The New Mexico economy depends on a strong oil and natural gas industry.
The billions of dollars in annual tax and royalty revenue from oil and natural gas is the single largest source of state funding for our public schools, our colleges and universities, and our health care.
All told, the industry accounts for nearly one-third of all state funding. No other industry comes close in terms of funding essential services.
As we look to recover from the downturn, now is the time for the New Mexico Legislature to foster an environment that will help us secure ongoing oil and gas production that will bring back jobs and new revenue to the state. Now is not the time to add additional regulations, further exacerbating the problem and discouraging production at a time when we need it most.
New Mexicans should be proud to live in one of the most energy-rich states in the country. New Mexico is the sixth-largest net supplier of energy to the nation, primarily because of our oil and natural gas production, and we are the largest petroleum producer among the eight Rocky Mountain states.
When it comes to energy production, New Mexico is a national leader.
Even during the recent downturn, the Permian Basin in southeast New Mexico has attracted a great deal of investment in the drilling of new wells. Even in the current price environment there are still over 30 drilling rigs operating in our state. Every drilling rig accounts for between 50 and 75 high-paying direct jobs, in addition to supporting a similar number of indirect and induced jobs.
Despite the challenges caused by low prices over the last few years, oil production remains close to all-time levels and natural gas production is steady. This means that the industry in New Mexico is well positioned to take advantage of any further price increases. This will mean more money for our schools and other vital services.
An example of how important oil and natural gas is to New Mexico is in education funding. In fiscal year 2016, the industry provided $703 million in funding for public schools and $238 million in funding for colleges and universities across New Mexico.
These funds cover many expenses, including the salary and benefits for teachers, professors and staff.
Throughout the coming weeks, we will be sharing the New Mexico Tax Research Institute’s county-by-county estimates of oil and gas revenue that goes to our schools.
As an example, the Albuquerque Public School budget in 2016 was $688 million, of which $173 million was funded by the oil and gas industry.
That means that nearly one out of three teachers are paid for with tax revenues generated from this industry.
New Mexico is competing with other states for investment in the drilling of new oil and gas wells and the jobs and tax revenue that follow. Extreme diligence in the upcoming legislative session is needed to balance the budget and pave the way for economic and job growth.
Any proposal that does not improve the business climate for existing and new industry should not become law.
New laws and regulations that offer complex and costly rules without clear science-based and cost-effective benefits to water quality, human health and the environment should not move forward.
While our state continues to face challenges, I believe we are up to the task of improving our economy and adding jobs and new revenue. What is needed now is calm thinking and sound policies that will get us through these next couple of years and set the stage for ongoing success.
The oil and gas industry in New Mexico is proud to be a part of our great state, and will continue to do our part to responsibly produce the energy we use, provide good paying jobs, and in the process, produce the taxes and other revenues that are so important to securing our future.