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The Unregulated Podcast #208: God-Tier Level Trolling

November 26, 2024 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the tentative transition occurring at the White House and Team Biden’s race against time to spend every tax-dollar they can.

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Statement on President-Elect Trump’s Energy Team

November 26, 2024 by Leave a Comment

WASHINGTON DC (11/26/24) – American Energy Alliance President Thomas Pyle issued the following statement today on the leaders President-elect Trump has nominated to comprise his energy team:

“Throughout his campaign, President Trump expressed his unwavering commitment to American energy, and his selections show how serious he is about unlocking our country’s resource potential. He has chosen strong candidates to comprise his energy team, all of which should instill confidence in the American people.

“All of these leaders share a vision for energy dominance and economic growth. Their dedication to prioritizing domestic energy production and addressing regulatory burdens will serve to spur job creation and strengthen our economy. 

“With his expertise and leadership, Chris Wright is the right person for the job. Over the past decade, Wright has led the way making the moral case for energy development, recognizing the link between economic growth and environmental progress. He is a champion for reliable, affordable energy and the role it plays in ensuring American prosperity and improving people’s lives in the developing world. His approach challenges conventional thinking while remaining firmly rooted in real-world solutions.

“One of the largest hurdles to affordable, reliable energy is our burdensome regulatory framework. Lee Zeldin understands the challenges that come with trying to innovate in a space that discourages practical solutions. His leadership at the EPA will bring the fresh perspective that is so desperately needed.

“Doug Burgum hails from one of the largest energy-producing states in the country and knows what it takes to get the job done. As Governor of North Dakota, he has overseen one of America’s great energy growth stories and his perspective will be valuable as we work to grow American energy production. 

“It’s encouraging to see President-elect Trump nominate Russ Vought to resume his leadership at the Office of Management and Budget. Under his direction during the first Trump administration, he focused on cutting through red tape to make government more efficient. His vision and focus are exactly what is needed in the push to strengthen America’s infrastructure and champion American energy.”

In addition to President-elect Trump’s chosen nominees, Pyle issued this statement on news that Senator Mike Lee will chair the Senate Energy and Natural Resources Committee in the 119th Congress:

“Sen. Mike Lee has consistently been a champion of American energy and natural resource development during his tenure in the Senate. He understands that free markets are the best way to deliver for the world’s growing energy demands. His perspective is rooted in a deep respect for the Constitution and the rule of law, a perspective that is sorely needed on energy and natural resource issues. We congratulate him on his chairmanship and look forward to working with him in the new Congress, for the good of the American people.”

In conclusion, Pyle stated:

“By assembling a team of energy experts and proven leaders, the incoming administration is positioning America to bolster its role as a global energy powerhouse. President-elect Trump is clear in his vision for affordable, reliable energy for all Americans; before he has even taken the oath of office, he is already positioning our country back on the right track and making American Energy Great Again.”

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Trump’s Victory To Save Ratepayers From Expensive Offshore Wind

November 22, 2024 by Leave a Comment

President-Elect Trump has made it clear that he is not a supporter of offshore wind energy, a stance he reinforced during his interview with Joe Rogan. Offshore wind, according to Trump, disrupts fishing zones, threatens wildlife such as birds and bats, damages large sections of the ocean floor, jeopardizes the North Atlantic Right Whale’s survival, and burdens Americans with high electricity costs that are unreliable—operating at less than half capacity. Wind power, he argues, requires backup from fossil fuels, nuclear plants, or costly batteries to be integrated into the grid, meaning consumers are paying not only for the wind energy itself but also for its backup capacity. Offshore wind exists largely due to massive subsidies from the Inflation Reduction Act, passed by Democrats, which are funded by U.S. taxpayers. Additionally, the Biden-Harris administration has pushed to build 30 gigawatts of offshore wind by 2030 to meet commitments made under the UN’s Paris Agreement. Warren Buffett has famously pointed out that wind energy would not exist without tax credits, many of which his own company benefits from. In essence, Americans are paying twice for offshore wind: once as consumers and once as taxpayers.

