BACKGlobal Energy Institute | December 10, 2019
New Mexico is one of the great success stories of America’s energy revolution. A state hard hit by the Great Recession, historic levels of oil and natural gas production – made possible by advancements and improvements in hydraulic fracturing technology – have resulted in new job creation, economic growth, and increases in personal income that are leading the nation.
New Mexico Governor Michelle Lujan Grisham (D) neatly summed up the importance of this historic opportunity, stating, “I could spend well longer than 30 minutes telling you about the benefits of what’s going on in the state of New Mexico because of what’s going on in the oil and gas industry — opportunities that we haven’t seen, ever.”
At a time when national candidates and elected officials are proposing to ban hydraulic fracturing, it is important to highlight both the benefits of the shale energy revolution and the real-world impacts that a ban would have.
This report is an update to the Chamber’s 2016 “Energy Accountability Series,” which modeled the impacts of proposals made by political candidates on energy policy. For the 2020 election cycle, the study is being updated with new numbers and the addition of several new states and expanded data, including the Land of Enchantment. This analysis models the impacts of banning hydraulic fracturing through the use of IMPLAN, an economic modeling tool that allows for calculating the direct, indirect and induced impacts of hydraulic fracturing on New Mexico’s economy. Using this tool can help quantify the impacts if hydraulic fracturing were banned.
In 2018, New Mexico generated $99.4 billion in GDP, had nearly 900,000 people in the workforce and an unemployment rate of 4.9 percent, and a median household income of $48,283. This represents significant gains compared to 2013 when the GDP was $88.4 billion, there were 863,000 people in the workforce, unemployment stood at 6.9 percent, and the median income was 43,368.
A ban on hydraulic fracturing in New Mexico would result in the loss of 142,000 jobs - representing 15.8 percent of the state workforce - and wipe out $86 billion in cumulative GDP from the state’s economy through 2025. Further, New Mexicans would lose out on $26 billion in household income (an average of $10,723 per household in 2025), the state would forego $8.0 billion in state and local tax revenues while federal government tax receipts will be reduced by $8.3 billion over this same period.