Category: Oil & Gas

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National Review Capital Matters opinion piece: New Mexico Wins the Lottery

The following opinion piece appeared in National Review’s Capital Matters on May 1, 2023.

Study after study shows that people who win lotteries often fritter away the newfound wealth and wind up no better off than they were before. States don’t win lotteries, but New Mexico recently came as close as a state can.

A recent report from Pew found that between January 2020 and June 2022 no state saw faster growth in tax revenues than New Mexico. In late 2022, budgetary analysts started telling New Mexico politicians that they were in for an even greater “gusher” of revenues. That’s thanks to the state’s share of the Permian Basin, which has led to New Mexico becoming the second-largest producer of oil in the nation. New Mexico’s oil production has approximately quintupled since about 2011

For a state with just over 2 million people, this kind of boom has led to an incredible amount of money flowing into state coffers relative to the size of the state budget. Budget analysts at the end of 2022 said that state revenue would exceed spending obligations by 43 percent, with revenue rising to nearly $12 billion.

One might compare such a windfall to winning the lottery. Unfortunately, according to the National Endowment for Financial Education, 70 percent of lottery winners go bankrupt within a few years. New Mexico hasn’t gone bankrupt and, as long as the oil-and-gas money continues flowing, it will continue to have money. But New Mexico continues falling further behind economically.

The state is a cautionary tale that budget surpluses are nice, but even massive budgetary windfalls like New Mexico’s can fail to improve a state’s economic situation.

New Mexico has been a “blue” state since 1930. Over the last nearly 100 years, the state has had its share of Republican governors, but rarely even one house of the legislature under GOP control. Since Herbert Hoover was president, New Mexico’s GOP has never controlled both houses simultaneously. It has always been a poor state with an economy reliant on federal spending and natural resources. That could still change (if the state’s politicians get their act together).

Alas, alleviating New Mexico’s poverty (it has the nation’s third-highest poverty rate) will require “progressive” policymakers to suddenly figure out basic economics. Otherwise, all this oil-and-gas revenue is going to be frittered away with little or no improvement in the state’s dismal rankings.

Lottery winners didn’t suddenly work harder or become better at managing money overnight. So, when presented with a large amount of unearned wealth, they  tend to make poor decisions. And all that brings New Mexico’s politicians to mind.

Take the recently completed New Mexico legislative session as Exhibit A. When presented with a budgetary windfall, what did they do? Believe it or not, the first versions of a big tax bill included several tax hikes. Initial versions of an “omnibus” tax bill introduced in the New Mexico Legislature included:

  • Two additional tax brackets of 6.5 and 6.9 percent . New Mexico’s current top rate is 5.9 percent (already increased from the 4.9 percent rate charged during Bill Richardson’s days as governor) would have been further augmented by even higher rates with the 6.5 percent kicking in at $200,000 for married filers;
  • Tax hikes on capital gains and corporate income;
  • Higher taxes on tobacco and alcohol;
  • Subsidies for electric-vehicle buyers, charging stations, and additional handouts for the already-heavily-subsidized film industry.

There were some modest reductions of New Mexico’s peculiar gross receipts tax, however even those reductions were to be phased in over four years and were made contingent upon future tax revenues meeting current record-breaking levels.

In the end, this bill, which was put together and passed by New Mexico’s overwhelming Democratic legislative majorities was (mostly) vetoed by Democrat Governor Michelle Lujan Grisham.

She could have taken a stand for free markets by just eliminating the bill’s proposed tax hikes. Or she could have done all manner of other things with the bill. Ultimately, what became law were one-time tax “rebates” of $500 or $1,000 depending on filing status, a boost to the already-generous film subsidies, a “refundable” child tax credit that mostly amounts to spending, and—this was welcome –-ending taxation of deductibles and copays paid to medical professionals.

In the end, most of the surplus was retained or used to add to New Mexico’s already bloated state government.  Spending grew by another $1.2 billion in the latest budget  thanks to a 14 percent year-over-year increase.

