A Crude Stab at Protectionism

The “Panhandle Import Reduction Initiative” will hold a rally on September 27 in Carlsbad, to support its effort to reimpose a quota on foreign oil.

Those interested in New Mexico’s economic health should attend the event — and stage a counter-protest.

The New Mexico Oil and Gas Association is opposed to the initiative’s agenda, as are the Texas Oil and Gas Association, the South Texas Energy and Economic Roundtable, the Texas Independent Producers and Royalty Owners Association, and the Permian Basin Petroleum Association. The organizations understand that free trade in black gold can be disruptive, but is preferable to the allocative inefficacy that results from protectionism founded on specious, Eisenhower-era claims about “national security.” Besides, U.S. exports are on the rise. As USA TODAY reported last month, “U.S. crude oil is increasingly finding markets around the world.” Japan is a customer, as is Italy, China, Israel, Panama, and Switzerland. What happens if countries decide to impose quotas of their own?

Yes, low prices have curtailed petroleum production — not just in New Mexico, but nationally. But the rollback is a setback, not a catastrophe. New Mexico’s production peaked in May 2015, and has fallen by 10.2 percent since then. That’s less than the national decline. U.S. production maxed out in June 2015, and is down 11.8 percent. Despite Saudi Arabia’s attempt to destroy the fracking-enabled boom in U.S. petroleum, producers are holding on. It hasn’t been pretty. But protectionism is no “solution” to pain in the oil patch.

Daniel Fine, an ex-MITer now with New Mexico Tech’s New Mexico Center for Energy Policy and the Energy, Minerals and Natural Resources Department, is a “founder” of the Panhandle Import Reduction Initiative. So it appears that taxpayers are subsidizing a policy proposal that’s sure to damage the state’s economy. That needs to stop, now.