The New Mexico State Land Office has announced a pause on leasing its most lucrative oil and natural gas sites in the Permian Basin after legislation during the 2024 Legislative Session to shake down oil and gas producers for more money via higher royalty rates failed.
Land Commissioner Stephanie Garcia Richard highlighted the effort to increase the current top royalty rate of 20 percent to 25 percent, a move that has seen repeated setbacks despite the Democrats dominating both chambers of the Legislature.
The proposal aims to align New Mexico’s royalty rates with those of Texas, which can go as high as 25 percent for oil and gas extraction on state trust lands. The Permian Basin, a hotspot for drilling, spans southeastern New Mexico and parts of western Texas. Texas’ royalty rates haven’t risen since the late 1990s, so the sudden attempt to hike rates appears solely politically motivated.
Revenue from oil and gas royalties in New Mexico contributes to a substantial investment trust that supports public education, universities, and healthcare institutions.
Garcia Richard emphasized her duty to optimize returns for the beneficiaries, stating, “I am a fiduciary on behalf of the school kids. It’s my job to make them the most money possible, and leasing these tracts below market rate means that school kids are subsidizing the oil and gas activity.” But with pauses on these leases, there will be no revenue coming in on the tracts in question.
The New Mexico Oil and Gas Association, through its CEO Missi Currier, expressed concern that halting new leases could disadvantage both the industry and the public who benefit from the revenues. Currier noted that New Mexico’s existing tax and royalty framework is competitive with neighboring states.
The Independent Petroleum Association of New Mexico’s Executive Director Jim Winchester wrote following the news, “The State Land Office has unilaterally decided to cut off future revenues to state beneficiaries and the general fund by suspending new leasing of premium tracts. IPANM strongly opposes this action especially considering the decision was abruptly announced without any consideration of the economic impact to all New Mexicans.”
The suspension of lease sales, starting with up to six leases in March’s auction, represents a small fraction of total transactions but signals a significant shift in policy. Garcia Richard re-elected for a second term in 2022, acknowledged the short-term loss of revenue from bonus payments due to the suspension but likened the strategy to a homeowner waiting for a more favorable market to sell property, emphasizing the long-term financial benefits. Time will tell if Richard’s shakedown will work.
Seems like a calculated move to push us away from oil & gas. The plan is to force us to go all electric even though it makes zero sense. Where will.the electricity come from? Where is the infrastructure? Nothing the left does makes any sense, but people keep voting for nonsense.
I wonder what the lease is for wind turbines? I bet it doesn’t come close to an oil well. Maybe the oil and gas producers should just shut down in NM for a couple of years and show everybody in Santa Fe where the money comes from.
Ditto!
All producers should shut down and leave nothing to the looting government/politicians. It’s time for these useless politicians to be powerless. Completely powerless.
Poetic justice! Of course this *is* NM… Nothing sensible goes on up there! The city’s IQ takes a nosedive when the legislature is meeting.
Why is it the Dems are always looking for more ways to tax everybody and even more ways to spend it. We all need to convince at least one Democrat to join us on the Republican side. I know how challenging that is so if you can’t convince a Dem, find a Rep that doesn’t vote and get them to the poll’s.
We need to vote these people out of office in November (the ones up for re-election) They have no morals or integrity and it’s all about control. MLG should never have been given a 1st term let alone a 2nd one. The evil queen is destroying NM and working on taking away our rights a little at a time. She should have been impeached and yet she continues her wrath on the people of NM,
Seems like the oppressed keep voting in their oppressors. Such a shame. People need to take off their blinders and be proactive to turn our state around. Stop being indifferent. Praying for Gods mercy.
I guess that’s why the politicians just passed the .50 a gallon gas tax. Land trust should be ashamed of how the oil and gas revenues fund a totally disgraced education system. The governor is waving her hands and jumping up and down to move to D.C. and live among the swamp with her friends. Hey look at me-see what I can do.
The demoncrats are all evil thugs.