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Heinrich coming for your gas heater, stove

The following appeared in the Albuquerque Journal on July 21, 2021. While the newspaper cannot include hyperlinks to the data used in the piece we have added those links here:

Natural gas is a clean and affordable fuel they use to cook, heat their water, and provide warmth in the winter. Millions of Americans appreciate its benefits, even if they don’t think about them.

Just because you don’t think about natural gas doesn’t mean radical environmentalists (including New Mexico’s senior US Senator Martin Heinrich) aren’t. Heinrich recently wrote in the New York Times that “working to electrify our vehicles, homes and businesses is a critical part of achieving economywide net-zero emissions.”

He’s pushing legislation in Congress and for funding in the “infrastructure” bill for “electrification” – which is really another way of saying phasing out or banning your natural gas stove, oven, and furnace and requiring you to use electric heat and stoves.

Sacramento recently became the 46th US city to begin “phasing out natural gas in new buildings.” It’s not just happening in California. According to the Wall Street Journal, “Seattle, Denver and New York have all either enacted or proposed measures to ban or discourage the use of the fossil fuel in new homes and buildings.”

Just a decade or so ago the Sierra Club and other environmental groups supported natural gas as a cleaner-burning alternative to coal. Now, Senator Heinrich – counter to the economic interests of the state he represents (New Mexico is a major natural gas producer) and against the expressed preferences of consumers who use such appliances – is pushing to eliminate natural gas.

The push for a natural gas ban is premised on the idea that we should replace fossil fuels with wind and solar technologies that put us on a path to “net-zero emissions.” Of course, we’re not just talking about replacing all existing electricity generation; just 10% of current electricity production comes from wind, solar, and geothermal combined. Experts say “electrification” would increase US electricity consumption by 40 percent.

To say the least, Sen. Heinrich’s “electrification” scheme will require astonishing amounts of new electricity generation (at great economic cost) not to mention batteries to ensure reliability and new transmission lines to distribute it. We’ll be the ones paying for all that new redundant generation.

It’s an even bigger problem considering the reliability and demand issues already facing the Western United States this summer and utilities’ (including PNM’s) difficulty bringing new “renewables” online.  

And then there are consumer preferences for natural gas, which for some reason get casually ignored. You will have to search far and wide to find an electric stove in your favorite restaurant. That’s because natural gas is superior to electricity for cooking on both food quality and price.  Banning natural gas in restaurants means you would be waiting longer for your favorite meal while also paying more.

Any serious push for “electrification” of our economy will require massive government subsidies (thus Heinrich’s push in the current “infrastructure” bill), with electricity reliability already an issue the reliability of natural gas can be a literal lifesaver.

We all want clean, affordable, and reliable energy. Natural gas provides all three. And while the US has been steadily-reducing CO2 emissions for over a decade, China now emits more CO2 than the rest of the developed world combined(that includes the US, Canada, Europe, and Australia). Sen. Heinrich’s forced-shift to all-electric in the US will be costly and won’t achieve the environmental gains he seeks.

The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

 

 

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Biden Energy Policy: How Red States Saved New Mexico

The following appeared on July 9, 2021 at National Review’s Capital Matters:

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On June 15, 2021, U.S. District Court Judge Terry Doughty issued a preliminary injunction halting the Biden administration’s moratorium on new oil and gas permits on federal lands and in federally controlled offshore areas in the Gulf of Mexico. The lawsuit was filed by 14 states that were set to lose out on significant oil and gas development if the moratorium remained in place indefinitely.

Ironically, of all the states impacted by Biden’s moratorium, increasingly deep blue New Mexico had the most to lose. According to an analysis from the American Petroleum Institute, New Mexico would be expected to lose over 62,000 jobs and $1.1 billion in revenue from the moratorium. Ranking third among all states in oil production and a leader in natural-gas production as well, New Mexico would have lost nearly half of total production in both had the moratorium stuck.

