Back to the well

Oil and gas funds everything from campaigns to government functions in New Mexico, complicating the state’s transition away from fossil fuels.

By Lindsay Fendt|May 19, 2021

Graphics by Joe Rull | Photo by Don J. Usner


On March 15, New Mexico Gov. Michelle Lujan Grisham sent a letter to President Joe Biden, praising his commitment to climate action and touting New Mexico’s leadership in the area. She then asked if oil and gas leasing in the state could continue in spite of a federal moratorium.

New Mexico, she said, was already contributing to stopping climate change — and it needed the revenues from oil and gas too much to slow drilling. As though to reinforce her point, the state legislative session concluded the following week without taking any steps to curb oil and gas emissions.

“It was kind of like a final cherry on top,” said Castille Aguilar, a campaign organizer for Youth United for Climate Crisis Action, a youth-led climate action group. “The idea that we can be leaders on climate change while continuing to give the industry free rein is just a lie, a huge lie.”

For activists like Aguilar, this spring was emblematic of the Lujan Grisham administration’s hands-off approach to climate policy. Democratic state leaders receive less campaign support from the industry than their Republican counterparts, but they still nix policies that could impede the immediate flow of oil (and dollars) in the state. Lujan Grisham and the Democrat-majority legislature talk about energy transition as something to come in the distant future, while tapping industry revenues to fund investments in education and other social policies.

Their hesitancy has opened a door for the industry to further cement its influence in the state. In fact, New Mexico has never leaned as heavily on industry dollars as it does today. In April, monthly oil and gas royalties from state lands hit an all-time high at $110 million, and in 2020, oil and gas funds made up more than a third of the state’s general fund.

A dot map in the shape of New Mexico in 100 gray points, with 34 of them being shaded a darker gray color to signify the portion of NM's general fund accounted for by oil/gas revenue. Title reads: New Mexico runs on oil. Caption reads as follows: Over one-third of NM's $7.9 billion state budget comes from oil and gas revenue, which tallied over $2.6 billion in 2020. SOURCE: New Mexico Tax Research Institute.

When Democrats assumed control of both the legislature and the governor’s mansion in 2019, environmental groups had high hopes for climate action. Over the previous eight years, former Gov. Susana Martinez had gutted funding for environmental agencies and deregulated the oil and gas industry. Lujan Grisham swept into office full of promises of a greener future.

She advised state agencies to prioritize climate change, and she formed a task force to monitor progress towards climate goals. That same year, the legislature passed the Energy Transition Act, which requires New Mexico to become completely carbon neutral by 2045.

However, legislation and regulations that would have immediately curtailed the oil and gas industry fizzled. Bills that would have raised oil and gas royalty rates and paused new fracking permits never made it out of committee. The state environment department put out draft rules designed to curb methane releases from oil wells but left gaping loopholes that would have allowed the vast majority of the state’s oil wells to continue polluting unchecked. After months of intense pressure from environmental groups, the state finally changed course, closing most of them.

“The governor and Democratic leadership can’t have their cake and eat it too,” Aguilar said. “They can’t claim to be climate champions while increasing oil and gas extraction in our state.”

Since then, no legislation that would stem oil and gas production has reached the governor’s desk, while droves of bills to spend the tax revenue from that industry have.

“The governor is proud to have successfully gotten so many of her legislative priorities over the finish line in the recent legislative session, as well as in previous sessions,” Nora Meyers Sackett, a spokeswoman for the governor’s office, said in a statement. Lujan Grisham did not respond to requests for an interview.

Over the years, the state’s budget has become increasingly reliant on oil and gas funds. In the 2020 fiscal year, that share was about $2.6 billion — just over a third of the state’s general fund. Since 2006, the state has used oil and gas revenue for at least 28 percent of its budget and sometimes as much as 37 percent.

Horizontal stacked bar chart illustrating the following general fund categories: public education, health and human services, higher education, public safety, general control, and other education. A darker gray area on each bar shows the portion of each category funded by oil and gas revenue, with the following values labelled at the end of each bar -- public education: $1.1 billion dollars of $3.2 billion dollars; health and human services: $640 million dollars of $1.9 billion dollars; higher education: $291 million dollars of $867 million dollars; public safety: $157 million dollars of $469 million dollars; general control: $49 million dollars of $148 million dollars; other education: $14 million dollars of $41 million dollars. Title reads: What the oil and gas industry pays for. Caption reads: A look inside NM's general fund. Source: New Mexico Tax Research Institute.

