This is the first post in a five-part series on “The Hidden Tax: New Mexico’s Energy Crisis & Path Forward.” Read Part 2 on seniors and local businesses, Part 3 on oil money dependence, Part 4 on the energy transition, and Part 5 on infrastructure policy.
Imagine you’re a nurse, leaving your shift after a long night and heading home to see your family before they leave for school and work. You have to stop at the supermarket to grab some items for their lunches, a text from your daughter asked specifically for the “good fruit snacks” this week. You notice your gas light is on in your car and decide to fill up before you go into the store. As you stand there, watching the dollar amount of your gas continue to climb and climb, you start to worry about whether or not that $65 fill up that used to be $40 means you won’t be able to afford the good fruit snacks, after all.
This story isn’t unique. This is the new normal for New Mexico families navigating what economists are calling an “economy-wide, unacknowledged tax on households.” We don’t really need economists to tell us what we already know: Living is getting expensive.
Since the US-Iran conflict began in February 2026, American consumers have spent roughly $45 billion more on gasoline and diesel than they did a year ago. For New Mexico households already stretched thin, this isn’t a headline,it’s a survival calculation.
The Numbers at the Pump
The statistics tell a stark story:
- U.S. gasoline prices reached $4.16 per gallon in April 2026, their highest levels since 2022
- While prices have since fallen to $3.99 per gallon as of June 2026 following a US-Iran peace deal, they remain 28.8% higher than a year ago ($3.14/gallon in June 2025)
- In just the first week after hostilities began, the average gasoline price increased 48 cents per gallon
- According to Brown University’s Watson School of International and Public Affairs, the extra fuel costs have topped $40 billion, or more than $300 per household
- Analysts warn prices “may stay elevated between $80-90/barrel” as buyers race to refill depleted emergency crude stockpiles, with full pre-conflict oil traffic not expected until 2027
For a family earning $40,000 a year, that’s an unexpected 0.75% tax on their entire income, money that can’t be spent on rent, food, or medicine.
New Mexico’s Grocery Crisis
But the crisis extends far beyond the gas pump. In our modern world, everything is tied to the cost of oil through either manufacturing or shipping, and usually both. Fuel price spikes drive up food prices through fertilizer costs, transportation, and packaging. Many of the countries impacted by ongoing hostilities are among the world’s top fertilizer producers, and one-third of global fertilizer supply travels through the Strait of Hormuz.
Urea nitrogen fertilizer prices have already increased by 42% since February 2026. Without going into it, modern nitrogen-based fertilizers are a key byproduct of petroleum refining, so the cost of a barrel of oil and the cost of fertilizer are inextricably linked.
For New Mexico households, this hits harder than most states. While absolute grocery costs have moderated to $114 per week in 2025, New Mexico families spend 9.54% of median income on groceries. That puts us among the highest burdens in the nation. When measured against household income rather than absolute dollars, New Mexico effectively ranks in the top 10 states for grocery cost burden. That’s families choosing between filling the tank and filling the pantry every single week.
This matters because 42% of New Mexico households are living below the ALICE Threshold, meaning they earn above the federal poverty level but still cannot afford the basic Household Survival Budget that includes housing, child care, food, transportation, health care, and technology.
Between 2023 and 2024, the number of ALICE households decreased slightly while poverty remained flat, but 356,394 households still face financial hardship. When fertilizer costs surge 42% in a matter of weeks and diesel prices climb, these families have nowhere to cut back.
The “Least Discretionary” Reality
Here’s what makes this crisis so devastating: gas and food are the least discretionary items in any household budget.
You can postpone a vacation. You can delay buying new clothes. You can skip a night out. You cannot postpone eating or driving to work, especially in New Mexico, where:
- Rural communities face limited food access, with many residents relying on distant grocery stores that require significant fuel costs to reach
- Public transportation is sparse outside Albuquerque, Las Cruces, and Santa Fe’s metro areas; car travel is essential for food access
- 80% of households earning less than $50,000 own cars, and over a third own more than one. And you know, fuel costs multiply quickly
For a single mother in Shiprock, driving 40 miles to the nearest supermarket, or a ranch family in Otero County making weekly supply runs, there’s no alternative. The tank must be filled. The pantry must be stocked.
State Response vs. Federal Cuts
New Mexico has recognized this crisis. Through the New Mexico Food Initiative, Governor Lujan Grisham’s administration has invested significant state funding including $41 million for universal school meals and $24 million for the Food, Farms and Hunger Initiative. These investments are meant to build resilience against exactly these kinds of supply chain shocks.
Programs like New Mexico Grown connect local farmers to schools, senior centers, and food banks, keeping food dollars in-state while reducing transportation dependencies. In FY25 alone, the value of locally grown food sales increased by more than $1 million from the previous year.