A recent incident off Nantucket on July 13 highlights further concerns about the industry. A large blade from the Vineyard Offshore Wind facility broke off, scattering debris along the coastline and creating hazards for boats. The manufacturer, GE Vernova, identified the root cause of the failure as a manufacturing error at its Canadian factory, revealing that other blades with the “manufacturing deviation,” had been found. As a result, the Federal Bureau of Safety and Environmental Enforcement issued a suspension order for Vineyard Wind, halting all turbine operations, blade installations, and other activities until the problem could be addressed. GE Vernova has since announced plans to replace some of the faulty blades and reinforce others at the site. This is not the first blade failure for the company—two blades also broke at the Dogger Bank offshore wind farm in the UK.

For years, fishermen, marine conservationists, and ocean advocates have voiced concerns about the expedited approval processes for offshore wind projects. Jerry Leeman, founder & CEO of the New England Fishermen’s Stewardship Association, said, “It is now obvious that foreign mega developers and their political allies cut corners to bring their flagship project online. Despite the compounding safety concerns at Vineyard Wind, lease auctions loom for wind farms in the Gulf of Maine, the culmination of a rushed regulatory process. There is no doubt that speed has taken precedence over safety and conservation for offshore wind.”

In Oregon, tribal leaders were forced to take legal action to slow the pace at which the Biden-Harris administration was pushing for an offshore wind lease sale for a costly floating wind farm. A lawsuit alleges that during a June 6 meeting with tribal representatives, Bureau of Ocean Energy Management (BOEM) Director Elizabeth Klein revealed that she had been given specific political directives from the White House to fast-track offshore wind projects. The administration ultimately canceled the Oregon lease sale, citing concerns from Native American tribes about its potential impact on their communities and the environment, as well as limited interest from potential bidders.

The situation in the Gulf of Maine mirrors the trend of limited interest in offshore wind development. In a recent lease sale, only four out of eight lease areas received bids, and those came from just two developers. The low level of interest is likely due to the high costs associated with floating wind technology, which remains less developed than traditional bottom-fixed wind installations, as well as inflation and market uncertainties. Offshore wind is significantly more expensive than natural gas combined-cycle generation—about 4.5 times more costly to build and 2.3 times more expensive to operate—even with the substantial federal subsidies, and without factoring in the additional costs for backup battery systems.

In Europe, Sweden has dropped plans for 13 wind facilities in the Baltic Sea due to security concerns as wind turbines could interfere with radar and slow Sweden’s missile response. Sweden shares a coast on the Baltic Sea with Russia. A study found that an additional minute could be added to the country’s missile response time as wind turbines could impede the country’s ability to detect incoming cruise or ballistic missiles. The towers and their blades produce radar echoes and interference both in the air and underwater, making missiles and submarines in their vicinity harder to detect.

Conclusion

Biden’s Executive Order 14008 issued on February 1, 2020–only two weeks after his Inauguration– launched the offshore wind program in the United States. This is an executive order that President-Elect Trump could easily rescind on his first day in office by just issuing a counter-executive order, which would stop the onslaught of this very expensive energy being added to the U.S. grid. Another way is to remove the excessive tax credits that encourage its adoption, which would take new legislation and add time to the process. Regardless of the avenue, it is not in the best interest of the American public to be hit with this double whammy—being taxed for lucrative tax credits for wind and the much higher energy costs that result from its construction and operation.

*This article was adapted from content originally published by the Institute for Energy Research.

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Northeastern Energy Corridor: Development, Regulation, and Threats to Expansion

November 22, 2024 by Leave a Comment

The Northeast region of the United States includes the states of West Virginia, Virginia, Maryland, Pennsylvania, New Jersey, and New York, as well as the entirety of New England, which is made up of Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire, and Maine.  The Northeast is an important region for fossil fuel production especially for coal and natural gas, which replaced coal as the primary fuel used for electricity generation in the region.  Transporting fuel throughout the Northeast requires an intricate network of rail lines for transporting coal and numerous pipelines for the transportation of highly reliant and affordable natural gas and oil.  The Northeast plays an integral role in America’s energy industry, both domestically and internationally, and its importance to America’s energy security cannot be understated.

