This opinion article first ran in the Artesia Daily Press on May 13th. 

Short-Sighted Taxation on Oil and Gas 'A Recipe for Disaster'

By Missi Currier

In recent legislative sessions, there has been a push to further tax the oil and gas industry in New Mexico. This approach is not only short-sighted but also detrimental to the state’s economic stability and growth.

The price of oil is notoriously volatile, subject to global market fluctuations and geopolitical tensions. Legislators seem to focus solely on the immediate revenue that can be generated from higher taxes, ignoring the long-term consequences. This myopic view fails to consider the inherent instability of the oil market, which can lead to significant economic disruptions. By not accounting for the cyclical nature of oil prices, policymakers risk creating fiscal policies that are unsustainable in the long run. This approach can result in budget shortfalls during periods of low oil prices, ultimately harming the economy and reducing the effectiveness of public services.

Over the years, New Mexico has developed a more sophisticated approach to managing its oil and gas revenues. By investing in funds designed to smooth out the economic ups and downs, the state has been able to mitigate the impact of price volatility. This strategy is rooted in sound tax policy and progressive philosophies that prioritize long-term stability over short-term gains.

The recent push for the Equalization Act, which aims to impose higher taxes on the oil and gas sector, flies in the face of these established principles. This “fly by night” approach undermines the progress made over years of careful planning and investment. It subjugates the state’s financial health to the whims of the oil market, rather than leveraging well-established financial mechanisms to ensure steady growth.

Further taxing the oil and gas industry in New Mexico is a misguided strategy that overlooks the lessons of the past. Instead of succumbing to the allure of immediate revenue, legislators should focus on maintaining and enhancing the financial structures that have proven effective in stabilizing the state’s economy. Only through thoughtful, long-term planning can New Mexico continue to thrive in the face of global market uncertainties.