Wyoming, the next-most-affected  state would have lost just a bit over half as much revenue ($641 million) as New Mexico. And, with an annual General Fund budget of $7.4 billion, that is a lot of revenue to make up. Unfortunately, in this world of “red” and “blue” states, self-interest was not enough to get New Mexico Attorney General Hector Balderas to join the lawsuit.

So, no thanks to any of our own elected officials (or former New Mexico Congresswoman, now Interior Secretary, Deb Haaland), New Mexico likely just dodged a dagger aimed straight at the heart of the state’s economy. Better still, a combination of market forces and geological discoveries means that New Mexico’s oil and gas industries (like America’s) could be heading into an era of unprecedented prosperity, if  the political forces arrayed against them can be held at bay.

Prior to the COVID-19 pandemic, oil production in New Mexico’s Permian Basin (which it shares with Texas) had been growing rapidly. As recently as 2010 New Mexico was the 7th-leading oil-producing state in the nation with 65 million barrels a year. By 2020 (despite the pandemic), annual production had risen to 379 million barrels.  

Now, it appears that New Mexico is on the verge of surpassing North Dakota to become the nation’s 2nd-largest crude-oil producer. March 2021 data (the most recently available) from the Energy Information Administration (EIA) show New Mexico producing 1.16 million barrels of oil per day compared to 1.11 million in North Dakota.

Like most of New Mexico’s post-2010 surge, the state’s continued growth is being driven by new discoveries that are accessible through new technologies; notably, “fracking.” Furthermore, as the Permian Basin  has already been producing large quantities of oil and natural gas for decades, the infrastructure to access and move the product is already in place.

As if all of these convergent factors acting in support of New Mexico’s oil and gas industry weren’t enough, while motorists may not be thrilled, prices at the pump clearly show that the industry is doing quite well in the wake of COVID-19. If analysts from Bank of America are right, the boom is just getting started. They predict that by 2022 crude-oil prices could hit $100 per barrel. This means even more jobs and tax revenues flowing into New Mexico and it means reliable (if not necessarily cheap) energy for Americans.

Ironically, despite all of this good economic news for the state, New Mexico’s history of rule by left-wing Democrats has left it in pretty bad shape, thanks in no small part to the intense lockdowns during the pandemic. Oil and gas and the money it brings may help, but if the state’s political leadership doesn’t do a better job managing the boom, the next bust could be harder to manage.

According to the Bureau of Labor Statistics data for May, New Mexico’s unemployment rate is 2nd-highest in the nation at 8 percent. Worse, due to the state’s poor performance on a variety of education, economic, and crime rankings, New Mexico was recently ranked as the worst state in the U.S. in which to live. Agree with the data or not, the Land of Enchantment has some deep-seated and serious issues to deal with.

And, while most problems are made easier with money as opposed to without it, a system where politicians have plenty of resources to spend regardless of the success or failure of their economic policies is not a great system. In fact, it is a system that has fueled awful government in places like Saudi Arabia and Venezuela (to name just two poorly governed petro-states).

Will things be different this time for poor New Mexico? The political and economic situation are extremely volatile and it is hard to tell. With energy largesse flowing in, the Land of Enchantment  could finally add a strong economy  to its name. Political will has always been the missing ingredient.

PAUL GESSING is president of New Mexico’s Rio Grande Foundation.

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Democrats walk fine line on energy

The following appeared in the Albuquerque Journal on April 18, Santa Fe New Mexican, and other New Mexico media outlets.

If there were an overall theme for New Mexico’s current political situation it would be the ongoing attempts by Democrats to placate their environmentalist base which opposes traditional energy sources while at the same time keeping energy dollars flowing into the State’s coffers.

The Biden Administration’s moratorium on oil and gas permitting is the most notable example of this conflict. Gov. Lujan Grisham has publicly spoken out about it, but Attorney General Balderas has refused to join a lawsuit challenging the policy that was recently filed by a dozen states. None of those states have as much to lose as does New Mexico, but our elected leaders are unlikely to challenge a President of their own party.

