As crude oil price drops, NM loses jobs

The nosedive in prices for crude oil will result in lower employment in the oil and gas extraction industry in New Mexico. The Albuquerque Journal reported on Wednesday that the state Energy, Minerals and Natural Resources Department predicted a drop of at least 2,000 jobs in the industry because of the lower cost of crude […]

As crude oil price drops, NM loses jobs

The nosedive in prices for crude oil will result in lower employment in the oil and gas extraction industry in New Mexico.

Oil rig in southeast New Mexico. Photo by Margaret Wright
Oil rig in southeast New Mexico.
Photo by Margaret Wright
The Albuquerque Journal reported on Wednesday that the state Energy, Minerals and Natural Resources Department predicted a drop of at least 2,000 jobs in the industry because of the lower cost of crude oil.

Wally Drangmeister, a spokesman for the New Mexico Oil and Gas Association, told New Mexico Political Report said that with crude oil prices dropping, companies need to adjust.

“Companies are looking for every efficiency they have,” Drangmeister said in a short phone interview.

One efficiency is fewer explorations, less “wildcat wells” in “unproven areas.”

Also, wells that are not performing as highly will be shut down, taking dozens of jobs with them.

From the Journal:

“So far we haven’t seen a decrease in oil production in New Mexico, but we expect it to begin leveling off, and that means lost revenue and jobs in the coming months,” Martin said.

Jason Sandel, executive vice president at Aztec Well Servicing in Farmington, said it usually takes about six months for the full impact of drilling rig shutdowns to kick in. Direct employees are affected first, followed by layoffs in support positions.

Boom helped oil patch

The bulk of the jobs are in southeastern New Mexico, known as the oil patch, an area of the state that has seen rapid economic and population growth in recent years even as the rest of the state has lagged.

An indication of the oil boom’s effect on the area is this report by the Associated Press that Hobbs, in the heart of the oil patch, was among the fastest growing areas in terms of population in the entire nation.

Hobbs was the fourth-fastest growing “micro area” in the nation from July 2013 until July 2014 with a 2.4 percent growth in population.

Hobbs is the largest municipality in Lea County and the population growth in Hobbs drove the county to near the top as well. Lea County was the 74th-fastest growing county from July 2013 until July 2014 according to U.S. Census Bureau estimates, with 2.4 percent growth.

“An incremental impact”

NASDAQ Chart of Crude Oil Brent prices for ten years, accessed 03-26-15.
NASDAQ Chart of Crude Oil Brent prices for ten years, accessed 03-26-15.
Drangmeister also pointed to concerns about a new rule from the federal government looking at hydraulic fracturing, commonly known as fracking. Those regulations are designed to protect water in areas with drilling.

“A well is not a well is not a well,” Drangmeister said. He added that horizontal wells used in fracking are more efficient and produce more oil so less people are needed. They are also more expensive.

He said that the Bureau of Land Management rule duplicates work done by the state Oil Conservation Division. He said the increased costs from the new regulation is “an incremental impact” but that those incremental impacts add up to make it more expensive to drill for oil and natural gas.

The total cost of the new regulation can be anywhere from $30 million to $2.7 billion depending on which estimate you read.

Environmental groups have said that the new rule does not go far enough.

“While there have been a few improvements, these rules largely bow to industry demands, putting drinking water at risk, thwarting transparency, and failing to modernize key standards,” Matthew McFeeley and Briana Mordick of the Natural Resources Defense Council wrote in a blog post.

While the price of Brent crude oil is far from the $100 level where it sat for most of three years until the latest price drop, prices on barrels of oil have rallied in recent days because of air strikes in Yemen.

We're ad free

That means that we rely on support from readers like you. Help us keep reporting on the most important New Mexico Stories by donating today.

Related

Emily’s List endorses seven candidates for Legislature

Emily’s List endorses seven candidates for Legislature

Emily’s List, a nonprofit that supports women candidates and reproductive rights, endorsed seven incumbents facing general election opponents in New Mexico legislative elections. All…
Equality New Mexico endorses 15 legislative candidates

Equality New Mexico endorses 15 legislative candidates

A New Mexico-based LGBTQ rights organization endorsed 15 candidates for state House and Senate seats for the 2024 elections.  Marshall Martinez, executive director of…
Lujan Grisham pocket vetoes two bills

Lujan Grisham pocket vetoes two bills

Gov. Michelle Lujan Grisham pocket vetoed two bills the legislature passed this legislative session: one changing the Cybersecurity Act and the other concerning law…
BLM announces final methane waste rule

BLM announces final methane waste rule

The federal Bureau of Land Management announced its final methane waste rule on Wednesday. These new regulations clamp down on the practice of venting…
What consumers, farmers should know about the flu impacting dairy cows

What consumers, farmers should know about the flu impacting dairy cows

Migrating birds appear to have caused a virus in dairy cattle that is causing reduced milk production. So far, the disease, which initially started…
Republicans seek to limit national monument designations

Republicans seek to limit national monument designations

Republican-backed legislation in the U.S. Congress would make it harder for the government to designate new national monuments. The proposed Congressional Oversight of the…
Amid new graduation requirements, what do high schoolers want to learn?

