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| Oil Boom Epicenter |
This is not your grandfather's boom and bust oil cycle. New Mexico is now enjoying its second budget year of extraordinary surpluses and signs point to more of the same straight ahead. The Feds are out with their two year
estimate for oil production in the state, which is now the second largest producer in the USA, and expect the good times to keep rolling:
Our forecast of crude oil production in the Permian increases by 470,000 barrel per day to average 5.7 million a barrel in 2023. . .In 2024, we forecast that crude oil production in the Permian will increase by 350,000 barrel per day. . .We forecast that production in other U.S. crude oil-producing regions increases by 70,000 b/d in 2024. We forecast the U.S. benchmark West Texas Intermediate (WTI) crude oil price will average $77 per barrel in 2023 and $72/b in 2024, down from $95/b in 2022.. .
No forecast is perfect but if this one come to fruition it will mean at least another two years of multi-billion dollar budget surpluses following last year's $1.6 billion and the humongous $3.6 billion for this year's budget that starts July 1.
Oil has been trending lower with prices now in the low 70's a barrel, down from triple digits. How far would it have to plunge before the wells in the SE NM oil fields were capped? Pretty low, says the Energy Information arm of the Dept. of Energy:
Despite declining crude oil prices, we expect the WTI price will remain high enough to support crude oil production growth, especially in the Permian, where data from the Dallas Fed Energy Survey indicate that average breakeven prices range from $50 to $54 a barrel.
Despite misgivings over the industry's environmental impact the MLG administration has carved a moderate path when it comes to fossil fuels. They have avoided far-reaching measures that would slow the pumping but also pursued meaningful ground and air quality rules (think methane regulation) that have kept the state in the sweet spot.
NOW IS THE TIME
We won't call them ludicrous but a continued string of economic reports from out of state experts urgently recommending that we "diversify" away from oil and gas are so deeply flawed that you wonder if they could find us on the map.
They only serve to distract from the task at hand--using our good fortune to enhance our fortunes in the decades ahead. Their insistence that we will soon go to hell in a hand basket is needless handwringing and plain wrong.
The state has been diversifying for over a century via its now over $22 billion Land Grant Permanent Fund, funded from energy royalties and that contributes a billion a year to the General Fund. And there are even more recently established funds now holding billions including a revenue stabilization fund, the severance tax permanent fund and an early childhood fund that is now so flush with billions that its mission will need to be broadened.
The notion that we can generate billions in revenue in a small population, mostly rural state through alternate economic development is, well, ridiculous. Why not diversify away from Sandia Labs and Kirtland Air Force Base. Aren't we "too dependent" on them as well?
The problem is not the future; it's the here and now. Staying fixated on that is imperative if we are to make the turn to a state that provides a better quality of life by overcoming generational obstacles and that finally has the funding to do so.
QUESTIONS PERSIST
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| Leader Wirth |
As we head for year three of towering energy revenue questions are becoming more persistent on how Santa Fe is adapting to this historic era.
While Senate Majority Leader Peter Wirth, the Governor and Senate Finance Committee Chairman George Munoz all label the immense surpluses "transformational" there have been few markers laid down for future generations to judge how we deployed the unexpected gift.
For example, there has been no firm goal established to improve the state's ranking in child well-being from last or near last in the nation. Likewise for the lowest in the nation high school graduation rate as well as test scores, the rate of drug addiction, alcoholism and suicide, all of which continue to rank among the worst in the nation.
A question for the leadership is where exactly do they see New Mexico ranking in these various indicators five years from now and how do they expect the "transformational" funding to get us there.
There is more than enough risk capital anyone could ask for but the political will to take a risk and say precisely where this state should specifically stand in light of the previously unimaginable funding has yet to be taken.
The Governor is safely re-elected so it first falls to her to engage in confronting New Mexico's reality and where it should be compared to our peers in the coming decade.
New Mexico needs stated goals that come with the risk of success or failure and that can be pursued rigorously and with oversight. Without them, when the epic surpluses fade we could find that all we accomplished was pedaling the bicycle in place.
THE CYFD PROBLEM
The latest CYFD shocker got the attention of reader of Kevin Berry, a licensed marriage and family therapist:
Joe, in last Thursday's blog, you highlight yet another instance of how CYFD is failing. No child should be sexually assaulted while in state custody, but the assault definitely should not occur in the very building where the Cabinet Secretary of the agency that is supposed to protect children has an office. Two words: incompetence and accountability.
You ask where many of the Legislature's progressive females are on CYFD's breakdown. Some of them are introducing legislation that will only make the situation worse, such as SB 128S. This bill is sponsored by Senators Katy Duhigg, Linda Lopez, and Siah Hemphill.
SB 128, if passed, will remove the authority of law enforcement to remove and take custody of abused and neglected children. This bill will give that sole authority to CYFD, the same agency that cannot even protect a child in their own building.
CYFD has a 51% vacancy rate, they have had numerous whistleblower lawsuits, and numerous children have been returned to abusive homes only to be abused again, or worse, killed. The last thing children who are being abused need is someone from a failing agency determining whether or not they should be removed from an abusive situation.
When is enough enough?
I have worked in the child welfare system in New Mexico for the last 19 years. There has been a philosophical shift at CYFD and from progressive legislators that believe the rights of abusive parents are more important than the safety of the child.
This is not a Democrat or Republican issue, it is a priority issue. Governors and legislators from both sides of the aisle have failed to protect children who have been abused and neglected.
It is time for true reforms, not more money or more control given to a failing agency.
It is time to truly protect the abused and neglected children of New Mexico. They are our future.
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(c)NM POLITICS WITH JOE MONAHAN 2023
