MLG: Oil and gas boom to continue for at least 5 more years

A few weeks ago Gov. Lujan Grisham visited Farmington, NM. Farmington is a conservative oil and gas community in Northwest New Mexico. While we don’t have video or audio recordings of the event, we have it on good authority that the Gov. told the group that New Mexico’s oil and gas boom is going to continue for at least another 5 years.

To be clear, that doesn’t mean that production will continue to grow at the near-exponential rates seen in recent years, but that New Mexico’s oil production is nowhere near “hitting a wall” and declining. You can see for yourself in the chart presented here (and in the data from the Energy Information Administration) that New Mexico oil production has grown 12X since just 2010. That has generated unprecedented revenues including $3.5 billion annual surpluses in recent years.

Unfortunately, due to both bad advice and their own ideology (ignorant of economic development and believing that oil and gas are “yesterday’s fuel source) the Legislature has been unwilling to embark upon needed tax and broader economic reforms that would diversify New Mexico’s economy for the eventuality when oil production DOES decline (we have no idea when that will be, but we agree with MLG it will be at least 5 years from now).

The motto of New Mexico’s Legislature appears to be:  Pile up hoards of cash and sit on it until the situation inevitably turns more negative when your state will have done nothing to diversify or grow and will instead have to rely on piles of money to get government (not necessarily the people) through tougher times. Call it the Scrooge McDuck strategy.