Amid mounting criticisms of President Biden’s executive order last week indefinitely halting new oil and natural gas leases on federal lands and waters, leaders across party aisles are concerned the executive order will jeopardize critical funding for states.
That’s especially true for New Mexico, which accounts for nearly 60 percent of federal onshore oil production. Oil and natural gas development on federal lands generated $1.5 billion in state revenue – accounting for nearly 18 percent of the state’s total spending – in fiscal year 2020, according to a new analysis from the New Mexico Tax Research Institute, . That’s nearly 54 percent of the oil and gas industry’s $2.8 billion in state revenue generated last year.
As New Mexico Oil & Gas Association President Ryan Flynn explained:
“Oil and gas development on federal lands is and will be a critical part of New Mexico’s economic and fiscal future. Our ability to develop resources on federal lands has a direct impact on the future of our state and the level of investment we’re able to provide in critical areas like education, healthcare, and public safety. Policies like a federal leasing ban only threaten to upend our economy, and keeping energy jobs and development here at home, rather than outsourcing them abroad, has an enormous ripple effect on the entire state. New Mexicans want to work, and those who work in this industry want to continue the safe and responsible energy production that our state depends upon.”
As a state that consistently falls among the poorest in the country, critical public services like education, healthcare, public safety, and more hang in the balance for the people of New Mexico. University of New Mexico Professor Reilly White recently echoed these sentiments:
“That’s higher education. It’s public education, K through 12. It’s public safety. It’s health and human services. It’s all the things that often have a tremendous human impact on New Mexicans as a whole.”
According to the analysis, in 2020 oil and gas development on federal lands generated:
- $734 million for public education resources
- $344 million for health and human services
- Nearly $85 million for public safety
Jessica Sanders, New Mexico’s 2019 Teacher of the Year and President of the New Mexico Science Teachers Association, has expressed concern about the future of the state’s education system if a critical source of funding is eliminated. Sanders said:
“Oil and gas in New Mexico fund $1.37 billion for education. That money funds teacher jobs, curriculum, and everything related to education in my state. New Mexico’s children are the future, and without vital funding from New Mexico’s oil and gas industry our students will not have access to the tools and resources they need to enter the workforce.”
Further, according to a 2020 American Petroleum Institute study, banning new leases for oil and gas production on federal lands in New Mexico could eliminate 62,000 direct and indirect jobs – or nearly 5 percent of statewide jobs –by 2022.
Source: American Petroleum Institute, 2020
In addition to risking high-paying jobs and critical revenue for the state, some local economic leaders are worried the ban could exclude New Mexico from being considered for future in-state investments and development opportunities down the line. In fact, as John Waters, executive director of the Carlsbad Department of Development, told the New York Post, this is already happening:
“As a direct result of the executive order, I was just contacted by a Canadian company to inform me that the plant they were going to construct and operate in south Eddy County will instead go to Reeves County in Texas where their operation will not be surrounded by federal land.”
Policies like this disregard the fiscal importance of the U.S. energy industry and unfairly penalize states like New Mexico that depend on energy development on federal lands. Jeopardizing critical revenue streams and high-paying jobs, an oil and gas leasing ban will have devastating impacts for communities across the country.
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