We Know You Have a Choice When You Drill for Oil…

Proving, once again, that there’s no tax on the books that New Mexico’s “progressives” don’t want to hike, the Santa Fe New Mexican recently reported that several “candidates for commissioner of public lands argue the state is not getting a big enough cut from the natural resources behind a renewed boom in southeastern New Mexico.”

Stephanie Garcia Richard, George Muñoz, and Garrett VeneKlasen, all Democrats, want higher royalty rates for production from state-trust land. “I do not believe for 100 years the industry has paid its fair share to New Mexico,” Garcia Richard sniffed.

If New Mexico were one of only a handful of places to produce petroleum on Planet Earth, perhaps tax hikes wouldn’t have any consequences. But with state-of-the-art tech, including fracking and deepwater drilling, crude can be tapped in a vast number of locales. And taxes, as well as regulation, impact where drillers do business.

The Canada-based Fraser Institute‘s latest “survey of petroleum industry executives and managers regarding barriers to investment in oil and gas exploration and production facilities in various jurisdictions around the globe” found that the Land of Enchantment is no star.

Among jurisdictions with “modest reserves,” New Mexico ranked 12th, with a “Policy Perception Index Score” of 75.54. That was well behind Oklahoma (94.14), North Dakota (91.53), and Wyoming (85.79). But hey — the Land of Enchantment beat Vietnam, Mexico, and Uganda.

Right next door, Texas, a “large reserve holder,” notched a perfect index score of 100.00.

The oil-and-gas sector produces nearly a third of the state’s indigenously raised revenue. And the industry’s decision-makers closely monitor proposed policy shifts. It’s safe to assume that they saw the article in the New Mexican, and didn’t like what they read.

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3 Replies to “We Know You Have a Choice When You Drill for Oil…”

  1. Dowd, what are you talking about? Are you saying that the Santa Fe New Mexican’s article influenced the opinion of New Mexicans as shown by the survey? The survey came out in 2017 and the Santa Fe New Mexican article came out AFTER that, in 2018. Any moron can see that there is no correlation. Thank you for this unintelligible article… keep it up.

    1. I think the point is that states/nations are competing (to an extent) for oil and gas companies to set up shop within their borders. New Mexico is actually a decent place to do business according to the survey, but that could change if the politicians (liberals running for Land Commissioner) get their way and raise fees.

      1. It is probably worth noting that according to a recent study that compared effective tax rates of the 16 major oil and gas producing states, New Mexico had the highest direct tax rates (severance + ad valorem taxes) on oil and gas producers. See Figure 10 in


        From a tax policy perspective, it would be more fruitful to discuss a change in the balance of these taxes, in particular raising ad valorem tax rates while lowering the severance tax rate to reduce oil and gas revenue volatility.

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