Tags: Commodity Market, Oil Market
oil

Prediction for The Oil Patch

New Mexico’s oil and gas industry has recovered to pre-pandemic levels in crucial categories. It delivered record amounts of petroleum to markets and money to state coffers. Moreover, it helped to add record amounts of carbon dioxide to the atmosphere. The state’s oilfield jobs, on the other hand, are expected to remain 25%. Alternatively, it might go below pre-pandemic levels for at least the next five years.

According to the University of New Mexico, New Mexico’s oil and gas jobs will soon return to only 74% of their pre-pandemic levels.

For years, state officials and industry boosters have cited oilfield revenues and job creation. Those are the primary reasons for supporting an industry that also contributes to the state’s climate emergency. One of those key reasons is likely to fade away now.

 

Oil and Gas from The Ground at Record Rates

 

According to O’Donnell, the BBER employment calculations bases on a close reading of previous employment, industry news, and interviews with industry leaders. Moreover, there is no doubt that the industry is extracting oil and gas from the ground at record rates while employing fewer people.

Carrie Hamblen, a Democratic state senator from Las Cruces, is concerned about what will happen to workers displaced by the shifting industry. She said that they need to put in place a new infrastructure. It would allow people who work in those jobs to get job training and earn the same or more than they do now to support their families.

When Gov. Michelle Lujan Grisham took office, one of her top priorities was to reduce the state’s greenhouse gas emissions drastically. More than half of it comes from oil and gas production. This goal resulted in two sets of state rules. One of them has yet to clean up waste and leaks in the industry. However, both directions rely heavily on operator self-reporting.

 

Mining Sector

 

In the first quarter of 2020, employed approximately 25,000 people in New Mexico in the mining sector, including oil and gas jobs. A year and a global pandemic later, that sector employs about 17,000 people, a 32% decrease.

According to Dawn Iglesias (LFC), for state legislators and other branches of government, total employment in the sector expects to rise to just under 19,000 jobs by the end of 2026. This is about 25% lower than pre-pandemic levels.

The BBER creates proprietary economic forecasts and reports for government agencies but does not make them available to the public. The LFC’s Iglesias described the contents of the information, and Acting Director O’Donnell confirmed the specifics. Employment is particularly low in the Permian Basin, the state’s largest and most productive oil and gas field.

 

Leading Industries

 

According to the state Department of Workforce Solutions’ most recent Labor Market Review, nonagricultural employment in New Mexico increased by 39,900 jobs a year from May 2021.

Despite a now-rescinded federal moratorium on new oil and gas leases on federal lands, a backlog of thousands of previously approved drilling permits has allowed production to continue. The number of well-drilling rigs is also increasing. At a recent LFC meeting, Iglesias presented data. It demonstrated that a portion of the state’s oil and gas fortune stems from the low cost of pumping oil here. And break-even points are as low as $2 per barrel.

Carlsbad, New Mexico, was the epicenter of an oil and gas boom. It was almost too much for locals to bear from 2018 to early 2020. According to Eddy County Commissioner Ernie Carlson, there were housing shortages, empty Walmart shelves, and overflowing man camps on the outskirts of town. Oilfield workers, nearly all of whom were men, shared RV parks and trucked in temporary housing.

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