The internal conflict was on full display in the recently-completed legislative session as well. Thankfully, the most radical bill on energy which would have banned “fracking,” (an oil and gas drilling process without which New Mexico’s oil and gas industry would be immediately decimated) failed without gaining traction.

Making it much further in the process only to fail unexpectedly was Sen. Mimi Stewart’s “clean fuel standard” SB 11. In 2019 Gov. Lujan Grisham made national headlines stating that New Mexico was going to increase vehicle mileage in New Mexico to 52 MPG by model year 2022.

SB 11 would have instead forced motorists to use “alternative” fuels with the goal of reducing carbon emissions while passing off the hard work of actually developing the technology onto the private sector. Presumably blame for higher fuel costs would have been shifted as well. The bill faltered after passing the Senate.

Anti-energy bills that did make their way into law included SB 8 which allows local governments  to enact more restrictive air quality regulations than are imposed by the federal government. It is unlikely that conservative counties where much of the Industry is located (and people are far more supportive of the Industry than liberal Albuquerque or Santa Fe) will enact such regulations, but this is about politics, not policy.

Speaking of politics, SB 112 which also made its way into law creates a “sustainable economy task force.” The task force’s stated goal is “diversifying New Mexico’s economy while reducing reliance on traditional energy sources.” Of course, New Mexico Democrats have controlled the Legislature for decades and with total Democrat control under Lujan Grisham, they have had ample time to enact the public policies necessary to “diversify” New Mexico’s economy.

Unfortunately, Santa Fe has repeatedly failed to reform the gross receipts tax, eliminate Social Security taxes, reduce onerous regulations, and expand educational choice (to improve workforce preparedness). In recent legislative sessions we’ve instead seen tax hikes passed at times of big budget surpluses. During both the 2019 (HB 6) and 2021 (SB 317) sessions tax hikes were adopted. Such cash grabs do nothing to diversify New Mexico’s economy. At best they diversify government revenues. In addition to tax hikes, policies like minimum wage hikes, paid sick leave mandates, and ongoing COVID restrictions imposed by the Executive only hinder economic growth and diversification.

Finally, this session, while the Legislature continued its piecemeal attacks on energy, after a decade of attempts they passed an amendment to increase distributions from the Land Grand Permanent Fund (the fund is generated by oil and gas). HJR 1 not only increased distributions by 1% but added an additional .25% to that amount for a total increase of 1.25%.

Continued existence of the fund happens only if the oil and gas industry thrives, so Democrats’ plan to take more money out while less money is put in seem problematic at best.

Rather than killing off energy first, New Mexico’s elected leaders should focus on diversifying the economy. When we are no longer among the very poorest states in the nation the Legislature can address ways to make the New Mexico less dependent on oil and gas.

Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility

 

 

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New Mexico session another missed opportunity

The following appeared in the Las Cruces Sun News on Sunday, March 28, 2021. UPDATE: Originally the article stated there was a production moratorium on federal lands. There is “only” a moratorium on new permits.

New Mexico is in one of the most unusual economic times in its history. Profound forces have impacted our State over the last year in unforeseen ways.

    • The Gov. and COVID shut down much of our State for much of the past year. COVID is declining, but New Mexico remains among the most locked-down states in the nation;
    • Oil and gas prices plummeted last April due to the pandemic and an international price war, but have come roaring back and produced $300 million in “new” money and a budget surplus;
    • Democrats in Washington recently passed a $1.9 trillion dollar “stimulus” that will dump an astounding $9 billion on New Mexico State and local governments. Meanwhile the Administration’s moratorium on oil and gas permits on federal lands will cost our State more than $700 million over the next few years according to Gov. Lujan Grisham;
    • While New Mexico governments are awash in money, businesses are struggling to recover. The State’s unemployment rate is 8.7 percent, 4th-worst in the nation.

