Oil bosses get billions in bail outs, NM workers get the shaft

Oil bosses get billions in bail outs, NM workers get the shaft

Last week a story floated across the mediasphere that didn’t seem to garner as much attention as you might expect: Oil and gas services were THE number one industry group to receive Paycheck Protection Program (PPP) funding in New Mexico during the height of Covid 19. Now, when you go and look at the names on the list of NM companies that received the relief, what you don’t see are the names of the big companies who wind up making all the money like Exxon or Chevron, but instead names of actual small oil and gas service companies that really do make up the fabric of New Mexico life.

These companies are the welders, the tire shops, the water and sand delivery companies, drillers, and drivers who subcontract the day-to-day labor of the oil fields. It’s unsurprising that these local companies would need to utilize PPP loans to help get them by during the extreme crash the oil market suffered last year; we don’t begrudge them that one bit. These companies are based in New Mexico, hire New Mexicans, and just like any worker, deserve the respect and the dignity any worker does. 

But wait, isn’t the oil and gas industry doing like, super well right now? As tempting as it might be to say, “well sure,” but last year there was a bust, it’s more complicated than just that (although it’s still pretty simple): big oil companies like Chevron make their money from investing and speculating (basically betting on the value without any ownership of the actual physical asset), while on-the-ground support services who rely on the big guys for contracts and work in the field need actual work and actual money to make ends meet, same as the rest of us. 

So while Exxon this week announced it raked in $4.7 BILLION in profits during the second quarter of 2021, with cash flow reaching nearly $10 BILLION, local NM oil service companies owe a combined total of about $223 MILLION in loans taken during the height of closures last year. Companies like Exxon don’t exactly hide the fact that they made strategic cuts to ensure profitability on their end as noted in this report from this week in Natural Gas Intelligence: 

“Efficiencies helped reduce structural costs by $3 billion overall in 2020. From January through June, another $1 billion-plus in savings also was captured. Management said it’s on pace to achieve total structural cost reductions of $6 billion in 2023 relative to 2019.”  

Read that as “We cut workers, shut-in less profitable wells, and shed less lucrative projects in favor of ones that made us more money.” 

Read that as “We cut workers, shut-in less profitable wells, and shed less lucrative projects in favor of ones that made us more money.” 

All this can be seen in the ongoing reporting that NM oil and gas jobs are not returning anywhere close to the same rate that profits are going up. So while reporting in New Mexico continues to highlight the “record production,” or the potential windfalls in cash being brought in from our royalties and leasing agreements, remember a few things. 

  1. NM’s share of the money is pennies on the dollar compared to what the end, out of state, users like Exxon and Chevron are making off our resources. 
    • While it’s easy for groups like the New Mexico Oil and Gas Association to point to the “funding” provided by oil revenue, we have to remember that our royalty rates haven’t been raised in over a century, 
    • The set amount of income New Mexico receives from royalties does go up when there’s a boom, however, that amount is still pennies on the dollar compared to the unlimited revenue generated through wall street speculation on our oil whether the price of oil is up OR down and;
    • That as seen last year, the state’s budget is highly susceptible to these economic fluctuations, while companies like Exxon may not profit as many billions of dollars, they still profit, while our state struggles to find funding for basic programs like education
  2. The political contributions from NOT JUST the big guys, but also the industry lobbyists like New Mexico Oil and Gas Association and Power the Future New Mexico AS WELL AS the owners of these smaller oil field service companies are still flowing and still trying to influence the political system in the state, despite claiming they needed PPP loans to survive the pandemic. We don’t know about you, but when we don’t have enough money to do one thing, like pay workers, we surely don’t have enough money to donate to political campaigns.  
    • One of the largest single loans ($6.9 MILLION) was from the Chase family out of Artesia. While it’s likely their day-to-day operations really did need the cash influx to help cover payroll because that’s how businesses work, it doesn’t diminish the fact they are still one of the state’s wealthiest families and largest political donors to both sides of the aisle.
    • Remember they also tried to even run one of their own for congress in 2020 (Claire Chase) who tried to run on a more classic anti-”big government” platform while trying to compete with arch-Trump puppet Yvette Herrell. Guess that platform doesn’t float through economic upheavals so well huh?
  3. Our illustrious former “Democrat” representative to Congress Harry Teague really summed it up well in the article about the PPP loans: “When asked if the funding was sufficient, Teague said there’s always a need for more: ‘Just like asking your daddy for money to go to the movies, it’s never enough.’ Still, ‘any time that you get any help making payroll, it definitely helps,’ Teague says.”
    • Teague’s oil services company borrowed $1.5 million in PPP loans to help cover the jobs of 37 workers, apparently.

So what does this all mean? It means that, as we’ve been saying all along, that “the industry” as a whole is wrong for New Mexico. It means that as colonists have been coming here for half a millennia to extract resources from our land at the expense of our people, it is still happening. Oil and gas companies are applying for PPP loan relief and yet still raking in BILLIONS of dollars, and then pumping dollars into trying to influence our state politics. Supporting workers in the field is one thing and we would never diminish the hard work and sacrifice those families have to earn a living, but that’s exactly what we need to change. Every family in New Mexico deserves a future they can count on and that has never been and never will be oil and gas.

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