As you can probably imagine none of this is going to inspire businesses or citizens to flock to New Mexico. Narrowly avoiding a slew of tax hikes while in posession of the largest surplus in state history is at best a reiteration of the state’s broken “progressive” politics which have done so much to keep the state impoverished for decades. That the state is taking this tack at a time when neighboring Texas, Utah, Colorado, and Arizona have been cutting taxes only makes matters worse.

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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Opinion piece: New Mexico’s misguided approach to economic development

The following opinion piece appeared in Las Cruces Sun News and other papers recently.

In her message in which she explained her veto of large portions of the Legislature-passed tax bill, Gov. Lujan Grisham wrote, “Although HB 547 has many laudable tax reform measures, I have grave concerns about the sustainability of this tax package as a whole.”

She wrote this while the State of New Mexico sits on a $3.6 billion budget surplus thanks to oil and gas revenues (a boom that shows no signs of slowing down). She also signed a 14 percent budget increase which grew the size of government by $1.2 billion and included everything from increased film subsidies to $10 million for an abortion clinic primarily to serve Texans. Last year’s budget increase was over 13 percent as well.

The “tax reform” effort in Santa Fe got off to a bad start when the House didn’t seriously attempt to reform the unfair and job-killing “pyramiding” of the gross receipts tax. That “original sin” of New Mexico tax policy (reform of which was supported by the Gov.) should have been the Legislature’s top priority. It clearly was not, and it was never included in any version of the bill.

Worse, instead of just cutting taxes, both houses of the Legislature sadly included tax increases in versions of the bill including the final version. Raising taxes is inexcusable with a $3.6 billion budget surplus. Worse still, the tax hikes included anti-economic-growth policies like imposing two new top rates on personal income and increasing both capital gains and corporate income taxes.

Each of these tax hikes would have done great harm to our economy. The Gov. was right to veto them. Gov. Lujan Grisham’s tax policy agenda is hardly above reproach, however. The Legislature initially planned to reduce the GRT by 0.5 percentage points. This should not be mistaken for reform, but it is much better than nothing. Reducing the GRT also fits nicely with “progressive” economic policy goals as the GRT is a classic “regressive” tax meaning that poor pay a higher percentage of their incomes on it.

But, in the waning days of the session as the Gov. expressed concerns about the size of the tax package legislators adjusted the package by phasing-in the gross receipts tax reductions “to make room for” the film subsidies which had been added during the legislative process.

It would be hard to come up with worse tax policy than delaying broad-based tax relief to pile even more generous subsidies on top of those already given to a favored special interest (Hollywood).  Adding insult to injury these GRT rate reductions were vetoed by the Gov. while film subsidies were left intact.

The best that can be said for tax package is that New Mexicans will get one-time rebates and medical doctors will no longer be taxed on deductibles and copays.

Watching the many twists and turns of the tax bill in the 2023 session highlighted that New Mexico’s political leadership simply does not understand basic economics. Given their ignorance, it is no wonder New Mexico performs so poorly economically. And it’s not just the Gov.’s vetoes, but the Legislature’s approach which was misguided from the start.

Economically, the 2023 session was a big disappointment. But, unless something dramatic happens, the State will likely again be awash in oil and gas revenues when the 30-day session rolls around next January. Can the Legislature and Gov. come up with a real tax reduction plan that will diversify our economy and move New Mexico out of last place?

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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Debate: Energy and the War in Ukraine

When Russia invaded Ukraine over a year ago energy prices leaped higher. Since then there has been continued argument between advocates on both sides as to what kinds of policies should be put in place in the wake of this crisis.

RGF president Paul Gessing was asked to debate the issue in a short series of  articles by Divided We Fall. Needless to say, we at the Rio Grande Foundation emphasized the critical need for free market approaches and traditional energy sources while his opponent pushed in the opposite direction.  Read the short series of articles here. 

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Education Notable News Oil & Gas Tax and Budget Top Issues

National Review column: Educational Improvement Is Not about Spending More Money

The following appeared in National Review’s Capital Matters on December 28, 2022.

The National Assessment of Educational Progress (NAEP) is known as “the Nation’s Report Card.” Sadly, the most recent “report card” represented failure for many states, not the least of which is my home state of New Mexico, which came in dead-last in all categories studied: fourth-grade and eighth-grade reading and math.