The Role of Coal in the Northeast

Of the top 5 coal-producing states, the second and third largest producers, coming in after Wyoming, are in the Northeast.  In 2022, West Virginia produced 14% of the nation’s coal, while Pennsylvania produced 7% accounting for a combined 21% of all national production.  With the exception of West Virginia where coal-fired power plants accounted for 89% of electricity generation in 2022, natural gas is regularly favored for electricity generation in the northeast; in 2022, coal still accounted for 19.5% of electricity generation in the United States.  

Although the use of coal for power generation has declined over time, it remains a highly valuable export for the Northeast.  Northeastern coal, primarily from West Virginia and Pennsylvania, is shipped via rail by CSX or Norfolk Southern, who provide most rail services east of the Mississippi, and arrives at the Port of Baltimore.  Once processed, it is loaded onto ocean vessels and distributed around the world – the Port of Baltimore accounted for 28% of all American coal exports in 2023 with the majority going to India. 

Source: EIA

Natural Gas & Oil

Natural gas and oil play an important role in both residential and commercial energy consumption in the Northeast and the nation as a whole.  In 2024, approximately half of the region used natural gas as its primary fuel source for generating electricity. Meanwhile, 82% of the 4.79 million Americans who use oil to heat their homes, reside in the Northeast.  

Source: EIA

Pennsylvania is the second largest natural gas producer after Texas, producing 7.5 trillion cubic feet of natural gas in 2022 and 2023 – 20% of the U.S.’s total.  In that same year, West Virginia produced 2.9 trillion cubic feet of natural gas, making it the country’s fourth-largest producer.  Given that in 2022, the United States consumed 33.31 trillion cubic feet of natural gas, accounting for 33% of national primary energy consumption for that same year, the northeast contributes significantly to the overall energy production of the United States.  Natural gas consumption is spread out into five categories: the electric power sector, accounting for 38% in 2022, the industrial sector, accounting for 32%, the residential sector, accounting for 15%, the commercial sector, accounting for 11%, and the transportation sector, accounting for 4%.  

Source: EIA

Pipelines & Regulatory Constraints

Transporting the Northeast’s natural gas requires several pipelines with both domestic and international terminals; although more are sorely needed.  The largest of the region’s pipelines is the Maritimes and Northeast pipeline, a 684-mile-long pipeline that transports natural gas from Nova Scotia to parts of Canada and America’s Northeastern states.  Passing through Maine and New Hampshire, the Maritimes and Northeast connect to the American natural gas pipeline grid in Dracut, Massachusetts where it disperses the Canadian natural gas further throughout the United States.  

Source: EIA

Source: EIA

Although the region is rich in natural gas, thanks in part to the Marcellus Shale Formation in western Pennsylvania, a significant portion of the Northeast does not have access to low-cost natural gas due to stringent regulations preventing the construction of the necessary pipelines required for its distribution.  The lack of pipeline infrastructure, especially throughout New England, has forced the region to import most of its natural gas from overseas.  New England has historically sourced its natural gas from nations such as Trinidad and Tobago, Norway, Canada, and Russia, and due to the Jones Act, which requires goods being shipped from one U.S. port to another to be on American-owned and operated vessels, a challenge in itself with America’s defunct shipbuilding industry, prices in New England tend to be exorbitant.

Northeastern residents are stuck with higher natural gas prices due to having to import natural gas from overseas as a result of regulatory restrictions preventing the construction of much-needed pipeline infrastructure.  Industry complaints include challenges getting permits for drilling for natural gas on state-owned lands, as well as obstacles to building out pipeline capacity due to unfounded anti-fossil fuel, and therefore anti-energy security organizations such as Greenpeace.  Environmental groups have a track record of halting pipeline construction across the country, and Northeastern politicians, unfortunately, are not immune to their demands.

