July 11, 2012

New Mexico’s 2012 Oil Boom Brings Few Jobs but Some Big Business.

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New Mexico’s 2012 Oil Boom Brings Few Jobs but Some Big Business.

 

New industry non-profit provides data without political bias

 

By Peter Moulson, Special Contributor

 

A striking series of new reports has recently been released by Headwaters Economics (www.headwaterseconomics.org)a high-tech nonprofit that offers a unique blend of economic research skills and on-the-ground experience-that offers  New Mexico the specific, accurate data that we need when making political and economic judgments that will lead to sustainable regional development.

 

 

 

“Touchy” subjects such as oil and gas drilling and production, the role of Federally Protected lands, housing development and wildfires, and other elements that tend to be rapidly politicized, often relying on dubious industry statistics and analysis. The reports aim to improve community development and land management decisions in the West. Here’s an example:

 

 

 

Oil and Gas Drilling and Production in New Mexico

 

The New Mexico Oil and Gas report shows that the strength of crude oil prices relativeOil production to natural gas prices has driven a dramatic shift in drilling activity from natural gas to oil across the region and particularly within New Mexico.

 

 

 

The stated purpose of this report is to educate decision makers and the public about the current health of New Mexico’s oil and gas industry, the status of the clean energy sector, and how the state can better benefit from its energy industries.

 

 

 

New Mexico’s fossil fuel energy industry, led by oil development, has made a strong recovery since the recession.  The production value of oil surpassed the production value of natural gas for the first time in April, 2010, and by March, 2012 was three times the value of natural gas: $682 million to $204 million.

 

 

 

New Mexico’s recent energy activity has been led by drilling for oil-86 of 90 active rigs are drilling for oil (as opposed to gas), all but a few in the Permian Basin. Gas drilling rigs in South Dakota have been “flaring” gas this year rather than attempting to sell it in such a weak market. Unlike other states such as Colorado and Wyoming, New Mexico has rebounded strongly from recession lows; the June 15, 2012 weekly rig count (90) was about 90 percent of the highs (just more than 100) reached in 2006.

 

 

 

“Pit Rule” was meant to be the death knell for Oil and Gas in New Mexico, que no?

 

The Oil and Gas industry in New Mexico said that the revised “Pit Rule” could drive them out of business. Not so. Even with the Pit Rule in effect, there is a substantial rebound in the oil extraction business. But we must be aware that more rigs do not mean more long-term jobs.

 

 

 

The “high employment phase” is in the initial set up and drilling phase (most workers are laid off after this period), not the production phase. The drilling phase is the hardest on surrounding communities-small hospitals or clinics are overwhelmed as is the sheriff’s department. Roads are severely damaged-all at a substantial cost to the community.

 

A New Resource for a New Economy

 

The data in these reports is complex yet well-organized. Very little policy outcomes are described-that’s up to us. Anyone working in policy analysis will find a host of unbiased data that will help in next year’s 60-day legislative session. Maybe this time we’ll have the data we need when oil and gas lobbyists cry wolf.

 

 

 

What’s more, there’s plenty more wonderful data at Headwaters Economics website that can help us understand what

 

 

 

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