Category: Oil & Gas

The following opinion piece recently appeared in several New Mexico media outlets including the Eastern New Mexico News.

There are many things that make New Mexico unique, but one of the most noteworthy political nuances is the State’s deep and unusual relationship with energy. New Mexico’s Democratic politicians love the money and jobs generated by the traditional energy industry, but also wish to be seen as pushing back against it to placate their environmentalist base.

Nonetheless, New Mexico, a state blessed with all sorts of energy resources (both traditional as well as wind and solar) has continued to embrace Democrat politicians despite the Party’s leftward shift on energy in recent years. With oil prices skyrocketing and electricity reliability in question, it is time for voters to demand sensible energy policies from politicians.

The Russian invasion of Ukraine caused gasoline prices to jump dramatically after having risen throughout Joe Biden’s time in the White House (due in part to his anti-energy policies and rhetoric). And, while there are limited things to be done in the short term, in the intermediate and longer term, former New Mexican and Secretary of the Interior Deb Haaland should be a pivotal figure in addressing America’s energy issues. Instead, she is nowhere to be found.

Haaland manages the sprawling federal estate including the Bureau of Land Management. Immediately upon taking office the Biden Administration instituted a permitting moratorium on federal lands. Rather than changing directions and opening the leasing process as prices rose, under Haaland’s direction, new oil and gas lease auctions have remained on hold.

Expediting new drilling on federal lands is just one of many ways Haaland could get serious about reducing gas prices (and at least partially defanging Russia which relies heavily on oil and gas exports to Europe) but remains silent on the issue, even on her official Twitter account.

Speaking of natural gas which often takes a back seat to oil in New Mexicans’ minds, New Mexico leaders could and should be advocating for natural gas as a cleaner energy solution relative to coal and others. New Mexico is one of the leading natural gas producing states in the nation.

Thanks to a fracking-driven production boom, natural gas has been used to replace coal in electricity generation. This has been one of the primary tools in reducing US CO2 emissions in recent years, a fact recognized by former President Barack Obama. Furthermore, exports of US-produced liquefied natural gas (LNG) have created home-grown American jobs, narrowed the trade deficit, and helped foreign countries like China reduce their CO2 emissions.

Russia’s invasion of Ukraine provides the United States (and by extension New Mexico) an ideal opportunity to expand production of natural gas. Unfortunately, our State’s senior Senator Martin Heinrich remains obsessed with eliminating natural gas in favor of “electrification.”

Rather than focusing on alleviating the pain of high energy costs (driven both by the Russian invasion and Biden Administration policies) Heinrich is pushing to replace natural gas in home heating and cooking. He remains uninterested in transitioning Western Europe away from Russian energy to New Mexico-produced natural gas.

Electrification is a fool’s errand. According to new Department of Energy data, electricity costs $41.79 per million BTU’s. Natural gas costs $12.09 per million BTU’s. And that’s in today’s numbers. Electrification would increase US electricity consumption by 40 percent. Public Service Company of New Mexico was concerned about blackouts and brownouts this summer due to the shuttering of one coal fired power plant. A 40% increase in electricity consumption over current levels will increase prices well above today’s levels.

A greener and more affordable future can be had, and New Mexico can lead the way. With abundant nuclear resources, natural gas, and renewable power, New Mexico has a lot to offer the nation and the world. But first, our leaders including, but by no means limited to Secretary Haaland and Heinrich need to get serious about balancing economic and technological reality with their “green” aspirations.

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

 

This article appeared at National Review Institute’s Capital Matters on September 23, 2021.

Don’t conflate Carter and Biden on Policy

By Paul J. Gessing

Amid the ongoing debacle in Afghanistan, some on the right have started making comparisons between the presidency of Jimmy Carter and that of Joe Biden. The parallels between the Iranian hostage crisis and the disaster in Afghanistan are limited, but it is notable that  the hostage crisis was the unforeseeable consequence of a series of events that the U.S. was in not in any real position to control (which is not to claim that Carter handled the events leading up to the fall of the Shah particularly well, on the contrary).  By contrast, what is now unfolding in Afghanistan is the direct and all too predictable consequence of a specific decision that — down to its disastrous timing — was ultimately Biden’s to take.

Another seeming parallel between Carter and Biden is the problem of inflation. Of course, inflation was a major issue throughout the Carter administration as well as during the Nixon and Ford years, with rates bouncing around wildly through much of the decade. But Biden’s inflation problem, like the Afghanistan debacle, is likely to end up resting  mostly on Biden’s own shoulders if his spending plans go through, with the rate having jumped from 1.4 percent in January when he took office to 5.39 percent in June.

To be fair, at least some of the inflation that we have seen so far can be put down to both the supply chain disruptions that have followed the pandemic and measures introduced, generally with a high degree of bipartisan support, during both the Trump and Biden presidencies, to help offset the impact some of the pandemic’s effects . The Fed, too, has played its part.

Persistent inflation could be avoided, but between the passage of the $1.9 trillion American Recovery Plan and the pending $1.1 trillion “bipartisan infrastructure” bill and the Democrats’ planned $3.5 trillion spending bill,  it is hard to be optimistic. The only question is whether Congress will oblige.

Carter, on the other hand, nominated Paul Volcker to chair the Federal Reserve. While there are disagreements as to why he did this, there is not too much dispute that he knew that Volcker would take a tough line on inflation, which he quickly proceeded to do. Biden remains oddly indifferent to the risk of inflation.  Hopefully, Congressional Republicans and Democratic moderates such as Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) will thwart Biden’s spending ambitions.

