Oil, gas must pay fair share to NM’s kids
Let’s ask our legislators to support HB 398 to #RaiseTheRate we get in royalties
I recently sat down for an interview with the Associated Press. The article that followed was aptly titled “State Land boss ready to ‘dance’ with oil industry.”
It’s true. I’m ready. As a lifelong educator, former state representative and New Mexico’s first and only female land commissioner, I stand firm that it is time to put our money where it matters most: into our schools and into our classrooms.
I was elected on a promise to leverage the mandate of the Land Office to raise more money for our beneficiaries, 94 percent of which are public schools.
To follow through on that promise, I recently pushed for the introduction of HB 398, sponsored by Rep. Derrick Lente, D-Sandia Pueblo, to raise the amount of money that our most profitable oil and gas leases pay in royalties when oil and gas companies use our land to extract our resources.
The dance has begun. What kind of dance it is, however, is yet to be determined.
Oil and gas drilling activity is up nearly 50 percent from annual averages over the last decade, yet the royalty rate hasn’t been touched in New Mexico since the 1970s. The Permian Basin, shared by New Mexico and Texas, is the largest continuous source of oil in the world. Texas charges a 25 percent royalty rate, yet we are stuck at 20 percent. HB 398 is not only about industry paying its fair share to use our land and resources, it’s about the long-term sustainability of our Land Grant Permanent Fund.
In fiscal 2018, the Land Office received approximately $692 million in royalties from oil and gas. After hundreds of millions in deductions, including the payment of royalties, my office estimates that in that same fiscal year, oil and gas company profits totaled $3.816 billion dollars, or 5 ½ times more than what went to our kids. I’m asking for this modest increase because I am constitutionally obligated to use my position as land commissioner to raise funds for our schools.
The truth is, I probably won’t see the impact of this new rate during my tenure. Lease rates are locked in for life. It is why our Permian Basin is only returning a 13 percent royalty rate average despite having the 20 percent royalty rate option for over 40 years.
HB 398 is about future production only and guaranteeing that if any other areas are discovered to have an abundance of oil, that they are paying the premium rate on leases that produce at least 20,000 barrels a month.
So, if this is a dance, I guess it’s a Sadie Hawkins. I’m the first female land commissioner, asking the oil and gas industry to pay its fair share on future leases to ensure a better future for New Mexico kids.
It takes people power to be successful. Legislators in the House and Senate will determine the fate of HB 398. If you are with me, and you want a better future for kids, please call or email your legislators today and ask them to support HB 398 to #RaiseTheRate.