Industry leaders have made their growing influence clear.

“The future and the opportunities that New Mexico has is directly tied to the success of the oil and gas industry,” said Robert McEntyre, the communications director for the New Mexico Oil and Gas Association. “That’s something that policymakers on both sides of the aisle have long recognized.”

New Mexico’s dependence on natural resources has been a feature of the tax structure since statehood in 1912. As decades passed, the resources being pulled from New Mexican earth changed — coal, then uranium, then natural gas — but the economic model never did.

The latest oil boom overlapped with years of steep tax cuts, resulting in a state budget with natural resources as its primary source rather than a piece of the pie. For nearly two decades, state government has focused on slashing taxes. Martinez, Lujan Grisham’s predecessor, still touts that she made 61 cuts to state taxes and fees.

But this tax structure is not set in stone.

“We have oil and gas, and so we have chosen to provide tax cuts in other areas,” said Bill Jordan, the government relations officer at New Mexico Voices for Children, an advocacy group. “Other states have figured out how to pay the bills … and they do it without oil and gas.”

To do this, some officials in state government have begun pushing to find other sources of revenue.

“We want to have a transition plan,” said Stephanie Garcia Richard, public lands commissioner and head of the office that oversees state land use. “We want to transition and not just leave New Mexico in a lurch.”

Garcia Richard’s office has begun leasing land to renewable energy companies. The office is also looking at recreation, manufacturing and research as potential income sources in preparation for the day that New Mexico’s oil wells inevitably shut off. Still, efforts to end New Mexico’s oil and gas dependence remain in their infancy.

That may be in part due to oil and gas’ influence in state and local elections. Industry money was the largest source of state campaign contributions in 2020, according to an analysis from New Mexico Ethics Watch.

The industry’s contributions to candidates span the entire state, both political parties and almost every level of government. More than half of the oil and gas contributions between 2017 and 2020 came from individuals or entities outside New Mexico. Chevron, based in California, was the single largest contributor to candidates from New Mexico in both state and federal elections. Oklahoma-based Devon Energy and Texas-based Occidental Petroleum and Concho Resources also cracked the top five contributors.

A bubble map illustrating the highest-paying corporations to NM elections, where the size of each bubble represents the amount donated by each company. Companies based in NM are lighter gray, while those based elsewhere are darker gray. The following companies, locations, and values are shown: Chevron Corp. (based in  California): 875350 dollars; PNM Resources (based in  New Mexico): 329950 dollars; Devon Energy (based in  Oklahoma): 305700 dollars; Occidential Petroleum (based in  Texas): 283750 dollars; Concho Resources (based in  Texas): 221700 dollars; ConocoPhillips (based in  Texas): 196825 dollars; Marathon Petroleum (based in  Ohio): 172500 dollars; Exxon Mobil (based in  Texas): 170950 dollars; Jalapeno Corp. (based in  New Mexico): 144452.21 dollars; New Mexico Gas Co. (based in  New Mexico): 115650 dollars; Mack Energy (based in  New Mexico): 111500 dollars; New Mexico Oil & Gas Association (based in  New Mexico): 76932 dollars; Process Equipment & Service Co. (based in  New Mexico): 70500 dollars; Strata Production (based in  New Mexico): 69500 dollars; Bowlin Travel Centers (based in  New Mexico): 67900 dollars. Title: The top oil and gas campaign funders. Caption: The biggest contributions to NM elections come from out of state.

Between 2017 and 2020, 225 candidates in New Mexico accepted direct contributions from the oil and gas industry. Of the candidates who won their elections, six — Phelps Anderson, James Strickler, Cathrynn Brown Novich, Candy Ezzell, Joshua Hernandez and Rachel Black, all Republicans — ran campaigns funded more than 50 percent by oil and gas, and 32 others had campaigns financed more than 20 percent by the industry.