Conclusion

The Northeast contributes significantly to America’s energy security providing substantial amounts of natural gas and coal to both domestic and international consumers.  Although abundant, the region has been unable to take full advantage of the accessible and affordable energy resources due to pressure from misguided environmental groups resulting in high natural gas impact fees and restrictive pipeline construction policies forcing most of the region to be reliant on expensive and highly regulated maritime imports.  The inability to build out a more extensive pipeline network has caused production in the Northeast, especially Pennsylvania, to stagnate.  Excessive and misguided regulations preventing pipeline construction, as well as outdated maritime policies, will continue to make access to the affordable and abundant natural gas of the region, not obtainable.

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Trump’s DOE Pick, Chris Wright, On Hydrocarbons And Human Flourishing

November 18, 2024 by Leave a Comment

President-elect Donald Trump recently named Chris Wright, CEO of Liberty Energy and founder of the Bettering Human Lives Foundation, as his choice for head of the Department of Energy. Chris Wright sat down for a discussion on the role of energy production in lifting humans out of poverty with the policy team at our sister organization, the Institute for Energy Research on the Plugged In Podcast.* The full episode is available below.

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*The episode was originally released on February 6, 2019.

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Biden-Harris Impose New Tax On American Oil & Gas

November 15, 2024 by Leave a Comment

The Biden-Harris administration’s Environmental Protection Agency (EPA) has finalized a federal methane tax for oil and gas drilling operations, set to take effect next year. This rule is part of the broader Inflation Reduction Act, which was passed by Democrats and saw Vice President Harris casting the decisive vote. The new regulation imposes a fee on oil and gas producers who exceed a certain methane emission threshold by venting or flaring the gas rather than capturing it. While the industry would prefer to capture the methane, they are often hindered by infrastructure limitations, such as insufficient pipeline capacity. This shortage is primarily due to the challenges of securing federal permits, which forces companies to flare the methane. If the necessary permits were granted and pipelines built, this issue could be resolved, potentially preventing any increase in consumer costs.

According to the EPA, methane emissions exceeding the threshold in 2024 could trigger a federal fee of $900 per ton, with the fee rising to $1,200 per ton in 2025 and $1,500 per ton by 2026. The rule applies to oil and gas facilities reporting annual methane emissions greater than 25,000 metric tons of CO2 equivalent. Industry organizations are expected to challenge the rule, especially any attempt to impose retroactive fees.

EPA Administrator Michael Regan has stated that the new fee, formally called the Waste Emissions Charge, will complement a separate methane rule introduced earlier this year. The goal of this fee is to encourage the early adoption of technologies that can reduce methane emissions. However, industry groups and some states have contested the earlier methane regulations in court, arguing that the EPA overstepped its authority and set unattainably high standards. These challenges were rejected by the Supreme Court, which refused to block the rule while the case continues in lower courts. According to the American Petroleum Institute, the fee “hampers our ability to meet the growing energy needs of American families and businesses and fails to advance meaningful emissions reduction.” Fees incurred by the industry will be passed on to consumers, who will pay more for energy through this backdoor tax.

Many large oil and gas companies already meet or exceed methane-performance levels set by Congress under the Inflation Reduction Act, so they are unlikely to be assessed the new fee. Despite that, the Biden-Harris EPA estimates that the rule will result in cumulative emissions reductions of 1.2 million metric tons of methane (34 million metric tons of carbon dioxide equivalent) through 2035.

The incoming Trump administration will likely want to weaken or eliminate the fees as the regulation adds a burden on American families by increasing energy costs. An option for changing the methane fee regulation might be through the Congressional Review Act, which allows lawmakers to overturn a regulation or rule within 60 days of it being finalized. With the regulation repealed, the Trump administration would not be required to collect the fee. Congress could then work to repeal the law as the Inflation Reduction Act would still require specific fees and fines to be imposed on companies that emit methane above the threshold.

There may be other reasons, however, to limit methane releases. During the UN’s COP 28, more than 150 countries pledged to reduce methane pollution by at least 30% by the end of the decade. As such, the European Union, the world’s largest gas importer, established methane import standards. The Biden-Harris administration expects the United States to begin a program that would use satellite data and other tools to spot large leaks of methane and alert companies. Methane is not only emitted via operations of the oil and gas industry. It is also emitted from livestock and landfills, and a large portion occurs naturally in wetlands.

