National Fracking Ban Would Cost Billions, Harm New Mexico Economy New Study Says
New Mexico stands to lose more than 142,000 jobs and $86 billion in state economic development by 2025 if hydraulic fracturing is banned, according to a new report.
The analysis from the U.S. Chamber of Commerce Global Energy Institute (GEI) was unveiled today at the New Mexico Association of Commerce and Industry’s 2019 Legislative FOCUS and semiannual meeting.
With several 2020 Democratic Presidential candidates–including U.S. Sens. Elizabeth Warren and Bernie Sanders–pledging to end the process along with national anti-fossil fuel groups calling for the immediate halt to fracking in states heavily dependent on it for access to natural resource development, the study outlines the damaging effect such a ban would have on New Mexico’s economy. The estimates provided by GEI point to a 16 percent reduction in the state’s total workforce, and a loss of $26 billion in household income through 2025.
“America is cleaner and stronger as a result of increases in domestic oil and natural gas production made possible by hydraulic fracturing and advances in technology,” said Marty Durbin, President of the Chamber’s Global Energy Institute, at the study’s release.
“In particular, New Mexico has been both a major beneficiary and a major contributor to this energy revolution, which means that it has a lot at stake in this debate. Our goal is to ensure that candidates for public office and voters understand how important oil and natural gas production is to New Mexico’s economy, and the real world harm across many areas that would come if fracking were banned,” Durbin said.
The study is the first in a series of planned updates through 2020 for several additional states, starting with New Mexico, that the Chamber first examined in their 2016 “Energy Accountability Series.”
“Every New Mexican is benefiting from the rapid increase in oil and natural gas production as a result of hydraulic fracturing,” said Rob Black, President and CEO of the New Mexico Association of Commerce and Industry. “Our state is now seeing record budget surpluses that are fueling much-needed investment in education and infrastructure as a direct result of oil and natural gas production. This new study should give pause to those who advocate for hydraulic fracturing bans, which would be devastating for New Mexico.”
From 2013 to 2018, according to the study, the largest portion of the state’s increase in employment and gross domestic product “can be attributed to the recent boom in oil and natural gas production stemming from hydraulic fracturing.” That includes the addition of nearly $11 billion in GDP in just five years.
Halting the use of hydraulic fracturing would mean New Mexico “would forego $8.0 billion in state and local tax revenues while federal government tax receipts will be reduced by $8.3 billion over this same period.”
Many of those federal tax receipts would normally be shared with the state, and the loss of more than $2.2 billion in oil and gas tax revenues, as Western Wire reported earlier this year, would harm not only the state’s budget, but educational spending. For example, the state took in more than $500 million from Bureau of Land Management oil and gas lease sales in 2018 alone.
Under current regulations, New Mexico is poised to enjoy its largest production year in 2019, with natural gas production helping to drive its overall output, which has increased more than 25 percent since 2013, with the vast majority–64 percent–of production accessed through hydraulic fracturing.
The increase in natural gas usage for energy and electricity needs has resulted in a dramatic decrease in carbon emissions from the energy sector, leading to the reduction of more than 2.8 billion metric tons of CO2 emissions between 2005 and 2018, according to the Energy Information Administration.
This reduction is directly “attributable specifically to shifts from coal to natural gas,” according to the EIA report released in November, with 444 million metric tons of reduction in 2018 alone, more than the 311 million metric tons of CO2 reduced through “noncarbon-related emissions reductions.” Over the same period, EIA saw U.S. demand for electricity increase by 4 percent.