In light of President Biden’s executive order banning new oil and gas drilling on federal lands, a new analysis of New Mexico’s revenue and spending showed that 18% of the state spending last year came from oil and gas production on federal land. It pointed out how the State’s economy and government budget could be facing disastrous results.
The New Mexico Tax Research Institute said the oil and gas production on federal lands in the state accounted for $1.5 billion in revenue. The new analysis also showed federal lands are responsible for about 54% of the oil and gas industry’s $2.8 billion in state revenue.
“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,” said Ryan Flynn, President of the New Mexico Oil & Gas Association.
He said the federal leasing ban only threatens to upend New Mexico’s economy.
“ 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.”
The analysis states that of the $1.5 billion in revenue from federal development, $1.4 billion was allocated to the operating budget and $87 million to reserves. The primary revenue sources attributed to federal lands were $809 million of royalties and other payments from federal leases, $205 million of Oil and Gas School Tax, and $179 million of Gross Receipts Tax, among others.
These revenues provided the state with $734 million in resources for public schools and education, $344 million for health and human services, and nearly $85 million for public safety, in addition to other spending.
“We share the new administration’s priority to reduce emissions and combat climate change, but we must do so with an inclusive approach that doesn’t put jobs, communities, and states like New Mexico on the chopping block,” added Flynn.
A September 2020 analysis warned of negative consequences for New Mexico if a ban on federal leasing were to take effect. New Mexico, which accounts for 57 percent of federal onshore oil production and 31 percent of onshore natural gas production, is projected to be among the states hardest hit, losing over 62,000 jobs by 2022.
New Mexico is the third-largest producer of oil and the eighth-largest producer of natural gas in the United States. In 2019, New Mexico oil and gas production set new highs, topping 330 million barrels of oil, and 1,803,148,707 Million Cubic Feet of natural gas.
A detailed, county-by-county summary of statewide oil and gas revenue is available at www.nmoga.org/fuelingnewmexico.
