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New economic numbers show why boom-and-bust extraction doesn't mean economic stability for Western states. In New Mexico, oil and gas revenues added more than $1.7 billion to state coffers in the first four months of 2022—more than doubling the $782 million brought in during the same period in 2021, which was itself a record year.
But despite getting a share of the windfall profits that oil CEOs have raked in thanks to high gas prices, oil producing states are dragging the rest of the country down in overall economic output. Pew Stateline reports that the states with the largest declines in gross domestic product are all oil and coal states, including New Mexico, Montana, Alaska, and Oklahoma. Wyoming had the largest drop in GDP in the first quarter, a 10% decrease.
Nationwide, there was a 1.6% drop in GDP for the first quarter. But oil and gas companies have refused to increase output, leaving drilling rigs and workers idle as gas prices spike.
New Mexico lawmakers are expecting more than $5 billion in oil revenue this year, according to State Sen. George Muñoz. But lawmakers know that's a one-time windfall that can't be used to fund new programs, add jobs, or increase pay for teachers.
“I have ridden the roller coaster,” Muñoz told Capital & Main. “I came in in [2009] where we had to cut a billion dollars out of the budget” during the great recession.
New Mexico economist Kelly O'Donnell warns that the state often has “selective amnesia” during boom times. “To progress economically, over time, we are going to have to get out of this boom-bust resource cycle,” she said. “When it goes down next time, it may not come back up, and we have to be prepared for that reality.”
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This is an expensive thing to build. Where is that money going to come from? There is a real concern that they will start building this and not finish it. Or it gets built and then doesn’t get used.”