Sadly, especially for New Mexico kids, the additional tax dollars being spent by the state’s education system have not moved the needle. If anything, the needle has moved in the wrong direction.

Let’s compare New Mexico with lower-spending, reform-minded states, such as Arizona and Mississippi. Arizona neighbors New Mexico and has a similar demographic profile, including large Native American communities and a large Hispanic population. Mississippi has poverty challenges similar to New Mexico’s and has also struggled with poor education outcomes for decades. A common saying in New Mexico for years was, “Thank God for Mississippi,” as it was often the only state doing worse than New Mexico on many lists of social well-being and economic outcomes.

But Arizona and Mississippi have enacted serious reforms while New Mexico has not. Using NAEP test scores, it is easy to see which states have improved their education systems and which haven’t. We’ll use fourth-grade reading scores to make the comparison. Many education analysts argue that fourth-grade reading is especially critical because up until fourth grade, much of education involves learning to read. After fourth grade, it is difficult or even impossible to succeed in school without being able to read well.

In 2005, New Mexico outperformed Mississippi on fourth-grade reading and was tied with Arizona, with a score of 207. By 2022, Arizona outperformed New Mexico 215 to 202 while Mississippi outperformed both states with a score of 216.

Neither Arizona nor Mississippi dramatically increased K–12 spending. According to data from Statista, in FY 2022 Mississippi spent $10,089 per-student, while Arizona spent $10,639. That places them as the third- and fifth-lowest-spending states in the nation. The U.S. average is $15,047.

New Mexico, on the other hand, has increased education spending over the past 15 years or so. In 2005, New Mexico spent far less than the national average and was twelfth-lowest among U.S. states. That was more than either Arizona or Mississippi, but still low.

Today, New Mexico ranks 19th among states at, considering its dismal educational record, an astonishing $15,338 per student. That is higher than the national average despite other states’ having also increased spending over those years.

What happened? Arizona and Mississippi embarked on serious (albeit different) education-policy reforms while New Mexico did relatively little other than increase spending.

Arizona has had a charter-school law since the mid 1990s and continues to see charter schools grow in terms of options and students. It is ranked as the second-best charter law in the nation, according to the Center for Education Reform.

A system of tax credits to be used for private school choice has been in place and growing since 1997, and various specialty programs as well as narrowly targeted vouchers have also made Arizona a school-choice leader. That’s even before the program of universal education savings accounts approved in early 2022 fully takes effect.

Mississippi, on the other hand, focuses less on choice (they have a small charter-school footprint). Instead, it has focused resources on improving early-childhood reading. Starting in 2013, with passage of the Literacy-Based Promotion Act, Mississippi started to require third-grade students to demonstrate basic reading proficiency levels to progress to fourth grade. The state also focused on teaching teachers how to use phonics-based reading instruction.

New Mexico, despite having had charter schools since 1992, has not enacted much in the way of additional reforms, whether those be choice or an early reading focus. Instead, New Mexico has used resources to increase teacher pay.

It will be interesting to see if Arizona (especially with its new choice law) and Mississippi can keep or accelerate the momentum. Sadly, New Mexico is one poorly performing state that has not gotten serious about either approach. The children in my state have suffered despite a large increase in government education spending. Better results are possible without breaking the bank, as Arizona and Mississippi have proven.

Paul Gessing is president of New Mexico’s Rio Grande Foundation.

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Published opinion piece: Use surplus strategically to solve long-term problems

The following appeared in the Santa Fe New Mexican on December 24, 2022 and in numerous other news sources.

As the State’s Permian oil production boom continues in New Mexico the budget surpluses available to legislators each session grow as well. The latest announced budget surplus is $3.6 billion which is a positively mind-blowing 43 percent. This surplus is on top of already dramatic spending growth of 30 percent during the first four years of the Lujan Grisham Administration.

More spending growth this year is to be expected, but the capacity for government to continue expanding after years of rapid growth is somewhat limited by the ability of government to manage existing resources available to it. This is not surprising since New Mexico’s state and local government is already among the very largest in the nation.