Conclusion

The Biden-Harris EPA finalized a rule that imposes a fee on oil and gas producers that exceed thresholds for venting or flaring methane rather than capturing the gas. Companies violating the new rule will start paying penalties next year based on methane emissions reported in the calendar year 2024. The tax will increase in 2026. The regulation can be overturned by the Congressional Review Act, but legislation would be required to overturn the requirement as the rule is part of the Democrat-passed Inflation Reduction Act. Oil and gas operators would prefer to sell their excess methane but are often hampered by other federal regulations that limit their ability to get the gas to market, such as pipeline availability.

*This article was adapted from content originally published by the Institute for Energy Research.

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The Unregulated Podcast #207: How Awkward Was That?

November 15, 2024 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the priorities of Team Biden during their waning days in the White House and a few issues that remain outstanding after the election.

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Biden Blames Birds For Backhanded Drilling Ban

November 13, 2024 by Leave a Comment

The Biden-Harris administration has proposed tighter restrictions on oil and gas drilling on federal land across more than 6,500 square miles in the West to supposedly protect a declining bird species—the Greater Sage Grouse—chicken-sized birds known for an elaborate mating ritual. The Biden-Harris Interior Department aims to strengthen protections for the sage grouse beyond the 2015 measures set by the Obama-Biden administration. Those earlier protections limited development across 226,000 square miles of sage grouse habitat in 11 states. The new Biden-Harris proposal seeks to close additional “loopholes” that currently allow oil and gas development in areas they deem critical for the bird’s survival. Under the new plan, energy activities would only be permitted on drilling sites located outside designated protected zones. Specifically, it would require that four million acres remain off-limits to oil and gas extraction to safeguard the sage grouse, which is hunted in seven states.

While the majority of the affected land is in Nevada and California, the proposal also impacts parcels in Wyoming, Oregon, Idaho, Colorado, Montana, and the Dakotas. Wyoming Governor Mark Gordon has expressed concerns, arguing that the plan would impose additional layers of federal regulation and limit practical solutions for managing sage grouse populations. Environmental groups, however, argue that the plan remains inadequate, as “loopholes” persist that still allow development across about 50,000 square miles of crucial sage grouse habitat. American Clean Power, a renewables industry lobbying group, said it had supported an earlier version of the proposal but not the final details because the proposal “unnecessarily restricts the development of wind, solar, battery storage and transmission, undermining the ability to deploy much needed clean energy infrastructure.”  The Biden-Harris administration predicts minimal economic impacts, as energy companies stay away from sage grouse habitat where there are limits on when and where work can be done near breeding areas.

The Interior Department’s Bureau of Land Management (BLM) manages the largest single share of greater sage grouse habitat in the United States—nearly 65 million acres of 145 million total acres. According to BLM, Sagebrush is crucial for the sage grouse, providing both food and a place for reproduction, with a single local population potentially requiring up to 40 square miles of habitat to thrive. Protecting sagebrush ecosystems not only benefits the sage grouse but also supports around 350 other wildlife species, including mule deer and pygmy rabbits, according to the Bureau of Land Management (BLM). This interconnected habitat is essential for maintaining biodiversity and the health of many species. The agency received about 38,000 comments from the public on the draft environmental analysis released earlier this year and obtained information from state, local, Tribal, and federal partners during more than 100 meetings held over two years. BLM will accept protests on this proposal until December 9 at the BLM Filing a Plan Protest page, after which final decisions will be made during the Biden-Harris lame-duck session.

The situation with the sage grouse mirrors that of the spotted owl from a generation ago when the bird was used as a justification to halt logging. At the time, timber mills and local communities were hit hard by policies aimed at preserving the spotted owl’s habitat. Today, however, biologists argue that the real threat to the spotted owl isn’t habitat loss, but competition from barred owls, which now rival them for food. This shift in understanding highlights the complexity of conservation efforts and the unintended consequences they can sometimes have. The federal government now wants to shoot 450,000 Barred Owls over the next couple of decades to save the Spotted Owls.

