I (and I believe this is true for most economists) have always found the economic impact of taxes to be relatively straightforward. But regulations, particularly those pertaining to the environment, are a bit more difficult to figure out. After all, we all want a clean environment and environmentalists constantly remind us that regulations can push society and lead to resources being allocated to cleaning the environment.
This all leads me to the Pit Rules which have been adopted here in New Mexico. I have intuitively understood that the Pit Rule likely represented an overreach on the part of New Mexico’s regulators, but the ins and outs of drilling for oil and gas can be quite difficult to parse. So, I was pleased to see “Pit Rules Dry Up NM Drilling” which more clearly explained the economic impact of New Mexico’s pit rule than any analysis I’ve seen yet.
The article refuted Joanna Prukop, Former Secretary, New Mexico Energy, Minerals and Natural Resources Department, and her article, “Don’t Blame the Pit Rule…” Mr. Maxey, the author or the anti-pit rule piece displays far superior understanding of the oil and gas industry and how public policy impacts the migration of businesses between different political jurisdictions in a constant search for policies that are sensible.
I’m glad to see the oil and gas industry stick their necks out and oppose anti-business policies. Hopefully this is a trend that will continue and grow.