To say we are living through unpredictable times would be an understatement. Oil and gas have always been volatile but are now more unpredictable than ever. This reflects broader economic uncertainty, but with the Biden Administration targeting the Industry, the Legislature must diversify our economy (this does not mean simply new sources of government revenue).

The unprecedented stream of federal spending flowing into our state is currently augmented by a flow of people. Housing markets are tight in most of our cities as Americans from big, expensive, states like California embrace remote work or simply move to states like New Mexico where they can spread out and buy a house for a lot less money.

Current trends are favorable, but long-term economic prosperity requires enacting policies that make the State more attractive as a business destination. The 2021 Legislature had a few successes but ultimately failed to enact policies that will bring long-term prosperity to New Mexico.

Despite a big budget surplus, the Legislature raised taxes on health insurance (SB 317). They imposed a new sick leave mandate on businesses, including small ones (HB 20). And, passage of HB 4, the misnamed “Civil Rights Act” will impose massive new legal costs on New Mexico governments without actually improving policing or protecting civil rights.

There were bright spots. HB 255 reformed New Mexico’s liquor licensing to make it easier for bars and restaurants long-term. HB 177 passed which allows New Mexicans to start micro-businesses by making non-perishable food items in their homes for sale.

But the gross receipts tax and its taxation of busines inputs and services remains a stumbling block for businesses. New Mexico also remains among a relatively small group of states that tax Social Security. No significant tax cuts or reforms were adopted. Also, no widespread reform of burdensome regulations (like the State’s “prevailing wage” law that artificially increases costs on public works) projects was enacted.

Some will argue that (after a decade of trying) tapping the Permanent fund to boost various education programs will help improve our workforce, but the track record of governments (including New Mexico’s) spending more money to boost education outcomes is spotty at best. Empowering parents and families with the resources needed to choose the educational option that is right for them (especially after a year of Zoom education), is more likely to succeed and at a fraction of the cost, but legislation to that effect was quickly defeated this session.

Microchip manufacturer Intel just announced that it is investing $20 billion in neighboring Arizona to build two new facilities. Such “economic diversification” is exactly what we need and what the Gov. and Legislature claim to want. Until the Legislature gets serious about reforming our economy we’ll continue riding the wave of luck, boom and bust in the oil patch, and Washington debt.

Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility

 

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Video of discussion: Kevin Hassett and Paul Gessing Evaluate the Impact of President Biden’s Energy Policy

On Wednesday Feb. 24, the Paul Gessing of the Rio Grande Foundation and Kevin Hassett of the National Review Institute discussed the impact of the Biden Administration’s energy policies on New Mexico. You can watch the discussion which lasts about an hour below:

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RGF’s Gessing in National Review: Deb Haaland Could Be a Disaster at Interior

This week, President Biden’s nominee for secretary of the Interior, New Mexico congresswoman Deb Haaland, is up for confirmation in the Senate. Haaland, a self-described “progressive,” and a member of the Pueblo of Laguna, would, if confirmed, become the first Native American to head Interior. The Department manages approximately 500 million acres of surface land, or about one-fifth of the land in the United States.

The agency’s work is of interest to all Americans because it oversees more than 400 National Parks, from Yellowstone to White Sands. However, the department is of particular importance to Westerners, as more than 90 percent of the lands it manages are located in the Western United States.

The nomination of Haaland makes a certain amount of political sense for President Biden, allowing him to place a Native American in a position of leadership over Interior’s vast network of Native reservations. These reservations, including the Navajo Reservation in Northwest New Mexico, remain among the deepest pockets of poverty in the country. The fact that no Native American has ever managed those reservations is indeed worth remedying.

But Interior is a large department with many lands of varying purposes, and Western resource-intensive states including New Mexico have already seen the Biden administration act in ways that will do significant harm to their economies.

At Interior, Deb Haaland would be a cheerleader for Biden’s early anti-energy policies and would likely look for opportunities to expand upon them. She has taken radically anti-fossil-fuel positions throughout her political career. In 2016, prior to being elected to Congress, Haaland traveled to North Dakota to cook food for the protesters demonstrating against the Dakota Access Pipeline. She stayed in the camps for four days that September.