A related proposal out of the Biden-Harris administration would block new mining projects on more than 15,625 square miles in Idaho, Montana, Nevada, Oregon, Utah, and Wyoming for 20 years, which was part of the 2015 Obama-Biden protection that was canceled under President Trump and restored by a court. The Biden-Harris administration claims to want mining for critical minerals needed for “green” technologies but continues to block, or at least delay, that mining whenever it can. The administration has revoked leases, withheld permits, and added fauna and flora to the endangered species list to block or stall mine development despite the need for the minerals and the jobs that would be obtained from their development. The Biden-Harris Interior Department intends to publish an analysis of its mining ban by the end of the year, which would continue its anti-American energy policy in favor of China, which dominates the supply chains for these elements and the processing of the minerals using cheap coal.

Conclusion

The Biden-Harris administration has decided to restrict energy development in the West in favor of protecting the greater sage grouse habitat, which will continue the administration’s anti-American energy policy. It is expected that the Trump-Vance administration will reverse this decision after inauguration day as the new administration favors an American-first policy for energy. The Trump administration reversed a similar anti-American energy policy of the Obama-Biden administration in its previous term, which a court overturned. The Biden-Harris administration predicts minimal economic impacts from its decision, which raises the issue of why government resources were spent on it. Species are often used by opponents of domestic energy production or resource extraction to justify stopping their development in the United States.

*This article was adapted from content originally published by the Institute for Energy Research.

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AEA’s Statement On Finalized Biden-Harris Methane Tax

November 12, 2024 by Leave a Comment

WASHINGTON DC (11/12/24) – The Biden-Harris administration is poised to finalize a new methane emissions tax for U.S. oil and gas producers today.

The tax, mandated by President Joe Biden’s 2022 Inflation Reduction Act, was originally outlined but left to the Environmental Protection Agency to finalize. The finalized rule will impose a penalty of $900 per metric ton on methane emissions that exceed a government-set threshold.

AEA President Thomas Pyle issued the following statement in response:

“Reliable and affordable energy is critical for American households, businesses, and manufacturers to thrive. Having decisively lost an election where energy policy was a key issue, the Biden administration is using its final days to impose taxes that will raise energy costs for Americans. Repealing this tax on natural gas should be a top priority for Republican leaders in the new Congress.”

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New Mexico’s Critical Role in U.S. Energy Production: Innovation, Regulation, and Threats to Growth

November 12, 2024 by Leave a Comment

New Mexico plays a vital role in American energy production, providing a substantial amount of oil and gas from a comparatively smaller population than its neighbor, the number one oil-producing state, Texas.  Accounting for an astounding 13.3% of all U.S. crude oil production in 2022, and increasing to an even 14% in 2023, due to further innovation in fracking, New Mexico consistently plays a key role in American oil and gas production holding about 13% of proved crude oil reserves in the U.S.  In addition to playing such an important role in the American crude oil market, New Mexico also is in the top ten gas-producing states accounting for 7% of U.S. natural gas withdrawals and proved natural gas reserves.  Furthermore, New Mexico also has approximately 3% of U.S. recoverable coal reserves, although only accounts for 1% of national production.  

Production and heavy regulation constantly are at odds due to the state having a predominantly left-leaning legislature while having to rely on oil and gas production for 25% – 30% of the state’s general fund.  This has made industry and government relations difficult, especially compared to their neighbor Texas, where the balance between private and public influence is far more balanced.  Fossil fuel production plays an important role in both the overall health of the American economy, but also, for the over 2 million residents of New Mexico, many of whom rely on fossil fuels for their energy at home, their jobs, and their communities’ well-being.

Sharing the Permian Basin

The Permian Basin is the largest producing oil field in the United States, encompassing an area 250 miles wide and 300 miles long in mostly west Texas and southeast New Mexico.  Four counties in New Mexico are a part of the Permian, including Chaves, Roosevelt, Lea, and Eddy – there are 66 total counties in the Permian Basin with the remainder being located in Texas. 

