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New Mexico Considers a Fracking Moratorium

February 20, 2020

For the second consecutive year, Democrats in New Mexico have introduced legislation to impose a four-year moratorium on hydraulic fracturing (fracking) and subject existing operating wells to expanded reporting requirements.

For the second consecutive year, Democrats in New Mexico have introduced legislation to impose a four-year moratorium on hydraulic fracturing (fracking) and subject currently operating wells to expanded reporting requirements.

State Sens. Antoinette Sedillo Lopez (D-Albuquerque) and Benny Shendo Jr. (D-Jemez Pueblo) introduced a bill on January 14 that would require state agencies with oil and gas permitting responsibilities, such as New Mexico Energy and the Minerals and Natural Resources Department, not to issue permits for new oil and gas fracking operations until mid-2024. In the meantime, it would require the agencies to study the impacts of fracking and recommend new regulations.

The bill would also require relevant state agencies to file annual reports to the legislature and the governor’s office detailing how many drilling permits have been requested and approved, the environmental impact of fracking, and more.

The bill allows current oil and gas extraction to continue, but under an increased inspection and reporting regime.

“The current boom on fracking is proceeding without sufficient state inspectors on wells, without adequate consideration of impact on air and water, without sufficient roads and other infrastructure, and without sufficient state capacity to audit records,” Lopez said in a statement. “I believe we have a responsibility to pause and consider these and other relevant considerations by temporarily halting the issuance of new permits.”

Could Cost State Revenue

The Energy Information Administration reports the hydrocarbon-rich Permian Basin in west Texas and southeastern New Mexico has become the most productive oil field in the United States as a result of fracking. Production in the Permian Basin has helped the United States become the world’s leading producer of oil and natural gas.

New Mexico’s joint Legislative Finance Committee issued a report assessing the economic impact of a similar moratorium proposed in 2019, showing it would cost the state significant revenues.

“Direct revenues from the [oil and natural gas] industry—including severance and production taxes, bonuses, and royalty payments on state and federal lands, and gross receipts taxes—make up about 35 percent of the entire FY 2019 general fund revenue estimate,” the report found.

The report further estimated the moratorium would cost the state government roughly $3.5 billion and local governments $327 million in lost revenues, stating this estimate “should be considered a minimum impact, as it assumes current oil and gas production remains constant.”

New Mexico, which has suffered from high levels of poverty, has seen its public sector benefit from the revenues produced by the fracking boom. In 2019, Gov. Michelle Lujan Grisham announced a new scholarship program to provide free four-year college educations to more than 55,000 high-school students, funded by oil and gas production revenue in the state.

Big Job Cuts Forecast

A fracking moratorium would affect the private sector as well. Fracking has allowed New Mexico to become the third-largest oil-producing state, behind Texas and North Dakota. A 2017 study by PricewaterhouseCoopers, conducted on behalf of the American Enterprise Institute, found the state’s oil and gas industry and the businesses they support accounted for $12.8 billion in economic impact for the state.

A 2019 study by the Global Energy Institute at the U.S. Chamber of Commerce found a total ban on fracking in New Mexico would result in the loss of 142,000 jobs across the state by 2025—15.8 percent of the state’s total workforce.

“To put this loss in perspective, more jobs supported by the oil and natural gas industry would be lost in the first year of a hydraulic fracturing ban than the total number of jobs that all New Mexico industries created in [2018],” the report stated.

New Mexico’s schools will suffer if this moratorium becomes law, said Larry Behrens, Western States director of Power the Future, in a statement.

“Supporters of this bill better be willing to walk into every classroom in New Mexico and explain to families why they want to jeopardize one-third of the budget to appease radical environmentalists,” Behrens stated.

‘Facts, Not Hypotheticals’

Fracking shouldn’t be banned based on speculative assertions of potential harm, says Tirzah Duren, a policy analyst at the Commonwealth Foundation.

“Any policy that would have a dramatic negative impact on people’s livelihood, like New Mexico’s proposed fracking moratorium, needs to be measured based on the facts, not hypotheticals,” Duren said. “In the case of fracking, most harms are hypothetical.

“My home state of Pennsylvania produces more natural gas than any other state except Texas, and there have been no established human health impacts from fracking, according to Dr. Theodora Them, a specialist in environmental medicine at the American Council on Science and Health,” Duren said.

The fracking moratorium presents New Mexico legislators with a stark choice between poverty and prosperity for their constituents, says Craig Rucker, president of the Committee for a Constructive Tomorrow (CFACT).

“New Mexico has been plagued by high rates of poverty for many decades,” Rucker said. “Now, the Permian Basin is giving tens of thousands of New Mexicans a level of prosperity few thought possible only a short time ago.

“It seems some politicians have nothing else better to do than slaughter the goose that’s laying golden eggs all over New Mexico,” Rucker said.

Bonner R. Cohen, Ph.D. (bcohen@nationalcenter.org) is a senior fellow at the National Center for Public Policy Research and a senior policy analyst with CFACT.

Internet Info

Tim Benson, “Research & Commentary: Proposed Fracking Moratorium in New Mexico Would Devastate State Economy,” The Heartland Institute, January 22, 2020: https://www.heartland.org/publications-resources/publications/research--commentary-proposed-fracking-moratorium-in-new-mexico-would-devastate-state-economy

Official Connections

New Mexico state Sen. Antoinette Sedillo Lopez (D- Albuquerque): https://www.nmlegis.gov/members/Legislator?SponCode=SSEDI; a.sedillolopez@nmlegis.gov

New Mexico state Sen. Benny Shendo Jr. (D- Jemez Pueblo): https://www.nmlegis.gov/Members/Legislator?SponCode=SSHEN; benny.shendo@nmlegis.gov

Author
Bonner R. Cohen is a senior fellow with the National Center for Public Policy Research, a position he has held since 2002.
bcohen@nationalcenter.org