But here’s the catch: the Regional Farm to Food Bank Program, which purchased over $4.6 million in food from New Mexico farmers and ranchers for distribution across all 33 counties, lost its $6.3 million in federal funding when USDA terminated the Local Food Purchase Assistance program in March 2025.
The scale of federal disinvestment extends far beyond New Mexico. According to reporting from Grist, the USDA terminated the Local Food Purchase Assistance program and Local Food for Schools program in March 2025, halting approximately $1.1 billion in federal spending on local food systems nationwide. The Emergency Food Assistance Program (TEFAP) also saw $500 million in funding abruptly cut. As one food bank director told Grist: “We don’t have the money… It’s been heartbreaking for the thousands of people we feed and the 40 farmers who have now lost that income.”
State emergency funds provided temporary relief, but as the New Mexico Food & Agriculture Policy Council warns: “Without restored TEFAP and USDA investments, food banks, rural producers, and families across New Mexico will continue to bear the cost of federal disinvestment.”
The Ripple Effect
When oil prices rise, it doesn’t just mean higher prices at Walmart. It means:
- Local farmers facing higher costs for diesel-powered irrigation pumps and tractor fuel
- Food banks paying more to transport donations across our vast state
- Families in rural communities choosing between filling up the truck or filling the pantry
- School districts struggling to afford both fuel for bus routes and food for universal meal programs that served 56 million meals in FY25
- Fertilizer costs forcing farmers to reconsider application rates, with potential savings of $7-45 per acre meaning $7,000-45,000 for a 1,000-acre operation, money that could mean the difference between profit and loss
This is why the “least discretionary” framing matters so much in New Mexico. When you’re already spending a disproportionate share of your income on groceries compared to most states, and 42% of your neighbors can’t afford basic necessities, a 42% spike in fertilizer costs or a doubling of jet fuel prices isn’t an economic abstraction
It’s the difference between making rent or falling behind.
Even as the Strait of Hormuz reopens following the June 2026 peace deal, food price pressures will persist longer than fuel costs. According to shipping analysts, fertilizer shipments will be “at the back of the queue” for Strait reopening while oil tankers and Liquid Natural Gas (LNG) carriers get priority. This means families may see gas prices stabilize while grocery bills remain elevated.
The Broader Financial Stress
Even before this crisis, American households were already under significant financial pressure:
- Credit card delinquencies hit a 15-year high in late 2024, with 13.12% of balances at least 90 days past due
- As of Q1 2026, 4.8% of all household debt is in some stage of delinquency, with total household debt reaching $18.8 trillion
- Credit card balances stand at $1.25 trillion—historically high even after seasonal adjustments
- Hardship withdrawals from 401(k)s have reached record highs as families tap retirement savings to cover basic expenses
- In low-income communities, credit card delinquency rates continue to exceed 20%
Now, with gas and food prices consuming more of their budgets, families face impossible choices: cut back on other necessities, go further into debt, or both.
What’s Next in This Series
This crisis doesn’t end at the grocery store. In Part 2, we’ll explore how supply chain disruptions are hitting New Mexico’s seniors who ration medication and craft breweries facing bankruptcy. In Part 3, we’ll examine who actually benefits from New Mexico’s oil wealth (spoiler: it’s not most New Mexicans). In Part 4, we’ll dive into the state’s Energy Transition Act and the paradox of funding a post-oil future with oil money. And in Part 5, we’ll look at why gas tax holidays are a dangerous fix that makes the problem worse.
What You Can Do
- Stay informed: Follow this series to understand the full scope of the crisis
- Support local food systems: Buy from NM Grown producers when possible to reduce transportation dependencies. Shopping at a local farmers market is a good option (find a market near you) and if you receive SNAP food benefits, you can even double your money at a farmers market.
- Contact your representatives: Advocate for restored federal funding for food banks and farm-to-food-bank programs
- Share your story: Tell policymakers how rising costs are affecting your household
- Build community resilience: Connect with local food hubs, mutual aid networks, and cooperative buying programs that reduce dependence on volatile global supply chains
Bottom Line: The global oil crisis functions as a regressive tax that disproportionately harms those least able to bear it. For New Mexico families already living paycheck to paycheck, every dollar spent on higher gas and grocery bills is a dollar not spent on rent, healthcare, or education. The path forward requires more than waiting for prices to drop—it demands building resilient local systems that can weather the next storm. Even as the June 2026 peace deal brings some relief to fuel markets, the structural vulnerabilities exposed by this crisis remain. New Mexico’s investment in local food systems and energy independence isn’t just good policy—it’s economic survival.