Revenue grows $500 million on the strength of production, returning drilling activity, and rebound in market prices
SANTA FE, NEW MEXICO, December 21, 2020 – A new report from the New Mexico Tax Research Institute shows the state’s oil and natural gas industry provided $5.3 billion in state and local tax revenue for fiscal year 2021 – the highest figure ever recorded in New Mexico history. Revenue jumped more than $500 million from fiscal year 2020 on production growth and improving market conditions, as New Mexico also became the second-largest oil producer in the United States.
“Historic revenue equals historic opportunity, and that is great news for teachers and students, critical first responders and healthcare workers, and each and every New Mexican across this state,” said NMOGA President and CEO Leland Gould. “For years, New Mexico has cemented itself at the center of the domestic oil and gas production, and the investments being made in our state are paying off in a big way. The only obstacle to future growth, production, and revenue is policy. Lawmakers in both Washington and Santa Fe should take note of the fact that safe, responsible oil and natural gas production in New Mexico is a win for the environment, a win for local communities, and clearly, a big win for all New Mexicans.”
The $5.3 billion in 2021 revenue surpassed the previous industry record of $5.16 billion set in fiscal year 2019. The report details how industry taxes and revenue support $2.96 billion in state general fund revenue, $358 million in local taxes, and $1.95 billion in other state taxes, royalties, and revenues. Revenue from federal mineral leasing remains the largest single source of income at $803 million, down slightly from $811 million in fiscal year 2020. Higher than average production coupled with improving market conditions was the primary driver of revenue growth, according to the report.
“2021 saw a remarkable recovery in New Mexico’s oil and natural gas industry as producers maintained record production levels and gradually restored drilling over the course of the year,” Richard Anklam, President of the New Mexico Tax Research Institute, said. “While some revenue streams initially dipped on curtailed drilling activity, the rebound in market prices and consistently high output lifted direct taxes on production by 40 percent. As drilling returns, production grows, and prices stabilize, policymakers and New Mexicans alike have every reason to be cautiously optimistic about the industry’s revenue contributions in future fiscal years.”
Industry revenue accounts for 35% of the general fund, supporting all areas of state spending such as education, public safety, economic development, healthcare, among others. Public schools continue to be the largest beneficiary of oil and natural gas revenue, with $1.04 billion going to public education and $275 million going to New Mexico universities, colleges, and other institutions of higher education.
"Thanks to the oil and gas industry’s support of public education, teachers across the state have access to opportunities for sharing knowledge and skills to serve our students and school communities,” said New Mexico International School first-grade teacher and 2021 New Mexico Teacher of the Year Alisa Cooper de Uribe. “This support provides resources for our children, uplifts and recognizes educators, and strengthens hard-working school communities. The result is an invaluable investment in our state’s future, with positive butterfly effects taking place in classrooms across New Mexico."
Click here for NMOGA’s full Fueling New Mexico report, including the oil and natural gas industry’s impacts and revenue contributions to each New Mexico county.
The New Mexico Oil & Gas Association (NMOGA) is a coalition of more than 1,000 oil and natural gas companies and individuals operating in the state of New Mexico. NMOGA is the oldest and largest organization representing the oil and gas industry in New Mexico and its members include all facets of oil and natural gas production, transportation, and delivery. The oil and natural gas industry is the largest economic and fiscal contributor to the state of New Mexico, supporting more than 134,000 jobs and $27 billion in annual economic activity. Taxes and royalties from the industry account for $5.3 billion in state and local revenue, accounting for 35% of New Mexico’s annual state budget and more than $1.3 billion for education and public schools.