By JOSE GARCIA
Guest Columnist

By any standard, in the past decade oil production in New Mexico has attained world-class stature. In 2023, New Mexico was producing about 1.8 million barrels per day (657 million barrels that year) of crude oil, 10 times more than it was producing in 2010, thanks to investments in new fracking technologies.

This quantity places New Mexico just about even with the oil-rich countries of Mexico, Kazakhstan, and Norway, and slightly above Nigeria and Qatar. If New Mexico were a nation it would rank about 14th in the world in oil production, well above the OPEC countries of Libya, Algeria, and Venezuela. Visionary as they might have been, it seems unlikely that Mary and Martin Yates, thrilled by the gushing black liquid at Illinois #3 in Spring of 1924, could have imagined that exactly one century later their descendants would still be drilling in a New Mexico now producing more oil than Qatar.

New Mexico gross domestic product in 2023 totaled about $130 billion. About one-fifth of this amount — $26.1 billion — was generated by the oil and gas industry. According to the New Mexico Tax Research Institute, total state and local government spending in 2023, including federal transfers, added up to about $26.2 billion, out of which slightly more than half ($13.9 billion) came from direct and indirect taxes collected from the oil and gas industry.

Most taxes collected on oil and gas are placed into the General Fund, which also includes revenues from income, corporate, and other taxes and fees. General Fund money is used to fund the annual state government budget: schools and colleges, health care, public safety, etc. Other chunks of oil and gas taxes are placed into various funds to pay for roads; for local operating, and state and local capital expenses; to bolster state reserves; and to add to various permanent funds designed to accumulate state monies against the day when extractive industries have been depleted as significant sources for state revenues.

In 2023 the general fund contained $14.98 billion when the legislature convened. Fully half of this amount, $7.5 billion, was collected from oil and gas, according to the Tax Research Institute. The other funds received $6.4 billion in oil and gas taxes and fees. The same source asserts that oil and gas taxes paid for nearly 58% of 2023 expenses for public and higher education. Twenty-seven percent of all state expenses for health and human services came out of oil and gas, and six percent of public safety expenses. Truly, in recent years state government spending has dramatically increased its reliance on revenues from oil and gas. By contrast, between 1998 and

2008 energy-related revenues averaged only about 16% of the General Fund. From 2011 to 2021 they averaged about 33%. In 16 years, the proportion of the state budget reliant on oil and gas has more than tripled.

The oil boom will not last forever. Given that the state is hardly a paragon of excellent government management, there is an urgency to use these generous petrodollars to fix what needs fixing.

Most New Mexicans outside of the Oil Patch — San Juan County is included because of its huge production of natural gas and oil — appear not to have absorbed the full magnitude of the oil and gas bonanza. Most are vaguely aware of increased oil activity in the east side, but few of us have any idea of the massive scales or spreading impacts from this surging tide of cash. Consequently, citizens have largely left the management of these new riches up to the New Mexico Legislature and executive branch, with little commentary or debate, much less public pressure about how to spend it. Likewise, the governor’s office and legislative leaders have made few serious remarks about what they might propose to do in the future with the most massive influx of tax dollars in the state’s history. But if they hadn’t thought this through, they have not neglected to spend the money.

Do you remember? This is the legislature, and the political class that surrounds it, that has managed New Mexico into last place in education; that is doing little to stem the obvious decline in health care; that has yet to muster our prevailing institutions into a robust effort to manage our water resources, dwindling relentlessly over the past two decades; that tolerates growing levels of public corruption and ignores persistent insults from a criminal class in Albuquerque growing faster than recent oil production stats in Lea County. Virtually no one believes the billions of NEA-driven, non-accountable new dollars for education will lift the state one centimeter above our last-place standing. We’ve seen this movie before.

Politics in the oil patch one century later

If the Oil Patch is generating more money than the average Arab oil-sheikdom, the political power of those who live there has not improved with all that extra cash. In fact, it may be shrinking.

The east side is not building 100-story skyscrapers in Hobbs, or creating a competing global organization for professional golfers, or sponsoring Formula 1 racing events, and the like, as is the case, say, in Dubai. Ninety percent of the land producing oil is owned by the state or federal government. By far most of the companies producing oil in New Mexico are headquartered in Texas, and it is unclear just how much of the revenue generated by oil production stays in New Mexico or in New Mexican hands. What we do know is that the state of New Mexico is now raking in more tax money each year than any of the general fund budgets signed by Gov. Michelle Lujan Grisham through this year. And census data shows the east side poverty rate (18.2%) is right at the state’s average (18.4%).

One in five of us lives in poverty.

The vastly improved efficiency in oil extraction has reduced the demand for labor on the east side. The population of the east side is in relative decline, reflected in a decline in the number of legislators from the region, reducing the region’s political clout. Three decades ago, the southeast corner normally contributed 15-17 percent of the vote in a statewide election. In those days, the east side vote — conservative to the core — easily matched the reliably liberal vote of Hispanic north. Today the east side struggles to produce 13% of the statewide vote, while the Hispanic north has maintained its proportion at about 16%. The southern congressional district (CD2) was held by east-siders from the early 1970s until 2018. In 2022 the legislature gerrymandered CD2 to include large sectors of Albuquerque, making it difficult for someone from the east side to be elected for that job. This was not an accident.

If the Tax Research Institute is correct, the $13.9 billion collected in taxes last year from oil and gas, if divided equally to every living person in the state, would amount to about $6,575 per person. The share for a family of four would be $26,300. A fair question to ask is, does that family of four get that much value each year from the extra cash state government spends?