As if the scales were already not tilted in Carter’s favor relative to Biden’s (at least to date), the starkest differences between the two can be found in the area of economic regulation. On this transformative issue not only was Carter much better than Biden, but he may be one of the most notable deregulatory presidents in modern history. He’s almost certainly the most unexpected.

As president, Carter led the way in deregulating America’s airlines and  interstate trucking, as well as freight railroadsand even beer brewing. Each of these reforms has stood the test of time, resulting in cheaper transportation, more industry competition, and better living standards for millions of Americans.

While Americans often complain about cramped quarters on airlines, the actual preferences of most ticket purchasers continues to be for inexpensive, “no frills” options. Meanwhile, just last year over 1,000 supporters of the 1980 Staggers Act, which deregulated much of the railroad sector, signed a letter reaffirming their support for the policies outlined in that bill. As noted in that letter, since the act’s passage,  “[r]ail traffic has doubled, rail productivity has more than doubled, rail rates are down more than 40 percent, and recent years have been the safest on record.”

In other words, deregulation worked, and it has been working to our benefit for decades since.

Lest you think you haven’t benefitted adequately from more efficient transportation, Carter also signed legislation that legalized craft brewing, something that  helped pave the way  to the numerous innovations in beer brewing that have pleased millions of Americans, from hop-heads to those who prefer fruit and chocolate-infused flavors and everything in between.

And how is Joe Biden’s record by comparison? He hasn’t touched brewers (yet), but he is already attempting to re-regulate freight railroads. A July executive order on “providing competitiveness in the American economy” encouraged the Surface Transportation Board (STB) — the federal agency that oversees economic regulations for private freight railroads like Norfolk Southern and Union Pacific — to consider imposing “forced access” more regularly.

This means that privately owned and maintained railroads could be forced to turn over traffic to competing railroads at potentially below-market rates – a clear violation of private property rights and free market enterprise as we know it. The order is akin to net neutrality for railroads. Railroads already voluntarily allow access to their competition in order to improve service across the industry, but the last thing Americans or freight railroads need is for Uncle Sam to get back into the business of heavily regulating railroads.

To date, the Biden administration has done virtually nothing to deregulate the economy. On  the contrary, aside from its  spending spree, what passes for “accomplishments” in the Biden administration largely involve undoing deregulatory executive actions on the part of the Trump administration on the environment, or imposing entirely new, onerous regulations  such as the ban on new oil and gas permits on federal lands, which has now run into trouble in the courts

These points may not convince many conservatives that Jimmy Carter was a good president (and to be clear, I don’t think he was, myself) , but perhaps they will convince some that Carter had significant and lasting accomplishments to show for his  four  years in office. Given his track record to date, Joe Biden is beginning to make  Jimmy Carter look pretty good. That may not say that much about Carter, but it says a lot about Biden.

 

The following was written by RGF Board member Steve Dodson. It appeared in the Albuquerque Journal on September 19, 2021.

New Mexico lawmakers must put politics to the side and embrace an all-of-the-above approach to sustainable energy if our state is to recover from the pandemic and advance our shared goal of combatting climate change.

A federal judge recently ruled in an ongoing lawsuit that the Biden administration must, for now, rescind its pause on oil and gas leasing on federal lands after more than a dozen states sued, citing that they had met the threshold for proving that the ban would result in significant community harm and economic loss. This comes on the heels of former New Mexico congresswoman and current Secretary of the Interior Deb Haaland’s testimony before the House Natural Resources Committee where she made clear there is no “plan right now” to enact a permanent ban on oil and gas leasing on federal lands.

This is all welcome news for New Mexicans and speaks to the need for honest conversations around the role oil and gas must continue to play in New Mexico’s future.

Our state has long been reliant upon the jobs and funding provided by oil and gas operations for critical public outlays like education, health care and infrastructure. Federal lands currently compose nearly 35% of our state’s total area – a permanent leasing ban would immediately threaten the welfare and future of our state while offering no direct alternatives to replace lost public funding and jobs.

Serving on the board of the Rio Grande Foundation, I am proud to work toward bringing meaningful reform to New Mexico. After one of the most devastating periods in history, marked by financial hardship and tremendous loss, it is vital – now more than ever – that energy policy decisions are balanced and take into consideration the vital economic benefits the industry provides to New Mexicans in every corner of the state.

The tax revenues derived from oil and gas operations are essential to N.M.’s economy, bankrolling schools, hospitals, roads and other infrastructure without hurting the pockets of N.M.’s taxpayers. The state’s Land Grant Permanent Fund, also known as the Permanent School Fund, is financed directly by oil and gas operations and is one of the largest such funds in the United States. It annually provides over three-quarters of a billion dollars to New Mexico’s public schools, universities and other related beneficiaries – in 2021 it is estimated the fund will produce roughly $836.5 million in benefits.

Furthermore, New Mexico’s … unemployment rate of 7.9% is tied for the highest in the entire country according to the Bureau of Labor Statistics. The oil and gas industry supports 134,000 jobs and contributes over $16 billion to our state’s economy annually. If this leasing ban were ever to be made permanent, it could result in (the loss of) over 60,000 jobs and nearly $1.1 billion in public funding.

Finally, the oil and gas industry is crucial to our national energy transition and continuing to meet consumer demand without increasing energy prices. Instead of focusing on demonizing oil and gas producers, our officials should be working hand in hand with them to incentivize innovative solutions like Carbon Capture and Storage (CCS) that can reduce carbon emissions without destroying jobs and revenues.

Although the recent court ruling and Haaland’s comments suggest the current leasing pause will come to an end, nothing is for certain. As some of our state’s lawmakers continue to try to appeal to partisan groups in Washington rather than their own constituents, it is important for all of us to remind them a balanced approach is necessary for New Mexico’s energy and economic future.

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.