In May 2019, the newly minted congresswoman told The Guardian, “I am wholeheartedly against fracking and drilling on public land.”

Are Haaland’s positions and opinions based on sound science and history? In a 2019 Los Alamos Monitor story, Haaland claimed that “climate change in the U.S. started when Europeans arrived and started killing the buffalo.” Considering the numerous, dramatic changes that were a feature of the climate in prehistoric North America (and everywhere else on this planet), Haaland’s understanding of environmental forces is a bit off.

Given her radical views, it is not surprising that Haaland has been a strong supporter of the Green New Deal. The ambitious plan put forth by Represenative Alexandria Ocasio-Cortez (D., N.Y.) and others would cost trillions in subsidies and lost economic activity. Among the plan’s radical proposals is a mandated shift to 100 percent renewable electricity by 2030 and an increase in the top marginal tax rate to 70 percent.

On day one, the Biden administration pulled the permit for the Keystone XL pipeline. While this pipeline won’t directly affect energy-producing states, the cavalier approach to the permit raised red flags. Shortly thereafter, the Biden administration placed a moratorium on new oil and gas leases on federal lands. If confirmed, Haaland would be a staunch defender of such policies.

Haaland’s home state, New Mexico, is particularly impacted by what happens at Interior. The state has the third-highest Native American population in the U.S. and also happens to be the state most financially dependent on energy produced on federally managed lands within its borders.

According to the American Petroleum Institute, a ban on federal oil and gas leases could cost New Mexico 62,000 jobs, reduce state revenues by $1.1 billion, and reduce oil and gas production within the state by nearly 50 percent.

With Haaland’s nomination up this week and Biden already taking an aggressive anti-energy stance, it is ironic Haaland wasn’t Biden’s first choice for the job.

In fact, according to several New Mexico media outlets, Biden initially offered the position to New Mexico governor Michelle Lujan GrishamOn December 2, media outlets reported that Lujan Grisham had been offered the top job at Interior but turned it down. Lujan Grisham has never stated publicly why she refused the job, although she is just halfway through her first term in a “blue” New Mexico where she likely expects to be reelected in 2022.

As has been the case since the early days of Biden’s run for the White House, identity politics loom large for him. The president seemingly had the Interior secretary set aside to be filled by a Western, female, minority Democrat. A few weeks after Lujan Grisham turned him down, Biden settled on Haaland for the post.

The case for the slot at Interior being based purely on demography is buttressed by the fact that Lujan Grisham and Haaland have very different views regarding federal-land management. While both are New Mexican females (one Hispanic and one Native American), they exemplify opposite wings of the Democratic Party on energy.

From 2013 to 2019, Lujan Grisham represented the same Albuquerque-area congressional district as Haaland does now (Haaland will relinquish the seat if confirmed), and took a practical, moderate view on energy. This moderation is notably reflected in her 2015 vote to repeal the ban on crude-oil exports. She was one of just 26 Democrats in the House voting to repeal, with 153 of them voting to keep the ban in place.

Lujan Grisham continued to express moderation on energy issues when she moved into New Mexico’s Governor’s Mansion in 2019. During her time in office, she has expressed strong support for the state’s oil and gas industry and even said she’d consider asking for a waiver in case of a federal leasing ban.

As a governor concerned about her state’s economic and financial interests (and one who enjoys having oil and gas generate anywhere from 30 to 40 percent of her state’s budget), Lujan Grisham has attempted to placate environmentalists in her political base without doing serious harm to the state’s most important industry. Based on President Biden’s early energy policies, Haaland seems to make a better fit for the administration.

Senator Steve Daines (R., Mont.) has announced his opposition to Haaland’s nomination. Montana’s junior senator signaled he would not only vote against her confirmation, but also attempt to block her nomination from advancing.

