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Oil and gas complicates New Mexico energy transition


This article was republished from Searchlight New Mexico, a nonprofit, nonpartisan media organization that seeks to empower New Mexicans to demand honest and effective public policy


On March 15, New Mexico Gov. Michelle Lujan Grisham sent a letter to President Joe Biden, praising his commitment to climate action and touting New Mexico’s leadership in the area. She then asked if oil and gas leasing in the state could continue in spite of a federal moratorium.

New Mexico, she said, was already contributing to stopping climate change — and it needed the revenues from oil and gas too much to slow drilling. As though to reinforce her point, the state legislative session concluded the following week without taking any steps to curb oil and gas emissions.

“It was kind of like a final cherry on top,” said Castille Aguilar, a campaign organizer for Youth United for Climate Crisis Action, a youth-led climate action group. “The idea that we can be leaders on climate change while continuing to give the industry free rein is just a lie, a huge lie.”

For activists like Aguilar, this spring was emblematic of the Lujan Grisham administration’s hands-off approach to climate policy. Democratic state leaders receive less campaign support from the industry than their Republican counterparts, but they still nix policies that could impede the immediate flow of oil (and dollars) in the state. Lujan Grisham and the Democrat-majority legislature talk about energy transition as something to come in the distant future, while tapping industry revenues to fund investments in education and other social policies.

Their hesitancy has opened a door for the industry to further cement its influence in the state. In fact, New Mexico has never leaned as heavily on industry dollars as it does today. In April, monthly oil and gas royalties from state lands hit an all-time high at $110 million, and in 2020, oil and gas funds made up more than a third of the state’s general fund.

Credit: Searchlight New Mexico

When Democrats assumed control of both the legislature and the governor’s mansion in 2019, environmental groups had high hopes for climate action. Over the previous eight years, former Gov. Susana Martinez had gutted funding for environmental agencies and deregulated the oil and gas industry. Lujan Grisham swept into office full of promises of a greener future.

She advised state agencies to prioritize climate change, and she formed a task force to monitor progress towards climate goals. That same year, the legislature passed the Energy Transition Act, which requires New Mexico to become completely carbon neutral by 2045.

However, legislation and regulations that would have immediately curtailed the oil and gas industry fizzled. Bills that would have raised oil and gas royalty rates and paused new fracking permits never made it out of committee. The state environment department put out draft rules designed to curb methane releases from oil wells but left gaping loopholes that would have allowed the vast majority of the state’s oil wells to continue polluting unchecked. After months of intense pressure from environmental groups, the state finally changed course, closing most of them.

“The governor and Democratic leadership can’t have their cake and eat it too,” Aguilar said. “They can’t claim to be climate champions while increasing oil and gas extraction in our state.”

Since then, no legislation that would stem oil and gas production has reached the governor’s desk, while droves of bills to spend the tax revenue from that industry have.

“The governor is proud to have successfully gotten so many of her legislative priorities over the finish line in the recent legislative session, as well as in previous sessions,” Nora Meyers Sackett, a spokeswoman for the governor’s office, said in a statement. Lujan Grisham did not respond to requests for an interview.

Over the years, the state’s budget has become increasingly reliant on oil and gas funds. In the 2020 fiscal year, that share was about $2.6 billion — just over a third of the state’s general fund. Since 2006, the state has used oil and gas revenue for at least 28 percent of its budget and sometimes as much as 37 percent.

Credit: Searchlight New Mexico

Industry leaders have made their growing influence clear.

“The future and the opportunities that New Mexico has is directly tied to the success of the oil and gas industry,” said Robert McEntyre, the communications director for the New Mexico Oil and Gas Association. “That’s something that policymakers on both sides of the aisle have long recognized.”

New Mexico’s dependence on natural resources has been a feature of the tax structure since statehood in 1912. As decades passed, the resources being pulled from New Mexican earth changed — coal, then uranium, then natural gas — but the economic model never did.

The latest oil boom overlapped with years of steep tax cuts, resulting in a state budget with natural resources as its primary source rather than a piece of the pie. For nearly two decades, state government has focused on slashing taxes. Martinez, Lujan Grisham’s predecessor, still touts that she made 61 cuts to state taxes and fees.

But this tax structure is not set in stone.

“We have oil and gas, and so we have chosen to provide tax cuts in other areas,” said Bill Jordan, the government relations officer at New Mexico Voices for Children, an advocacy group. “Other states have figured out how to pay the bills … and they do it without oil and gas.”

To do this, some officials in state government have begun pushing to find other sources of revenue.

“We want to have a transition plan,” said Stephanie Garcia Richard, public lands commissioner and head of the office that oversees state land use. “We want to transition and not just leave New Mexico in a lurch.”

Garcia Richard’s office has begun leasing land to renewable energy companies. The office is also looking at recreation, manufacturing and research as potential income sources in preparation for the day that New Mexico’s oil wells inevitably shut off. Still, efforts to end New Mexico’s oil and gas dependence remain in their infancy.

That may be in part due to oil and gas’ influence in state and local elections. Industry money was the largest source of state campaign contributions in 2020, according to an analysis from New Mexico Ethics Watch.

The industry’s contributions to candidates span the entire state, both political parties and almost every level of government. More than half of the oil and gas contributions between 2017 and 2020 came from individuals or entities outside New Mexico. Chevron, based in California, was the single largest contributor to candidates from New Mexico in both state and federal elections. Oklahoma-based Devon Energy and Texas-based Occidental Petroleum and Concho Resources also cracked the top five contributors.

Credit: Searchlight New Mexico

Between 2017 and 2020, 225 candidates in New Mexico accepted direct contributions from the oil and gas industry. Of the candidates who won their elections, six — Phelps Anderson, James Strickler, Cathrynn Brown Novich, Candy Ezzell, Joshua Hernandez and Rachel Black, all Republicans — ran campaigns funded more than 50 percent by oil and gas, and 32 others had campaigns financed more than 20 percent by the industry.

Credit: Searchlight New Mexico

While more Republicans took money from industry-linked donors, high-ranking Democrats also drew in large contributions. Lujan Grisham received $233,626, far less than her Republican opponent Steve Pearce, who received more than $800,000 in contributions from oil and gas. Brian Egolf, Democratic speaker of the state House, brought in $87,150, and Joseph Cervantes, Democratic chair of the state Senate Judiciary Committee, took $46,682 from the oil and gas industry, accounting for more than 20 percent of his total campaign contributions.

It’s difficult to trace campaign contributions or meals provided by lobbyists directly to votes and policy, but the oil and gas industry leaders have made no secret of their efforts to grab a seat at the table in government. Democratic state leaders aren’t turning them away.

Just days before Lujan Grisham made her public appeal to Biden for a moratorium exemption, her staff privately asserted the administration’s strong link to the industry in an email to an Eddy County official obtained by the corporate watchdog group Documented and published by HuffPost.

“We have been communicating frequently with the large operators and the trade associations,” wrote Caroline Buerkle, a top Lujan Grisham staffer. “They have all been appreciative of her efforts.”

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