But I’m not here to rail about the size of New Mexico government (at least not this time). Rather, I’m here to remind legislators of both parties that such massive surpluses present rare opportunities to lead our State to a better future.

Gov. Lujan Grisham has already proposed rebates of $750 or $1,500 for New Mexicans depending on marital status. Rebates are a bi-partisan idea, one supported in the recent campaign by her Republican opponent Mark Ronchetti, though details differed. To be clear the Rio Grande Foundation does not oppose tax rebates if they are not an excuse to (yet again) punt on long-overdue tax reform. Returning a portion of the budget surplus is not going to move New Mexico’s economy forward and diversify it in the same way as long-overdue tax reform would.

The same can be said for an idea that often garners bipartisan support in Santa Fe: that is bolstering various permanent and “rainy day” funds. Quite honestly, New Mexico has numerous big problems facing it. There is no better time to address these problems than right now. If policymakers use the surplus to diversify and improve the State’s economy in ways that will make it more competitive with its neighbors, the well-being of future New Mexicans won’t be so contingent on the vagaries of oil and gas.

New Mexico’s litany of current economic challenges includes:

  • A low workforce participation rate that has historically lagged behind our neighbors and remains well below pre-pandemic levels and has even dropped in recent months;
  • Poverty rates that are among the very highest in the nation;
  • A medical provider shortage that, while driven in part by regulations is worsened by gross receipts taxation of medical practitioners including Medicaid services;
  • Lack of economic diversity in a state that relies heavily on oil and gas for money and government (federal, state, and local) for employment opportunities;
  • Water and other infrastructure issues.

These problems (and more) can at least partially be solved by using New Mexico’s financial largesse wisely. New Mexico policymakers have long focused on government-driven approaches to these problems. State and local government spends a very high percentage of the economy.

Majority Democrats have an opportunity to not only pump more funding into their priorities, but they could show that they are pro-business and interested in using oil and gas revenues to diversify the State economy for a time when the oil and gas industry isn’t as bullish.

Republicans, rather than leaving the bold ideas to Democrats, should offer their own serious reform ideas and bills in the upcoming session. Ideally, the minority GOP could influence Democrats toward a more pro-growth agenda. Worst case, in two years they can point to their detailed policy ideas and use them to challenge Democrats for failing to take advantage of this unique opportunity.

Regardless of your political affiliation or beliefs we all must realize that 43 percent budget surpluses don’t come around often. We can’t solve all of New Mexico’s problems even with this massive surplus, but with strategic moves like those outlined here we can certainly move the needle.

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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Legislature blessed with $3.6 billion in “new” money in upcoming session

According to the latest news reports New Mexico has a mind-blowing $3.6 billion budget surplus available to it when the Legislature convenes in January. This is, of course, derived largely from a production-driven boom in New Mexico’s oil and gas industry. Between now and January we and others will have plenty of time to discuss potential uses for the money. For now we’d like to simply help people grapple with the sheer size of this surplus.

  1. The budget surplus alone is a mind-blowing 43% of the current $8.4 billion budget which is in itself a 30% bigger budget than when Susana Martinez left office.
  2. The budget surplus alone is virtually the same size as the FY23 (current year) K-12 budget ($3.8 billion) which is a 41% increase over 5 years.
  3. The budget surplus is more than 7X the State’s “public safety” budget and 3.5X the entire higher education budget.
  4. The State could ELIMINATE the entire gross receipts tax ($3.047 billion) for FY 2024 and still have nearly $600 million left over.
  5. The State could ELIMINATE ALL personal and corporate income taxes ($2.107 billion for FY 2024 and still have $1.5 billion left over.

What WILL happen is anybody’s guess. With New Mexico’s continued economic struggles there are plenty of opportunities for the type of pro-growth tax reform the State sorely needs.

As a quick reminder, New Mexico’s state and local spending is already tops in the nation according to the website US Government Spending:

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RGF submits public comments in support of gulf oil/gas leasing

When it comes to issues surrounding oil and gas, the Rio Grande Foundation supports the industry. This is NOT because of the billions it provides our State every year or even the thousands of jobs it creates. We support the industry because we support human flourishing and energy allows humanity to flourish.