“I’m deeply concerned with the Congresswoman’s support on several radical issues that will hurt Montana, our way of life, our jobs and rural America, including her support for the Green New Deal and President Biden’s oil and gas moratorium, as well as her opposition to the Keystone XL pipeline,” Daines said in a statement. Is that enough to stop Haaland from taking her radical policies to Department of the Interior? We should all hope so.

 

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Hurting the Economy without Helping the Climate? We’ve Got this Inside-Out

In the last month, New Mexico and the United States as a whole have witnessed unprecedented attacks on the traditional energy sector. Nationally, President Biden’s ban — for now, just described as a pause — on new oil and gas leases on federal lands has been well documented. So too has his revoking of the permit for the Keystone XL pipeline.

While such decisions are undoubtedly popular with radical environmentalists and their well-funded allies, it is hard to see how they — or anyone likely to follow them — will achieve the reductions in CO2 emissions necessary to make any difference to the climate. Look, for example, at the impact of the Keystone XL pipeline decision. With no available pipeline, Canada and its oil producers will simply load their oil onto trains or trucks, relying instead on modes of transport that are more risky and less energy-efficient. Indeed, doing so will involve higher greenhouse-gas emissions than the pipeline would have, especially considering the pipeline developers’ recent promise to use only renewableenergy to operate the project.

Overall, less than 10 percent of American oil and gas comes from federal lands. Cutting production from them won’t have a real impact on producers on private and state lands, nor will it reduce demand for foreign oil. Nevertheless, this new policy could end up inflicting significant economic pain on an already shaky U.S. economy.

Even if a relatively small amount of U.S. oil and gas production comes from federal lands, bans or restrictions there will have a disproportionate effect on a good number of states and their economies (like my own in New Mexico). Half of New Mexico’s oil and gas production — much of it fracked — is on federal land. Long-term curtailment of oil and gas drilling on federal lands would devastate the state’s budget.

Not to be outdone by the Biden administration, the Democrat-dominated legislature here in “deep blue” New Mexico is considering a number of proposals of their own. (Mind you, the state is one of the poorest in the Union and, thanks to fracking, is the country’s third-largest oil producer.) Chief among them is legislation that would require all new construction (homes and schools) in New Mexico to incorporate solar panels and mandate that 75 percent of all state-government vehicles be electric-only. Another bill would require dramatic reductions in “carbon intensity” for vehicles purchased by everyday New Mexicans. The technology to reduce carbon-intensity of New Mexico vehicles is left unsaid because the regulation would oblige fuel producers to work this out for themselves.

Writing for the Albuquerque Journal, two Democratic state legislators explained the proposals:

By requiring fuel providers that refine, blend, make or import fuel used in New Mexico to gradually reduce the carbon intensity of the transportation fuel itself, we can reduce emissions by 4.7 million metric tons in carbon dioxide equivalent by 2040. That’s like taking 44,000 cars off the road every year for 15 years. A clean fuel standard would not apply to retail gas stations or cause cost increases at the pump.

Yet, the heavy-handed, economy-killing efforts in New Mexico and in various state capitals across the country will do little to rein in global CO2 emissions. In fact, CO2 emissions are already being curbed in the United States through a combination of market forces and government policies. The real problem is that emissions are exploding elsewhere, most notably in China.

In late 2020, Forbes noted that U.S. CO2 emissions already comply with the Paris agreement. Goosed by an 11 percent drop in CO2 emissions in 2020 due to COVID-19–induced travel reductions, the United States has seen emissions drop since the mid 1980s. Nowadays, despite a population that is 40 percent larger than it was in the mid 1980s, U.S. CO2emissions are approximately the same as they were back then. This is a remarkable feat.

Indeed, the combination of a long-term shift in electricity generation from coal to natural gas (in no small part thanks to fracking), along with the energy efficiency generated both by market competition and regulatory pressure, fuel-mileage mandates, and the Clean Air Act, have made the United States a more CO2-efficient national economy.

