Although it was hardly surprising, President Joe Biden’s moratorium on new oil and gas leasing on federal lands announced his first week in office sent shock waves through the industry, along with states like New Mexico where oil and gas is a major economic engine – both in private sector activity and the revenue it generates for state coffers.
Biden, in seeking to fulfill climate change commitments to environmental activists who are an energetic part of his base, said the pause was needed to allow for a thorough review of federal policies. That goes down easy if you are in Washington (non-oil-and-gas state with zero fracking) or Vermont (no known frackable gas reserves). It’s a lot harder if you are in New Mexico, Texas, Wyoming or any major producing state.
Responses to Biden’s announcement were varied. Texas threatened to sue. Wyoming quickly asked for a waiver. The Western Governors Association asked for consultations. While some responses fell along predictable party lines, this one didn’t: “Now is not the time to jeopardize American jobs, or the critical tax and royalty revenues federal leases generate for local, state and federal government.” That was signed by four Democrats in the Texas congressional delegation – Reps. Henry Cuellar of Laredo, Lizzie Fletcher of Houston, Vicente Gonzalez of McAllen and Marc Veasey of Fort Worth.
Republican U.S. Rep. Yvette Herrell, who represents the southeastern New Mexico oil patch, is critical of the move. Gov. Michelle Lujan Grisham and her fellow Democrats in our congressional delegation haven’t criticized the pause but have strongly cautioned it can’t go on too long or be too restrictive.
The governor put her cards on the table last week. She said in a letter to Biden that New Mexico could lose nearly three quarters of $1 billion over the next few years if there’s even a “modest” reduction of oil and gas production due to federal government curbs. With more than half of all oil and gas wells in New Mexico on federal land, the governor noted any changes to leasing and permitting would disproportionately affect the state and push producers to states like Texas where there are more opportunities on private land.
“Those shifts would not only cause economic harm to New Mexico, but would actually lead to increased emissions by shifting productions to areas that have not adopted our strict environmental standards. This,” she told the president, “runs counter to our shared climate goals.”
She acknowledged about one-third of the state’s general fund revenue is generated by the industry and shutting off the revenue spigot would have a serious impact on the state’s ability to achieve goals like universal access to early childhood education – part of a strategy to turn the tide in a state plagued by high poverty rates and poor educational outcomes.
The governor talked about the state’s Energy Transition Act and its timeline for getting away from fossil fuels for electricity, a clean fuel standard and a statewide greenhouse gas reduction target laid out in one of her executive orders.
New Mexico, she argues, should get “credit” for being a good soldier in the climate change wars. Presumably this would be flexibility on new leasing and drilling on federal lands here. We need the money, she argues, to support what her administration is trying to do. That has to include building a bridge to cleaner energy vs. taking the state over a revenue cliff.
We still don’t know exactly what will happen next. Is there a way to get “credit” and therefore more leeway as the governor suggests? Meanwhile the Associated Press reports the Interior Department would resume the “standard permitting process” for activities on public lands and noted “even Sens. Martin Heinrich and Ben Ray Luján” welcomed that news as they had said earlier any extension beyond 60 days would have significant consequences for New Mexico.
Whatever the process is, it will be under the ultimate direction of new Interior Secretary Deb Haaland, who until last week represented New Mexico’s 1st Congressional District.
The governor is crystal clear anything resembling a significant reduction or permanent moratorium will have a devastating impact on New Mexico’s economy and funding she says is essential to address our last-in-most-everything rankings. Let’s hope her approach finds a receptive audience with the new secretary and her boss. Otherwise, as the governor artfully emphasizes, this state is in for some very difficult times.
This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.