ALBUQUERQUE (KRQE) — Crude oil prices have been dropping, so has natural gas, but what's good for consumers has state number crunchers worried that could impact state revenues.
New Mexico is seeing a switch due to the changes in the fuel industry, according to John Felmy, chief economist for the American Petroleum Institute, who was in New Mexico Wednesday.
Natural gas prices are at a 10-year low, and this winter crude oil was more than $100 a barrel. So crude oil drilling exploded in New Mexico.
Output has doubled for crude oil here compared to this time last year. That should be great news for state revenue, but crude oil prices have dropped almost 20 percent to below $90 a barrel.
Nationally, there is a 44 percent increase in rigs drilling in the U.S. this year over last, and here in New Mexico, there are 89 oil rigs online right now. That's the highest number since January 2009.
Most of the natural gas drilling is in the Four Corners area in the San Juan Basin. Oil drilling takes place in the Permian Basin in southeastern New Mexico.
Natural gas used to account for two-thirds of the $2.2 billion in oil-and-gas revenues collected by the state. But over the last three years crude oil and natural gas now split about 50-50 as sources of state income.
So how do fluctuations in the fuels translate in terms of dollars? If natural gas goes up 10 cents, that means more than $16 million. If crude oil goes up $1, that means more than $9 million to the state.
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New Mexico is located in the southwestern region of the U.S. Inhabited by Native American populations for many centuries, New Mexico has also been part of Imperial Spain, part of Mexico, and a U.S. territory.