Title: NM candidates are cooking with gas. Caption: Winning NM candidates who received at least 20% of their campaign contributions from oil and gas. A chart showing winning NM candidates who accepted at least 20 percent of their campaign donations from oil and gas interests, sorted into 3 sections: greater than 40 percent, 30 to 40 percent, and 20 to 30 percent. The following candidates, parties, and portion of contributions coming form oil/gas are listed as follows: Phelps Anderson (R): 69.10%; R.J. Strickler (R): 66.70%; Cathrynn Brown (R): 61.87%; Candy Ezzell (R): 56.57%; Joshua Hernandez (R): 53.33%; Rachel Black (R): 50.71%; Greg Nibert (R): 46.52%; Paul Bandy (R): 44.78%; Jim Townsend (R): 43.69%; Rod Montoya (R): 42.84%; Larry Scott (R): 41.45%; Bill Rehm (R): 39.18%; Patricio Ruiloba (D): 37.74%; Zach Cook (R): 37.46%; Ron Griggs (R): 36.90%; Cliff Pirtle (R): 36.77%; Jack Chatfield (R): 35.49%; Steve Neville (R): 35.35%; Jane Powdrell-Culbert (R): 34.97%; Bill Sharer (R): 34.24%; Bobby Gonzales (D): 32.84%; Harry Garcia (D): 31.33%; Randy Crowder (R): 30.72%; Kelly Fajardo (R): 30.48%; Randall Pettigrew (R): 30.17%; Bill Burt (R): 29.65%; Gay Kernan (R): 28.77%; Alonzo Baldonado (R): 28.75%; Craig Brandt (R): 28.22%; Tim Lewis (R): 25.84%; Ambrose Castellano (D): 23.29%; Jim Trujillo (D): 22.54%; Joshua Sanchez (R): 22.51%; Gregory Baca (R): 22.20%; Joseph Cervantes (D): 21.91%; Mark Moores (R): 20.84%; David Gallegos (R): 20.76%; Jason Harper (R): 20.69%; Moe Maestas (D): 20.26%.

While more Republicans took money from industry-linked donors, high-ranking Democrats also drew in large contributions. Lujan Grisham received $233,626, far less than her Republican opponent Steve Pearce, who received more than $800,000 in contributions from oil and gas. Brian Egolf, Democratic speaker of the state House, brought in $87,150, and Joseph Cervantes, Democratic chair of the state Senate Judiciary Committee, took $46,682 from the oil and gas industry, accounting for more than 20 percent of his total campaign contributions.

A list showing the NM candidates who accepted the highest amounts in campaign contributions form oil and gas donors from 2017 to 2020, illustrating the following candidates, parties, and values: Steve Pearce (Republican): $811,397; Yvette Herrell (Republican): $368,767; Michelle Lujan Grisham (Democratic): $233,626; Patrick Lyons (Republican): $212,250; Claire Chase (Republican): $186,762; Martin Heinrich (Democratic): $139,950; George Munoz (Democratic): $114,400; Mark Ronchetti (Republican): $111,610; Monty Newman (Republican): $104,099; Brian Egolf (Democratic): $87,150; Jim Townsend (Republican): $86,400; Rebecca Dow (Republican): $72,850; Patty Lundstrom (Democratic): $69,200; Gary Clingman (Republican): $68,877; Ben Ray Luján (Democratic): $66,860; Xochitl Torres Small (Democratic): $58,860; Kelly Fajardo (Republican): $56,201; Candace Gould (Republican): $54,725; John Arthur Smith (Democratic): $54,600; Mick Rich (Republican): $51,300.

It’s difficult to trace campaign contributions or meals provided by lobbyists directly to votes and policy, but the oil and gas industry leaders have made no secret of their efforts to grab a seat at the table in government. Democratic state leaders aren’t turning them away.

Just days before Lujan Grisham made her public appeal to Biden for a moratorium exemption, her staff privately asserted the administration’s strong link to the industry in an email to an Eddy County official obtained by the corporate watchdog group Documented and published by HuffPost.

We have been communicating frequently with the large operators and the trade associations,” wrote Caroline Buerkle, a top Lujan Grisham staffer. They have all been appreciative of her efforts.”