So, we support policies that allow energy development throughout the nation and even the world, including drilling in the Gulf of Mexico. The Bureau of Ocean Energy Management (BOEM), under the Department of Interior, is currently collecting comments on a proposed lease sale (environmental groups are opposed to any new sales).

Click here for details and if you’d like to comment, please do (no later than October 6, 2022). Rio Grande Foundation’s comments can be found below (they are also available on BOEM’s website: l8n-a2s4-dvbe.

The following comments are on behalf of the Rio Grande Foundation, a public policy research organization based in Albuquerque, NM and working to make New Mexico more economically prosperous.

The Bureau of Ocean Energy Management (BOEM) recently released plans for offshore energy development for the next five years. Currently, BOEM’s plan only includes 10 lease sales over a 5-year period in the Gulf of Mexico and does NOT guarantee those sales will take place.

BOEM does not have an active leasing plan for the Gulf of Mexico and will be unable to hold any lease sales until the new plan is finalized. This will leave a multi-year gap in lease sales in the Gulf. The proposed plan needs to be finalized ASAP to help protect consumers and businesses from high energy prices!

The Gulf of Mexico produces 15% of our nation’s energy. The Rio Grande Foundation supports BOEM’s planned lease sale specifically and encourages opening the Gulf to ensure energy prices stay affordable for consumers.

New Mexico is the nation’s 2nd-biggest oil producing state. Nearly half of that oil is produced on federally managed land. So, while a New Mexican might be expected to oppose drilling in the Gulf in hopes of making New Mexico’s product more valuable, the reality is that we truly ARE all in this together. The federal government needs to expand, not contract, the ability of energy producers to bring oil and gas to Americans and potentially Western European nations as well who are dealing with shortages driven by Russia’s invasion.

Here are a few facts:

  • In FY2021, revenues totaled $4.1 Billion from OCS oil and gas activities.
  • If drilling in the Gulf is stopped, western states like New Mexico are likely to see a decline in lease sales on federal lands located within the state in the future; negatively impacting our state’s budget and infrastructure funding.
  • Oil produced in the Gulf of Mexico is some of the least carbon intensive oil produce anywhere in the world and will play a key role in reducing global carbon emissions.
  • The Gulf of Mexico funds conservation efforts across the country, including our national parks.
  • Producing American oil and gas in the Gulf of Mexico helps protect consumers from instability in global markets.
  • If drilling in the Gulf is stopped, western states like New Mexico are likely to see a decline in lease sales on federal lands located within the state in the future; negatively impacting our state’s budget and infrastructure funding.

Energy abundance is critical to our way of life. The Gulf of Mexico is a big part of America’s energy picture. I urge you to approve this plan.

 

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Top 5 things New Mexico should do with its largesse (and a few they shouldn’t)

New Mexico, fresh off a 15 percent spending increase, has ANOTHER $2.5 billion in “new” money (basically a budget surplus). Who knows what big-spending schemes the Legislature will cook up for the 2023 legislative session? Of course, what happens with that cash depends A LOT on what happens in November.

Here are the top 5 things the Legislature SHOULD do with the money (and a few things to avoid);

1) Address the gross receipts tax and both its “pyramiding” (taxes paid on top of taxes) as well as its taxes on business input services is an ABSOLUTE must. It won’t “cost” much in the grand scheme of things and as analysts told the Legislature recently, it is a big factor holding our state back.

2) AFTER the GRT is reformed, New Mexico should begin phasing down (and out) both personal and corporate income taxes. 9 states currently have NO personal income tax.  The corporate income tax only accounts for $200 million or so annually. It is time to diversify our economy and New Mexico can do so by eliminating the corporate income tax.

3) Pay down pension debt while reforming them AND giving workers freedom to invest their OWN retirement funds. Yes, that’s a lot, but New Mexico’s underfunded pensions are in need of not only more funding, but fundamental transformation. Dumping more tax dollars into them is not a particularly good idea, but paired with needed reforms and increased worker control, this is a worthy approach.

4) Infrastructure: repave our roads and bridges, water projects. While New Mexico roads are ranked okay nationally (despite our dangerous drivers) e all know of certain roads that need to be paved/improved across our State. It is time to get this infrastructure in top shape. Same with water. It is time to make every drop count and explore innovative approaches to improving our future water security.

