by James Jimenez, New Mexico Voices for Children
and Oriana Sandoval, Center for Civic Policy

From the super-computing work at our national labs to the out-of-this-world flights from our spaceport, evidence is abundant that New Mexico can meet current and future challenges with transformative solutions. Our legislators need to tap into our state's well of ingenuity and knowledge and figure out how to accelerate the diversification of our economy and state revenue sources. And they need to do it now – while the oil and gas industry is still with us.

The oil and gas industry is in decline – and has been for at least a decade – according to a new economic report from the Institute for Energy Economics and Financial Analysis (IEEFA). This isn't the fault of the coronavirus, but the pandemic has helped underscore some of the industry's problems. The report gives new urgency for New Mexico to chart a new course for a more resilient, diversified economy, a more stable and equitable tax system, and a more prosperous future.

Pre-pandemic New Mexico saw a boom in oil and gas extraction, which was mirrored by an increase in state revenue. And while many state leaders opined that this boom – being different from previous booms – was going to last indefinitely, the reality for the industry was far more grim. "In short," the report states, "while New Mexico posted record oil and gas revenues, the oil and gas industry itself was reporting steep losses."

Among the key findings:

• Prices for New Mexico's oil and gas have been declining since 2014. From 2015 to 2019, prices fell an average of 44% – and that was before the pandemic.
• The industry is so cash-poor that the five largest publicly traded oil and gas companies have been unable to pay shareholder dividends. Since 2010 they have funded shareholder dividends by selling off assets and taking on new debt.
• Investors are taking notice. While there once were seven oil and gas companies in the S&P's 500 Index top ten, today there are none.
• The growth in electric vehicles is helping drive down demand for gasoline. A new report predicts that the electric vehicle share of passenger vehicle sales will rise to more than 50% by 2040. It concludes that oil demand from passenger vehicles will never recover to 2019 levels.
• Fundamental changes in the economy now support growth strategies that require less dependence on fossil fuels. Energy experts now chart corporate strategies to address the decoupling of economic growth from fossil fuel growth.

We've long known that our oil and gas resources are finite, but we must consider the possibility that the demand for them may die before the resources themselves are depleted. IEEFA's report gives new urgency to the state's need to diversify its revenue sources to rely more heavily on those that are more stable and longer lasting.

IEEFA's report concludes that years of over-production have been unprofitable and unsustainable, and the oil and gas industry in New Mexico may never rebound to previous levels. That means we cannot rely on oil and gas for the revenue we need to staff our classrooms and hospitals, pay our first responders, pave our roads, and more.

Legislators can't control demand for oil, but they have many ways to help stabilize the state's revenue, and they should start by repealing failed tax cuts for the wealthy and out-of-state corporations. Since those tax breaks failed to produce the promised jobs, they stand simply as corporate welfare – something New Mexico can't afford.

We can't wait. New Mexicans need bold and innovative solutions from our policymakers to accelerate the diversification of our state's economy, restructure our tax system with an emphasis on equity, stability and accountability, and strategically invest in our most precious asset – our people This is how we build a more sustainable, prosperous future for our state.

James Jimenez is executive director of New Mexico Voices for Children and Oriana Sandoval is executive director of Center for Civic Policy.

Content on the Beat

WARNING: All articles and photos with a byline or photo credit are copyrighted to the author or photographer. You may not use any information found within the articles without asking permission AND giving attribution to the source. Photos can be requested and may incur a nominal fee for use personally or commercially.

Disclaimer: If you find errors in articles not written by the Beat team but sent to us from other content providers, please contact the writer, not the Beat. For example, obituaries are always provided by the funeral home or a family member. We can fix errors, but please give details on where the error is so we can find it. News releases from government and non-profit entities are posted generally without change, except for legal notices, which incur a small charge.

NOTE: If an article does not have a byline, it was written by someone not affiliated with the Beat and then sent to the Beat for posting.

Images: We have received complaints about large images blocking parts of other articles. If you encounter this problem, click on the title of the article you want to read and it will take you to that article's page, which shows only that article without any intruders. 

New Columnists: The Beat continues to bring you new columnists. And check out the old faithfuls who continue to provide content.

Newsletter: If you opt in to the Join GCB Three Times Weekly Updates option above this to the right, you will be subscribed to email notifications with links to recently posted articles.

Submitting to the Beat

Those new to providing news releases to the Beat are asked to please check out submission guidelines at https://www.grantcountybeat.com/about/submissions. They are for your information to make life easier on the readers, as well as for the editor.

Advertising: Don't forget to tell advertisers that you saw their ads on the Beat.

Classifieds: We have changed Classifieds to a cheaper and shorter option. Check periodically to see if any new ones have popped up. The former software failed us, so it's just a category now, with prices posted. Send your information to editor@grantcountybeat.com and we will post it as soon as we can. Instructions and prices are on the page.

Editor's Notes

It has come to this editor's attention that people are sending information to the Grant County Beat Facebook page. Please be aware that the editor does not regularly monitor the page. If you have items you want to send to the editor, please send them to editor@grantcountybeat.com. Thanks!

Here for YOU: Consider the Beat your DAILY newspaper for up-to-date information about Grant County. It's at your fingertips! One Click to Local News. Thanks for your support for and your readership of Grant County's online news source—www.grantcountybeat.com

Feel free to notify editor@grantcountybeat.com if you notice any technical problems on the site. Your convenience is my desire for the Beat.  The Beat totally appreciates its readers and subscribers!  

Compliance: Because you are an esteemed member of The Grant County Beat readership, be assured that we at the Beat continue to do everything we can to be in full compliance with GDPR and pertinent US law, so that the information you have chosen to give to us cannot be compromised.