NEWS
Gas price surge strains drivers, boosts state revenue
Motorists feel the pinch as elevated oil prices push state revenues above forecasts and reshape the debate in this year鈥檚 elections
Published
SANTA FE 鈥� The latest spike in gas prices is a double-edged nozzle in New Mexico, as consumers continue to feel the impact of rising costs while the state takes in more money from royalties and tax payments.
Average gas prices in the state climbed past $4 per gallon Thursday 鈥� or about 40% higher than they were one year ago, .
Gas prices were highest in rural Harding County, where they reported to average $4.85 per gallon, and were lowest in eastern New Mexico communities including Clovis and Portales.
Due to the Iran war and related supply chain interruptions, global oil prices have hit their . In New Mexico the current average gas prices in the state are more than $1 above prices for regular fuel in mid-February, when they sat at about $2.70 per gallon.
But buying gas in New Mexico is still more affordable than in many other places, with the average cost of gas in San Diego this week. The national average as of Thursday was $4.30 per gallon.
While the spike in gas prices has hit New Mexicans鈥� pocketbooks from Deming to Dulce, it鈥檚 also led to increased revenue inflows for the state.
New Mexico is the nation鈥檚 second-highest oil producer 鈥� behind only Texas 鈥� and the recent surge in oil prices has reversed a downward state revenue trend from earlier this year. Recurring revenue is now tracking roughly $320 million 鈥� or 2.4% 鈥� above projected levels for the current fiscal year, according to Legislative Finance Committee data.
During a legislative hearing this week, LFC Director Charles Sallee said most of the revenue surplus will flow into the state鈥檚 permanent funds, which are invested and provide yearly distributions to support schools, hospitals and other programs.
鈥淰ery little of it will make its way into the general fund in a direct way,鈥� Sallee told lawmakers.
Unlike in past years when drops in oil prices prompted furloughs and state spending cuts, the strategy of funneling excess oil revenue into trust funds has put New Mexico on more stable fiscal footing going forward, Sallee added.
鈥淲e鈥檙e moving out of a situation of high volatility on both the up side and the down side,鈥� he said.
However, the spike in gas prices has not led to increased oil drilling in southeast New Mexico鈥檚 Permian Basin 鈥� at least for now.
Missi Currier, the president and CEO of the New Mexico Oil and Gas Association, said Thursday production decisions typically hinge more on long-term planning and infrastructure capacity than on short-term price movements alone.
鈥淣ew Mexico鈥檚 oil and natural gas industry continues to operate responsibly and efficiently, providing reliable energy while supporting jobs and generating significant revenue for the state,鈥� Currier told the Journal. 鈥淎ny sustained changes in commodity prices can have implications for state revenues over time, but it鈥檚 important to recognize that these impacts depend on the duration and stability of pricing trends.鈥�
Meanwhile, stubbornly high inflation and rising gas prices have also emerged as key issues during New Mexico鈥檚 election cycle this year.
Several candidates for governor have proposed tax cuts to provide financial relief for state residents and businesses alike, with the three Republican candidates in the race all calling for full repeal or partial reduction of the state鈥檚 personal income tax code during a KOAT-TV debate this week.
As for the two Democrats in the race, Sam Bregman has called for $500 per person rebates for New Mexico families making less than $200,000 per year, while Deb Haaland has said she would push to expand existing tax breaks and reduce the state鈥檚 gross receipts tax rate.
Dan Boyd covers state government and politics for the Journal in Santa Fe. Follow him on X at @DanBoydNM or reach him via email at dboyd@abqjournal.com.
