New Mexico, the No. 2 oil-producing US state, braces for possible end to income bonanza
New Mexico is bracing for the possibility that a bonanza in oil income for the nation's No. 2 oil producing state will end if the world's thirst for oil falters
SANTA FE, N.M. — A windfall in government income from petroleum production is slowing down but far from over in New Mexico as the nation's No. 2 oil-producing state grapples with how much it can effectively spend — and how to set aside billions of dollars for the future in case the world's thirst for oil falters.
The state is headed for a $3.5 billion general fund surplus for the year running through June 2025, according to a new forecast Monday. New Mexico’s annual state government income has swelled by nearly 50% over the past three years, driven largely by oil an natural gas production in the Permian Basin, the most prolific shale-oil producing region in the country that extends across southeastern New Mexico and portions of western Texas.
The state will draw in a record-setting $13 billion — exceeding annual spending obligations by one-third, economists from four state agencies said in a presentation to a legislative panel. Monday's forecast anticipates 2.2% growth in state government income, on top of 10.2% growth during the current budget year.
The estimate of government income sets a baseline for budget negotiations when the Democratic-led Legislature convenes in January, and could extend efforts to set aside money to ensure critical programs endure when oil income falters. The forecast cautions that slowing oil production and lower prices are expected to generate significantly less federal payments next year and beyond.
By the end of the decade, oil income is likely to begin a long, steady decline, “becoming a drag on revenue growth as global demand
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