DALLAS The federal government would have to remain closed for about four weeks before New Mexico state revenues from the oil and gas industry are impacted, according to the New Mexico Oil and Gas Association.
While the permitting process is halted by the shutdown, state revenues have not yet begun to suffer, the trade association said.
Oil and gas is often produced on federal land, which makes up about 40% of the state. The U.S. Bureau of Land Management issues permits on federal property and since the shutdown went into effect Tuesday, the BLM has halted that permitting process.
Oil, gas and extractive industries in New Mexico accounted for $1.7 billion in severance taxes in fiscal year 2012, with more than half of that total going to public schools and higher education.
“With the price of oil where it is, with the production and the activity level, it’s a tremendous benefit to the state of New Mexico,” said Raye Miller, chairman of the New Mexico Oil and Gas Association.
But with the government shutdown, parts of that booming industry have been forced to a halt.
“It’s basically shutting down part of their industry,” said Bureau of Land Management Environmental Protection Specialist Joe Amos.
New Mexico was one of the states whose outlook from Moody’s Investors Service shifted to negative when the ratings agency placed the U.S. government on negative outlook in 2011. The lower outlook on the state’s triple-A rating reflected the state’s close economic, financial and capital markets linkages to the federal government, Moody’s said at the time. However, in July, Moody’s restored the stable outlook to U.S. debt and included New Mexico.
New Mexico’s severance tax bonds, backed primarily by oil and gas revenues, carry ratings of Aa1 from Moody’s, AA from Standard & Poor’s, both with stable outlooks.
Standard & Poor’s rates New Mexico general obligation bonds AA-plus.