China, on the other hand, is not just rapidly increasing CO2 emissions, it is massively expanding coal-fired electricity production. According to Voice of America, “China put 38.4 gigawatts (GW) of new coal-fired power capacity into operation in 2020, more than three times the amount built elsewhere around the world and potentially undermining its short-term climate goals.”

Furthermore, according to research released on Wednesday by Global Energy Monitor, China’s coal-fired fleet capacity rose by a net 29.8 GW in 2020 (including decommissions), even as the rest of the world made cuts of 17.2 GW.

China, which still has millions of citizens living in real poverty, certainly has a right to develop its economy. But if the Biden administration is serious about addressing climate change, it ought to use the bully pulpit to cajole China to move toward lower CO2 intensity. After all, China is already the global “leader,” with CO2 emissions approximately doubling those of the United States. Those emissions rose even during the pandemic year of 2020.

Even if the Biden administration and states such as New Mexico make a concerted and focused effort to reduce CO2emissions (an open question to say the least), the United States won’t be able to halt climate change. Any CO2reduction we make is only displaced by a doubling from China, who seems more serious about developing its own economy than the Biden administration and many “blue” states like New Mexico are about theirs.

President Joe Biden and New Mexico governor Michelle Lujan Grisham telling us to pay more for energy while destroying thousands of energy jobs is a hard pill to swallow even if we were to make serious progress toward achieving our climate goals. But to do immense damage to the U.S. and New Mexico economies while allowing American progress on CO2 emissions to be undermined by our economic and geopolitical rivals in China is woefully misbegotten.

Image result for china coal plant

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RGF’s Gessing appears on Institute for Energy Research Podcast to discuss the role of oil & gas in New Mexico’s economy

Shortly before the Biden Administration imposed a moratorium on oil and gas leasing on federal lands, the Foundation’s president Paul Gessing joined the Institute for Energy Research podcast to discuss New Mexico’s energy portfolio and what possible consequences the state could face from a ban on hydraulic fracturing instituted by the Biden administration.

Click below to listen:

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Netflix Fueled by Oil and Gas in New Mexico

The following appeared at National Review’s website on December 25, 2020

We have known for decades the extent to which progressives dominate Hollywood. In the age of social media, Hollywood celebrities waste no opportunity to show that they stand with the poor, the downtrodden, and the righteous. But they have a way of showing themselves up as the hypocrites we already know that they are.

Let’s start with “fracking.” Fact: a few years ago, more than 100 Hollywood A-listers signed on to an effort under the banner of Artists Against Fracking to ban hydraulic fracturing. Yet it’s no secret that many of Hollywood’s numerous well-heeled opponents of “fracking” have something of a weakness for private planes and, even in their humbler moments, for large SUVs. It’s not much of an exaggeration to think that some of them probably gobble up more energy in a day than average Americans do in weeks.

But without hydraulic-fracturing technology, oil and gas production in my home state of New Mexico would almost completely dry up. This industry has made New Mexico a major energy producer, a crucial source of revenue and jobs for a state widely recognized as one of the poorest in the country. Fracking has safely opened massive new energy deposits with production concentrated in the Permian Basin, located in southeast New Mexico and shared with Texas. In fact, New Mexico is the third-largest oil-producing state, with over 1 million barrels per day at the end of 2019One-third of the state’s entire budget is generated by the industry.

Too bad. If the nation follows the advice of Hollywood’s anti-fracking activists, a poor state and its poor residents will be denied the benefits of an important natural resource and simply go without. While fracking remains legal (for now) in New Mexico, Hollywood’s hypocrisy goes far beyond merely advocating against this technology: some of its leading companies have found a way to suck up tax revenues right here in New Mexico that would otherwise be spent on public schools, health care, and other government services.

In an effort to attain the glitz and glamour of Hollywood, New Mexico’s liberal politicians are handing out some of the most generous subsidies available anywhere to Hollywood film companies. That those companies tend to lean liberal is, of course, only a coincidence.