Experience over the past century shows that countries that rely heavily on oil revenues to fund government are highly prone to public corruption: look up corruption ranking scores for Russia, Libya, Nigeria, Mexico, Venezuela, Iraq, and Iran. They are also highly prone to neglecting investment in solid infrastructures for economic development in the future when oil revenues have depleted.

The time is ripe for all of us to ask these questions of our governor and our legislators. Mary and Martin Yates, Tom Flynn, and Van S. Welch, if they were here, would surely join the crowd in asking.

(EDITOR’S NOTE: Jose Z. Garcia taught politics at New Mexico State University for more than three decades and served as Secretary of the New Mexico Higher Education Department for four years.)

By RICH CONNOR
Publisher/Editor

Attractive nuisance.

What originally caused consternation among Eddy County folks drilling for water – water from Artesian springs – turned out to be among life’s most attractive nuisances.

Oil.

Water drilling was continually paused because that darn black oil kept seeping into wells. The persistence of the unwelcomed oil was, thank goodness, matched only by greater persistence by men and women determined to drill specifically for oil and later oil and gas.

This weekend’s celebration of the 100 years since Illinois #3 gushed and oil shot straight into the air like a black rocket is testament to hope, courage, risk, and the determination not to give up in the face of adversity.

It’s also a time to reflect on the philanthropy that has flowed from business profits back into Artesia to make it darn close to what former President Ronald Reagan described as a shining city on a hill, a phrase he used to be emblematic of his political career.

Actually, the phrase was originally used in 1630 by John Winthrop in a sermon on his vision of America, “we shall be as a city upon a hill.” Winthrop was a Puritan and among the first colonists from England. He was governor for many years of the Massachusetts Bay Colony.

Artesia is not hill country but we have oil and the discovery of it here was the boom to great economic growth. Several of our local residents have been more than willing to spread their wealth from oil and gas to make Artesia a shining city.

No better example of the history of oil and Artesia exists than the bronze statue at the center of town – “The Derrick Floor.” It tells our story and is the result of men and women who wanted to honor our history in dramatic and artistic fashion.

It is possible to take for granted all the wonderful aspects of life in Artesia, an almost idyllic, Andy of Mayberry town. The benefits of living and working here are the result of not only the Illinois #3 discovery but also of the generosity of our citizens driven to make this town special.

May the next 100 years be even more fruitful.

Thank you, Artesia.

By NELLA DOMENICI
Guest Columnist

I am pleased to join the Permian Basin Centennial celebration. In many ways, it is a celebration of New Mexico’s national, pre-eminent leadership in energy production; its contribution to our energy independence and free world leadership; and a tribute to the men and women who work in the oil fields.

We are blessed with the Permian Basin. We are third in solar energy production, at the top for wind, and sixth in the country for geothermal potential. We are the state that provided the know-how to unleash nuclear energy for peaceful purposes.

New Mexico should have a senator who appreciates that our state is an energy producing state, appreciates our abundance of oil and gas and other types of energy, and who believes we should be the world’s showcase for producing natural gas and oil in the most environmentally sensitive ways.

New Mexico should have a senator who will put New Mexico in the spotlight as a Center of Excellence for developing the best technologies and make New Mexico the headquarters for testing pilot programs to reduce greenhouse gases. I will be that senator.

It is time to flip the script. We have experienced too much Martin Heinrich and not enough support for the oil and gas industry.

The world needs more energy — not less. It needs more oil and gas — not less.
Artificial Intelligence will make enormous demands for energy. By 2050 there will be 2 billion more people and a world economy twice as big as today.

Modern life can’t exist without oil and gas and the thousands of products made from petroleum products.

Martin Heinrich wants to shut down the oil and gas industry.

Without products made from oil and gas our lives would be less modern.

Your house would have no roof, insulation, or flooring – most made from petroleum products. Your wardrobe would be reduced – no spandex, polyester, nylon, or vegan leather. There would be nothing made of plastic including 20 percent of the parts needed to build electric vehicles. If my opponent had his way, he would ban gas appliances including stoves.

Oil and gas production is not the problem. No particular energy source is the problem. The problem is emissions.

The industry, our national laboratories, and universities are working to develop technologies to reduce emissions. Energy companies are some of the most sophisticated, innovative high-tech companies in the world, and they are using their expertise to reduce emissions. One energy company’s research and development budget is almost two-thirds of the total EPA budget.

There are many promising technologies at work in the Permian ranging from satellites in the sky to new sensors on the ground. At least one is developing an all-electric drilling rig. Others are using renewables in their operations.

Most are greatly reducing flaring through innovation. The technology exists to detect and stop methane leaks in real time; to suck CO2 out of the air; to extract lithium from drilling byproducts and to recycle produced water. Yet government agencies are heaping more and more regulations on them as a backdoor to reducing production.

My opponent supports the Biden administration’s anti-oil and gas policies —including more than 90 separate sets of regulations promulgated by EPA.

Those who advocate for reducing oil and gas production are really advocating for more poverty in the world and an unworkable state budget in New Mexico.

New Mexico should have a senator who understands that 50 percent of the state’s budget for education and crime fighting public safety is paid for by oil and gas royalty payments; that oil and gas jobs are high paying — more than 130,000 of them in New Mexico alone; and that domestically produced oil and gas makes gasoline at the pump and electricity to heat and cool our homes reliable and affordable.

My father was a champion for the oil and gas industry. He believed in all types of energy and recognized that energy security is national security.
I will be that senator.

(EDITOR’S NOTE: Nella Domenici is the Republican candidate for U.S. Senate and is challenging incumbent Democrat Martin Heinrich.)