As New Mexico legislators get ready to tackle the ailing state budget in a few weeks, oil and gas prices are on the rise.
Today, the U.S. Energy Information Administration announced that energy commodity prices rose more than any other sectors last year.
According to the EIA, after two years of significant declines, crude oil prices rose late in the year. That happened after OPEC (Organization of Petroleum Exporting Countries) and non-OPEC countries announced they would cut production in early 2017.
A widespread boost in production over the last few years, in the United States as well as the Middle East and Russia, had led to a glut of oil and lower prices.
The EIA, an independent and impartial agency that analyzes energy information, also offers a concise economic analysis about the causes of natural gas price fluctuations:
High levels of natural gas storage at the start of the 2015–16 winter, together with warm winter weather that kept withdrawals below seasonal norms, translated into very low natural gas prices at the start of 2016. Natural gas prices increased rapidly in the second half of 2016 because of record natural gas-fired electricity generation in the summer of 2016 and expectations that the 2016–17 winter would be significantly colder than the previous winter.
Other commodity prices that rose in 2016 include copper, nickel, silver and aluminum. Freeport McMoRan, the world’s largest copper company, owns three open pit copper mines in southwestern New Mexico. Another company is trying to reopen another copper mine near Hillsboro.
Commodities that didn’t fare well in 2016 include wheat, cattle and cocoa.
According to Baker Hughes, there are 34 active rigs drilling new wells in New Mexico. Those are all oil wells in the eastern part of the state.