Netflix is the latest production company to bring significant operations to the Land of Enchantment. The streaming company recently announced that it would expand its operations in the state, spending an additional $1 billion in New Mexico over the next 10 years.

That sounds good, but however liberal it may be, the entertainment industry is still the entertainment industry, and the deal comes with a catch. Netflix may be spending in the state, but it will also be receiving a very generous incentive from the New Mexico taxpayer, something of an irony when one-third of the state’s taxes are paid by “wicked” oil and gas.

Netflix (like any film company that operates in New Mexico) is eligible to have 25 percent of its expenses reimbursed by the State. Better yet, the length of the company’s ten-year lease means it “qualifies” under state law to receive an increased reimbursement of 30 percent.

Just to be clear, if Netflix does indeed spend $1 billion over the next decade as it asserts, it could be entitled to checks from the New Mexico Treasury totaling $300 million. If 33.5 percent of New Mexico’s budget comes from oil and gas over that time period, Netflix alone will effectively be receiving $100 million directly from the oil and gas industry.

Of course, if the “keep-it-in-the-ground” wing of the Democratic Party prevails and bans fracking on New Mexico’s federal lands, the state’s oil and gas revenues could plummet, forcing the State’s other taxpayers to pick up more of the bill for Netflix or triggering some sort of crisis in its relationship with the company

Unfortunately, when it comes to subsidies for Netflix, $300 million is just the down payment. The state is also fronting another $17 million in direct incentives to Netflix while the City of Albuquerque is coughing up another $7 million. These funds come from something called the Local Economic Development Act (LEDA), commonly referred to as a “closing fund.” These are payments made by state or local governments to preferred industries. One might believe that in a state as poor as New Mexico (consistently among the nation’s poorest) that taxpayers picking up the bill for 30 percent of a profitable corporation’s business expenses would be enough.

As things seem at the moment, Netflix is going to continue to grow and over time it should create more jobs in New Mexico. That will generate all the usual headlines about how great the company is for the state and its economy, but it will come at a tremendous cost. That cost is not just in lost revenue, but in tax rebates borne primarily by state taxpayers. This subsidy is both unfair and unsustainable.

As one of Hollywood’s biggest businesses, Netflix is a member of that elite group of publicly traded stocks known as the FAANGs (Facebook, Amazon, Apple, Netflix, and Google). Netflix flaunts its rapidly growing profitability, but it is still prepared to consume massive taxpayer subsidies not only from one of the poorest states in the country, but from a state that can only afford to pay out those generous subsidies thanks to the revenues it receives from the oil and gas industry that so much of Hollywood condemns.

Senator Bernie Sanders is still a hero to many in the entertainment industry and, to be fair, he at least takes a principled approach to such corporate welfare. Unfortunately, the same cannot be said for many in Hollywood and Democratic politicians like New Mexico governor Michelle Lujan Grisham. She has locked our state in to paying Netflix outrageous sums of money over the next decade at a time of great uncertainty for New Mexico and its economic outlook and thrown away the key. That much of that uncertainty comes from her own party only piles irony upon irony.

Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility

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Economy Energy and Environment Film Subsidies Health Care Legislature Local Government Notable News Oil & Gas Open Government RailRunner Top Issues Videos

RGF’s Paul Gessing talks New Mexico politics and policy w/ Mick Rich

The following conversation between RGF president Paul Gessing and Mick Rich (former US Senate candidate and owner of a construction business) aired on local television in Albuquerque, NM recently. It is split into four segments of about 10 minutes apiece.

In the first segment Mick and Paul discuss health care reforms made under ObamaCare, why it has failed, and how Biden plans to move forward with the same government-driven philosophy.

In segment two we discuss the evolution and economics of New Mexico’s film industry and its oil and gas industry.

In the third segment we discuss some of the crime issues at play in the City of Albuquerque.

In this segment we discuss the upcoming 2021 legislative session, the Rail Runner, Spaceport, and five things the Legislature SHOULD do to bring prosperity to our state.