Record gas prices squeeze New Mexico drivers while fueling state revenue
As motorists change their habits to cope with pain at the pump, the state’s oil and gas boom is generating revenue for public schools, Medicaid, and tax relief.
ALBUQUERQUE, N.M. —
New Mexico is on track for its most expensive September at the pump in history. However, while residents are paying more to fill up, the state of New Mexico is bringing in more money from the oil and gas industry.
“New Mexico taxes oil that’s taken out of the ground,” said Charles Sallee, director of the New Mexico Legislative Finance Committee. “And in some cases, if it owns the ground, then it owns the oil as well and gets a royalty payment.”
With conflict in the Middle East pushing oil prices higher, New Mexico’s oil is also worth more.
“The amount of taxes that they’re paying goes up and we get more revenue from that,” Sallee said.
According to Sallee, oil has made New Mexico a wealthy state.
“New Mexico would drill about 70 million barrels of oil a year up until around 2017, 2018, when we started a massive production boom,” Sallee said. “And the amount of oil we expect to produce as a state has shot up to 850 million barrels per year.”
New Mexico has put some of its oil and gas money into permanent funds, saving and investing the revenue. Each year, the state uses a portion of those funds to help pay for early childhood programs, public schools, and Medicaid. Sallee noted that this revenue “allows the state to provide a greater level of service than would otherwise be provided or basically is providing huge tax relief.”
While drivers feel the pain at the pump, Sallee explained that they are paying less in taxes as a result.
“The average person benefits from this oil and gas revenue to sustain school spending, Medicaid spending, and other road spending at levels that they would otherwise be taxed for if they wanted to enjoy that,” Sallee said.
Managing the oil money is a balancing act, according to Sallee, as the revenue will eventually dip or plateau. Spending too much now could leave the state with less money to rely on later, while spending too little means leaving money on the table instead of improving services for New Mexicans.
At the consumer level, high prices are forcing drivers to think twice before getting behind the wheel or to skip trips entirely.
“I feel like I can’t even really drive anywhere anymore,” Dean, an Albuquerque driver, said. “Everything is kind of limited to where I go nowadays, just because of the fact that gas prices are so high, you know?”
He described the costs at the pump as the “absolutely most diabolical prices you could ever ask for. Hands down.”
Stephen, another Albuquerque driver, echoed the frustration over the expenses.
“The gas prices are getting outrageous,” Stephen said. “I feel like people are probably having to choose between putting gas in and food. We filled up a cart the other day and it was $80. And also, I think is taking away from some of the other people’s recreational things.”
For those trying to cut down their gas bills, AAA recommends not pulling into the first station available. Drivers can use apps like the AAA Mobile app or GasBuddy to find cheaper prices nearby.
“Shop around for gas, that’s one of the best things you can do,” said Daniel Armbruster of AAA New Mexico. “Make sure that you have fuel discounts and rewards.”
Driver behavior is the number one factor in maximizing fuel efficiency. Armbruster recommends turning off the air conditioning when possible and adjusting speeds to time traffic lights to avoid constantly stopping and accelerating.
“Just simple things like not accelerating quickly, making sure that you take extra items out of your vehicle to lower the weight of your vehicle, making sure that your tires are in good shape,” Armbruster said.
As for the future of gas prices, geopolitical factors continue to play a role.
“A lot of what we’re seeing has to do with the conflict in Iran and the Strait of Hormuz being blocked,” Armbruster said. “But there is some sign of hope today. We saw crude oil come down a little bit today, about 4%.”
AAA noted that when gas stations switch to a winter fuel blend in the fall, prices could drop by about 20 cents a gallon.