Source: Dallas Fed

Of the four New Mexican counties in the Permian Basin, Lea, and Eddy account for not only the majority of production within New Mexico, but in 2023, they were responsible for 29% of all Permian Basin crude oil production in the first quarter of that year.  Additionally, with 40% of total U.S. crude oil production coming from the Permian Basin, the importance of continued exploration of the region, and innovation within the industry to extract more crude oil, cannot be understated both for economic and geopolitical reasons.  

San Juan Basin

Located mostly in the Northwest corner of New Mexico, with smaller parts spilling into Southwest Colorado, the San Juan Basin produces 67% of New Mexican natural gas, and, although it has been on the rise, the Basin produces a mere 5% of the state’s crude oil.  Not getting nearly as much notoriety as the Permian Basin, the San Juan Basin still plays an important role in the New Mexican economy, and in the fulfillment of American energy needs.  The New Mexican portion of the San Juan Basin encompasses the four counties of McKinley, Rio Arriba, San Juan, and Sandoval.  

Source: Oklahoma Minerals

In addition to significant reserves of natural gas and some oil, the majority of New Mexico’s recoverable coal reserves are in the San Juan Basin – there are some, but not as much in the Raton Basin.  Not only is the San Juan Basin the largest coal-producing region in New Mexico, but it is the only area currently actively being mined.  The coal mined in the San Juan Basin remains mostly at home where it is used for power generation in the state, or, for power generation in parts of Arizona whom New Mexico shares a border with.  

Revenues and Regulation

As a major producer of oil and gas, fossil fuels are a critical economic driver of the New Mexican economy for both the state’s GDP and the employment of thousands of residents.  The state generates significant revenues from oil and gas in a variety of ways, including severance, a tax put on the extraction of non-renewable natural resources, gross receipts, corporate and personal income taxes, and royalties.  New Mexico generally receives 4$ billion in direct revenue from the oil and gas industry, and the combination of direct and indirect revenue regularly accounts for 25% to 30% of the state’s general fund.  Additionally, revenues from the production of oil and gas directly contribute to the state’s early childhood care and education funds. 

Oversight of oil and gas extraction and transportation is done by both state and federal agencies and the control of the oversight depends on whether or not the land is federal, state, or private property.  Any drilling and production activities on New Mexico State Trust Lands or private property are regulated primarily by the New Mexico Oil Conservation Division.  In contrast, if production takes place on federal land, regulation comes primarily from the U.S. Bureau of Land Management and or the U.S. Forest Service.  

New Mexico’s Energy Export Markets

Mexico’s proximity to New Mexico and Texas has helped establish it as one of America’s top export markets.  For example, in 2023, Mexico received the most exported petroleum products from the U.S., such as gasoline, diesel, and propane, which is highly beneficial to both parties due to the ease and relatively low cost of transportation, and because Mexico has an outdated refinery system that cannot keep up with output demand.  Furthermore, Mexico imports a significant amount of natural gas annually, primarily through pipelines, which accounted for 13% of all energy exports from the U.S. to Mexico in 2023.

However, production in New Mexico and its export market are currently under threat from multiple political campaigns.  Although efforts by organizations such as Greenpeace to stop production in the Permian seem unrealistic, their campaigns should not be underestimated as they potentially present a major obstacle to growth in the region.  Greenpeace’s revenue for the fiscal year 2022 was $32,508,926.  The organization has a long track record of using those resources to block energy development in the U.S. and around the world. Greenpeace has placed pressure on both the U.S. and Mexico to “defuse” Permian production and has led political efforts to block energy infrastructure that is necessary to facilitate trade between the U.S. and Mexico.  Eliminating the Permian Basin as an oil producer, as well as restricting the construction of pipelines to transport oil along with natural gas, would have catastrophic consequences for both the American and Mexican economies.  

Conclusion

By regularly providing the second largest amount of oil to the American economy, 14% in 2023, and standing in the top 10 natural gas-producing states, New Mexico plays a significant role in American energy production.  Residents of New Mexico use revenues generated from oil and gas production to fund a significant portion of the public budget and include important funds for early childcare and education.  Aggressive overregulation and the prevention of production by environmental groups stand to impact not only national production but also the overall well-being of the New Mexican economy, economic relations with Mexico, and the global oil and gas market.  

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