5) Bring/keep more medical professionals. New Mexico needs more medical professionals. While basic reforms to our new, harmful medical malpractice law are essential, improving Medicaid reimbursement (and ending the GRT on medical services as part of a broader GRT reform) are two ways to make New Mexico a more attractive place for medical providers.

Things we don’t need

1) Another year of massive spending growth. New Mexico’s state spending as a percent of GDP is the highest in the USA in FY 2023 (vastly outpacing its neighbors as seen below). Broad new spending increases are not going to improve our State;

2) Socking the money away: this is only deferred spending growth. New Mexico needs to act prudently with this money to address important policy shortcomings NOW.

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Economy Energy and Environment Notable News Oil & Gas Top Issues Transportation

Op-ed: Clean Car Rule is Lujan Grisham’s latest policy imposition

Gov. Lujan Grisham recently continued her attempt to simultaneously keep the oil and gas revenue spigot flowing while enacting enough policies from the radical environmental agenda to placate her political and fundraising base.

Her latest plan, known as the Clean Car Rule, was adopted by her handpicked Environmental Improvement Board (EIB). Governor-appointed boards are far more willing to do what they are told than are unruly and sometimes uncooperative (albeit overwhelmingly Democrat) legislative bodies with their own political calculations and aspirations.

Incredibly, New Mexico’s newly Clean Car Rule undermines democracy and self-government (along with our economy) by placing New Mexico automobile regulations under the control of another state, California. The current rules are California’s and if California changes them, New Mexico will have to go along with them or reverse course and opt out.

New Mexico’s new automobile standards will require roughly 7% of new cars sold in the State to be zero emission in 2025. In the latest report available (3rd quarter of 2021) zero emission vehicles amounted to just 2.29% of new vehicle sales in New Mexico. So, to comply with the new rule, sales of zero emission vehicles will need to just more than triple from Q3 of 2021 to 2025.

But the real kicker is by subjecting itself to California’s political whims New Mexico could be forced to adopt even more aggressive “Clean Car” standards soon. California Gov. Gavin Newsom has issued an  executive order that, if adopted, would end the sale of gas-powered cars in California by 2035. Final adoption of that rule could come in California as early as this August.

If California enacts this rule, 35% of new cars, SUVs and small pickups sold in California (and thus New Mexico) must be zero-emission starting with 2026 models. That number will increase yearly, reaching 51% of all new car sales in 2028, 68% in 2030 and 100% in 2035.

“Just” tripling sales of electric vehicles (EV’s) in two years in New Mexico means dealerships will cross-subsidize EV’s by raising prices on gasoline vehicles or they will look to the State to further subsidize sales of “chosen” vehicles. This could make gasoline vehicles purchased in New Mexico more expensive leading to purchases made at out-of-state car dealers. That would result in lost jobs and tax revenues in New Mexico. That situation will get much worse if California (and New Mexico) adopt the even more aggressive rules being considered.

Current tax credits and subsidies include a $7,500 federal tax credit and various credits for upgrading connectivity to the electrical grid further help with deployment of electric vehicles. Of course, those credits and subsidies are paid for by increasing costs on taxpayers and utility rate payers.

Deployment of EV charging stations will be another expense associated with this plan. A recent report found New Mexico to have just 401 public charging stations statewide. And those need to be maintained. A recent report from EV-friendly San Francisco found that 27 percent of the Bay-areas charging stations were not functional.

All of this comes at a time when New Mexico’s largest utility (PNM) is keeping its coal fired power plant open just to keep the lights on and says it won’t have half the solar/battery replacement power needed to keep the lights on during the summer of 2023.

There are so many problems and costs with a drastic shift toward electric vehicles that at the very least New Mexico’s elected Legislature should have had a say, but instead we have a Governor in a tight reelection battle who wants to make big promises to environmental groups and their funders no matter how disruptive or damaging to New Mexicans and their livelihoods.

The fact is that the real costs of these unrealistic and damaging policies will be borne after this election. Sadly, that is all by design.

