The presidential race is far from over, but former Vice President Joe Biden has maintained a consistent lead on President Donald Trump. That trend has the energy industry preparing for the real possibility of a dramatic shift in our national energy policy under a Biden-Harris administration.
Looking at the tea leaves, what should New Mexicans make of his decision to appoint Gov. Michelle Lujan Grisham as a co-chair for his transition team?
Of particular concern is the oil and gas industry’s practice of hydraulic fracturing. Known as “fracking,” the procedure has been used safely for over 70 years, and technological innovations implemented in the past decade have significantly improved its effectiveness. The practice led to a “Shale Revolution” that completely transformed local economies in places like Ohio and Pennsylvania and helped America become a net energy exporter.
The boom has similarly lifted the prospects of Lujan Grisham’s state. Thanks to fracking, New Mexico is now the nation’s third-largest oil-producing state and the ninth-largest natural gas producer. These activities support more than 100,000 jobs in the state, with average salaries of $71,000 a year.
Notably, New Mexico oil and gas generate tax revenue that accounted for 39% of all state general fund revenues in the fiscal year 2019, providing money for roads and highways, first responders and public education.
So, Vice President Biden’s equivocation on fracking is concerning. He drew scrutiny when he debated Sen. Bernie Sanders in the Democratic primary in March.
“I’m talking about stopping fracking as soon as we possibly can. I’m talking about telling the fossil fuel industry that they are going to stop destroying this planet – no ifs, buts, and maybes about it,” said Sen. Sanders.
“So am I,” Biden replied. “No more – no new fracking.”
Biden’s official position has been that his administration would prevent the federal government from issuing new permits for drilling on public lands but would allow existing fracking operations to continue.
But that still presents a potential problem for New Mexico because the federal government owns 32% of its land, and more than two-thirds of its natural gas production occurs on public lands. Biden’s ban on new fracking would be a job killer and could decimate the general fund. A recent report by the American Petroleum Institute and the New Mexico Oil and Gas Association claims it could cost the state 62,000 jobs and more than $1 billion.
In contrast, President Trump has put forth reforms that would expand drilling on some public lands. So that begs the question, will Lujan Grisham be able to convince a President-elect Biden to exempt New Mexico from a fracking ban on federal lands?
The governor was given a speaking slot at the Democratic National Convention in August that she used to talk about her “climate leadership,” criticize Trump’s easing of regulations and promote her renewable energy goals. I support an all-of-the-above approach, so that’s fine in my book, but she said nothing to reassure New Mexico voters that she will protect its vital oil and gas industry.
In the Roundhouse earlier this year, one of the governor’s fellow Democrats, Sen. Antoinette Sedillo Lopez, introduced a bill that would place a strict moratorium on fracking until 2024. Luckily, the bill was shelved before the pandemic-related economic crisis hit.
But it hardly inspires faith that the governor will stand up to Biden on energy policies that impact New Mexico should he become president.
Canary LLC is one of the country’s largest oil field service companies with operations in New Mexico and West Texas.