Shifting politics expected to affect NM oil and gas sector

By Spencer Butler / NM News Port

With the 2020 general election finally over, reality is setting in that a new Biden administration will take power on Jan. 21, 2021. And with it comes the promise of a renewed fight over environmental protections that were weakened under the Trump administration.

This will affect New Mexicans, as New Mexico has produced 10,000 barrels of oil per month since 2014, according to the U.S. Energy Information Administration, making the state the third-largest oil producer in the nation.

Oil production also accounts for a large amount of New Mexico’s financial income, with the oil and gas industry generating $2.2 billion for the state in 2018.

The question of how a new administration will affect the oil and gas industry is not a simple one to answer, according to Joseph A. Schremmer, assistant professor of law at the University of New Mexico and the Judge Leon Karelitz Chair in oil and gas law.

“The president and the federal government in general doesn’t have much to say about the basics, it’s only in a few narrow areas that the federal government and therefore the president has much direct influence on,” Schremmer said.

One of the areas that the federal government does have sway over is environmental regulations, such as the Clean Air Act which was shrunk by the Trump administration.

“It’s very likely that he (Biden) and his EPA (Environmental Protection Agency) will try to re-implement the Obama-era Clean Air Act rules and probably increase them,” Schremmer said.

Also, policy relating to federal lands is important to New Mexico due to the large number of such lands that exist in the state.

While the Obama administration put several regulations on these lands, such as fracking and methane emissions rules, the Trump administration rescinded them and relaxed other regulations on federal land.  

“Similarly to the environmental situation, when the Biden administration takes over, they have been pretty clear actually about what they intend to do in terms of federal oil and gas development…What they intend to do is to ban the use of hydraulic fracturing on federal land,” Schremmer said.

This would be a significant increase in regulation compared to the Obama administration, as it never banned the use of hydraulic fracturing on federal land, according to Schremmer.  

A number of other changes could also occur, such as ceasing the selling of new oil and gas leases on federal land and stopping new permits to drill new wells under existing leases.   

But this doesn’t mean that these changes will go into effect.

“There are a lot of legal reasons why it’s likely that those changes to the Trump administration policy will be challenged, and at the very least delayed in their effect and quite possibly will never be able to take legal effect,” Schremmer said.

A derelict Shell gas station on Central is a reminder of the volatile, boom or bust, nature of the oil and gas industry. (Spencer Butler / NM News Port)

Senator-elect Ben Ray Luján, who will be succeeding  Sen. Tom Udall, has already made clear his thoughts on the state’s oil and gas industry, including fracking.

“I have never supported a fracking ban because I don’t think it is the best policy for our country. We can and should protect our oil and gas workers while creating new energy opportunities for New Mexicans,” Luján told the Albuquerque Journal.

Even so, Luján has said he believes that clean and renewable energy is the future. 

His campaign website states, “Rep. Luján is committed to a clean energy future that will eliminate America’s dependence on foreign oil and produce affordable, sustainable energy.”

Luján co-wrote the American Renewable Energy and Efficiency Act, and cosponsored the Public Land Renewable Energy Development Act, which would speed up the federal government’s process of approving renewable energy projects.

Meanwhile, questions linger as to what the incoming New Mexico state legislature will do as new, more progressive legislators begin their terms early next year.

One of the new senators is Siah Correa Hemphill, who beat incumbent Sen. Gabriel Ramos and James Williams to represent New Mexico’s 28th state senate district.

In an email, Hemphill expressed the need for New Mexico to start the transition away from reliance on the oil and gas industry.

“It’s no secret that New Mexico has been overly dependent on the volatile oil and gas industry,” Hemphill said. “Currently, it makes up more than 1/3 of our budget, so when oil prices are down, it has a devastating effect on our economy.” 

“At one time there were seven oil and gas companies in the S&P’s 500 Index top 10 and today there are none,” the statement from Hemphill reads. “It’s important that NM diversify our revenue sources to rely more heavily on those that are less volatile and longer lasting in order to stabilize our state’s revenue.” 

Hemphill pointed to other revenue sources such as cutting tax breaks for the rich and for out-of-state corporations. 

“It’s time to restructure our tax system with an emphasis on equity, stability and accountability and move to diversify our economy through legalization of recreational cannabis, value-added agriculture, renewable energy and supporting our small businesses,” Hemphill said.

Senator-elect Brenda McKenna, in New Mexico District 9, agreed with Hemphill in that the new legislative body should look at the tax breaks that corporations get. 

“I think that we need to look at these tax cuts, so that we are making sure that everyone is doing their fair share in this economic situation,” McKenna said.

Similarly, McKenna stressed the need to create jobs through legalization of cannabis, and, like Hemphill, called for retraining workers that can help create newer, more sustainable forms of energy. 

Spencer Butler is a reporter for the New Mexico News Port. He can be reached on Twitter @SpencerButler48.