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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Rio Grande Foundation in National Review’s Capital Matters: “Where’s Deb Haaland”

Any car-owning American who has taken a recent trip to the pump will be able to tell you one thing: Gas is expensive. Really expensive. Indeed, as of last week, a gallon costs $4.231 — up $1.379, from a year ago. (The same trend is true for natural gas.) The crisis has evidently lasted longer — and proved more economically serious — than the Biden administration suggested.

Curiously, the cabinet official best equipped to address it has remained completely mum on the issue. I’m referring to former New Mexico political activist, former member of the U.S. House of Representatives, and current secretary of the Department of the Interior, Deb Haaland.

Secretary Deb Haaland manages the federal government’s onshore subsurface mineral estate — about 700 million acres (30 percent of the United States) held by the Bureau of Land Management alone. There are, of course, additional oil and gas resources to be found on tribal lands, in the Alaska National Wildlife Refuge, and on the outer continental shelf.

According to the website operated by the Department of the Interior’s Bureau of Land Management, in fiscal year 2018 (which is unfortunately the most recent data available), sales of oil, natural gas, and natural-gas liquids produced from the federal and tribal mineral estate accounted for only a small fraction of total sales in the U.S. (8 percent of all oil, 9 percent of all natural gas, and 6 percent of all natural-gas liquids).

These numbers could be much higher. In the best of times, the federal government might be a more difficult partner for oil and gas companies than private landowners or even state land offices that have a much stronger financial incentive to approve permits than does Washington. Now, with the avowedly anti-fossil-fuels Biden administration and anti-oil-and-gas activist Deb Haaland in control of the Interior Department, the permitting situation is much worse.

And that’s the point of this critique. If the Biden administration really wanted to address rising gas prices, it could do so most readily by encouraging drilling on federal lands — especially on onshore resources in Deb Haaland’s home state of New Mexico.

Yet rather than pursuing that fairly simple solution, the administration would rather plead with such hostile nations as Venezuela and Iran to expand their production.

Whether it is Deb Haaland calling the shots within the administration on energy policy or whether she is just one of many decision-makers, the Biden administration’s embrace of anti-energy environmental groups and their policies appears to be the root cause. Not surprisingly, Haaland herself rose to some level of prominence by opposing traditional energy, calling for a fracking ban, and promoting the Green New Deal. “I am wholeheartedly against fracking and drilling on public lands,” Haaland said in an interview with the Guardian in May 2019.

Haaland is unlikely to moderate her views, even as skyrocketing energy prices have become a major problem. Instead, she avoids dealing with the issue entirely. Consider just a few examples:

  • The Interior Department and its associated agencies have not issued a single press release on the energy-crisis situation, much less about increasing production on federal lands.
  • There have been no tweets from Secretary Haaland on the issue of increasing energy production on federal lands.
  • When the secretary does focus on energy issues, as she did in a visit to Ohio, the focus is on infrastructure — cleaning up orphan wells, legacy pollution from extractive industries, and moving toward renewables.
  • Oddly, even Haaland’s calendar hasn’t been updated in nearly a year (since March 2021).

While the Interior Department and Deb Haaland have been completely missing in action during the ongoing energy crisis, Energy secretary Jennifer Granholm is at least publicly calling for ramping up production. Previously the White House was “quietly” calling for more production, but you can look far and wide for specific Biden-administration policies to increase supply. The best you’ll get is the recently announced release from the Strategic Petroleum Reserve.

Unfortunately for hard-pressed motorists and, more generally, American consumers being throttled by high inflation, the Department of Energy can’t really do anything directly to address America’s energy crisis. The department that can, though, is nowhere to be seen. Perhaps the administration simply doesn’t want Haaland front and center because she has such a long track record of opposing the very energy resources necessary to solve the current crisis.

Will Haaland come out of “hiding” to lead the charge on behalf of increasing American supplies of oil and gas? I’m not holding my breath. This administration remains more beholden to radical environmental groups than any in history. Prices may come down a bit if the war in Ukraine ends, but high gas prices and constrained American production are a feature, not a bug, for the Biden administration and its interior secretary.

Paul Gessing is president of New Mexico’s Rio Grande Foundation.