Amid new graduation requirements, what do high schoolers want to learn?

By Margaret O’Hara, The Santa Fe New Mexican The main things that bring Brayan Chavez to school every day: Seeing, talking to and engaging with…
Special ed teachers hope lawmakers OK pay raises, admin changes

Special ed teachers hope lawmakers OK pay raises, admin changes

By Margaret O’Hara, The Santa Fe New Mexican Brittany Behenna Griffith has a laundry list of adjectives to describe the ideal special education teacher:…
Lawmakers must find consensus on competing education spending plans

Lawmakers must find consensus on competing education spending plans

By Margaret O’Hara, The Santa Fe New Mexican A challenging task awaits New Mexico lawmakers in the next 30 days: Reconciling three very different…
Health workers fear it’s profits before protection as CDC revisits airborne transmission

Health workers fear it’s profits before protection as CDC revisits airborne transmission

Amy Maxmen, KFF Health News Four years after hospitals in New York City overflowed with covid-19 patients, emergency physician Sonya Stokes remains shaken by…
Lujan Grisham, Biden admin announce $10 million in federal funds for tribes, pueblos

Lujan Grisham, Biden admin announce $10 million in federal funds for tribes, pueblos

Gov. Michelle Lujan Grisham announced Friday $10 million in funding from the federal American Rescue Plan Act was awarded to six tribal nations and…
Proposal to curb executive powers moves to House Judiciary

Proposal to curb executive powers moves to House Judiciary

The House Government, Elections and Indian Affairs Committee discussed a potential constitutional amendment that seeks to limit the governor’s executive powers. The committee approved…
U.S. Supreme Court hears case to restrict access to medication abortion

U.S. Supreme Court hears case to restrict access to medication abortion

The U.S. Supreme Court heard the case about the regulations around mifepristone, one of a two-step regime for abortion medication, on Tuesday. FDA v.…
At stake in mifepristone case: Abortion, FDA’s authority, and return to 1873 obscenity law

At stake in mifepristone case: Abortion, FDA’s authority, and return to 1873 obscenity law

Lawyers from the conservative Christian group that won the case to overturn Roe v. Wade are returning to the U.S. Supreme Court on Tuesday in pursuit…
Supreme Court to hear two abortion cases this spring

Supreme Court to hear two abortion cases this spring

Later this month, the U.S. Supreme Court will hear oral arguments on the case against the abortion medication mifepristone. It will hear a second…
New Mexico Medicaid to cover cost of over-the-counter oral contraception

New Mexico Medicaid to cover cost of over-the-counter oral contraception

New Mexico Medicaid announced on Wednesday that it will cover the cost of Opill, the first oral contraception approved for over-the-counter use. It is…
U.S. Supreme Court hears case to restrict access to medication abortion

U.S. Supreme Court hears case to restrict access to medication abortion

The U.S. Supreme Court heard the case about the regulations around mifepristone, one of a two-step regime for abortion medication, on Tuesday. FDA v.…
At stake in mifepristone case: Abortion, FDA’s authority, and return to 1873 obscenity law

At stake in mifepristone case: Abortion, FDA’s authority, and return to 1873 obscenity law

Lawyers from the conservative Christian group that won the case to overturn Roe v. Wade are returning to the U.S. Supreme Court on Tuesday in pursuit…
San Juan County, Navajo Nation settle redistricting case

San Juan County, Navajo Nation settle redistricting case

The Navajo Nation and San Juan County reached an agreement Monday about commission districts after the tribe alleged that its members were not adequately…
MIT ranks NM elections most well-run in the U.S.

MIT ranks NM elections most well-run in the U.S.

New Mexico’s 2022 election was ranked most well-run in the country by Massachusetts Institute of Technology’s Election Data and Science Lab’s Elections Performance Index.…
Emily’s List endorses seven candidates for Legislature

Emily’s List endorses seven candidates for Legislature

Emily’s List, a nonprofit that supports women candidates and reproductive rights, endorsed seven incumbents facing general election opponents in New Mexico legislative elections. All…
BLM announces final methane waste rule

BLM announces final methane waste rule

The federal Bureau of Land Management announced its final methane waste rule on Wednesday. These new regulations clamp down on the practice of venting…
U.S. Supreme Court hears case to restrict access to medication abortion

U.S. Supreme Court hears case to restrict access to medication abortion

The U.S. Supreme Court heard the case about the regulations around mifepristone, one of a two-step regime for abortion medication, on Tuesday. FDA v.…
What consumers, farmers should know about the flu impacting dairy cows

What consumers, farmers should know about the flu impacting dairy cows

Migrating birds appear to have caused a virus in dairy cattle that is causing reduced milk production. So far, the disease, which initially started…

GET INVOLVED

© 2023 New Mexico Political Report