Guest “I Feel Shocked” by Pepper Brooks David Middleton
January 24, 2021
New Mexico officials surprised by Biden’s oil and gas attack
David Blackmon
Senior Contributor
energy
New Mexico state officials said they were surprised last week by President Joe Biden’s decision to impose a 60-day moratorium on all oil and gas-related leasing and licensing activities in the state. It’s a decision that will have a significant impact on the state budgets of New Mexico and other western states, especially if extended beyond their original tenure and backed by Biden’s promised state ban on hydraulic fracturing.
A little over two years ago, in September 2018, I wrote about the half-billion dollars the state of New Mexico had just received from a single state oil and gas lease sale. These federal leases are in the segment of the Permian Basin that runs from Texas to southeastern New Mexico, part of the Delaware Basin game area, which has been the hottest oil game in North America since 2016.
As in other western states that produce oil and gas, huge swaths of land in New Mexico are owned by the federal government …
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Some New Mexico officials are now trying to defend themselves by saying they did not expect the new president to issue such a ban, but such protests sound pretty hollow as they most certainly understood that Biden was planning to continue its fracking ban. which would have the same effect in every way.
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[T]The reality is that [New Mexico’s Democratic Governor, Michelle Lujan Grisham] and their government can endeavor to “diversify” the state’s energy portfolio at will, but the state will still lose hundreds of millions of dollars each year if the Biden administration manages to close their state’s oil and gas business.
To put it clearly: Neither the state nor the federal government levy license fees for solar systems or wind parks. There is no severance pay tax on these alternative forms of energy that can be used to fund state schools or hospitals, or maintain the Lujan free state tuition program that Lujan set up in 2019 thanks to the new stroke of luck in the Permian / Delaware Basin in New Mexico.
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These are just some of the real potential costs of the Biden attack on the New Mexico oil industry. They are the things that happen in the real world, contrary to the fantasies of many politicians.
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Elections have consequences. For New Mexico, the consequences of the 2020 elections are only now beginning to understand.
Forbes
“Elections have consequences” …
New Mexico’s hockey stick is very real.
Oil and gas production in New Mexico comes from the Permian and San Juan Basins (mostly federal leases).
New Mexico Oil Conservation Division
Unlike neighboring Texas, most of New Mexico’s oil and gas production and resources are leased by the federal government.
US BLM map of New Mexico. US BUREAU OF LAND MANAGEMENT
Obviously unaware of most of the voices in New Mexico, oil and gas are important parts of their economy.
How does the state benefit from oil and gas production?
Oil and gas development is an integral part of New Mexico’s economy. In fiscal 2013, the oil and gas industry provided 31.5% of the New Mexico General Fund, which in turn finances schools, hospitals, and other government services. This is a conservative estimate as it does not include any induced or secondary revenue generation. Early data suggests that Oil and Gas contribution to the General Fund could be up to 38% in fiscal 2014. Oil and Gas directly account for 86% of the permanent severance pay fund and 96.6% of the permanent land grant fund. In fiscal 2014, the New Mexico State Land Office reported record revenues of $ 726 million from oil and gas fees alone for the state’s public schools, universities, and hospitals.
In addition, the oil and gas industry is a major employer in New Mexico. It is estimated that in 2012 9% of all New Mexico employees, or 68,800 jobs, were directly or indirectly related to the oil and gas industry. In oil producing countries like Eddy County, the unemployment rate was 4.0% in July 2014, compared to the national 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 national average of $ 40,600.
While oil and gas exploration revenues are primarily generated in the southeastern and northwestern regions of the state, oil and gas exploration revenues in all areas of New Mexico come through General Fund disbursements, capital financing projects, gross income taxes, and ad valorem taxes benefit go to the counties.
New Mexico Oil Conservation Division New Mexico Oil Conservation Division
How will the state of New Mexico deal with Biden’s attack on its economy? In a typically democratic way:
Governor Lujan Grisham would seek a lifting of the fracking ban if Warren or Sanders were elected
IPANM, Reuters & OilPrice.com (Nov. 1, 2019) – While IPANM would have serious concerns if a newly elected president were to seek a statewide fracking ban, we are encouraged that New Mexico Governor Lujan Grisham understand the importance of fracking in sustaining the state’s economy acknowledges. The article linked below contains the following quotes from Governor Lujan Grisham.
“Without the energy expenditure in this state, no one can make education a top priority,” said Democratic Governor of New Mexico Michelle Lujan Grisham on October 8 in Santa Fe. If Trump loses next year’s election, she said in a later interview I would ask the Democratic president to grant her state a waiver that exempts him from any drilling ban “so we can continue manufacturing in New Mexico.”
Meanwhile, OilPrice.com reports that due to the threat of a federal fracking ban with a new president, oil companies are responding by accelerating fracking in southeastern New Mexico.
Independent Petroleum Association of New Mexico
Did she really think Biden was better than Fauxcahontas or Comrade Bernie?
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