New Mexico has been politically pushed to fund green energy projects which do not have the generation density to be cost-effective and useful. Our oil patch has long funded the public schools, the green energy projects fund the politicians. We need public schools more than we need politicians. We will eventually abandon all of the green projects when we run out of money we wish to spend on politics.
However, the oil patch is the real deal for New Mexico. Therefore in this price drop we New Mexicans need to recognize the opportunities an oil price war provides our state. When the New Mexico oil patch prospers, so do all New Mexicans.
The price of oil fluctuates because of supply and demand. As more global oil comes on the market the bid price goes down. More important is why more oil suddenly floods the market. Often this reflects the desire of some oil producers to gain market share globally. Some oil sheiks want to run the USA out of the oil market for both business and political reasons.
Their cost of oil production is much less than ours. They have no Environmental Protection Agency or environmentalists. Therefore they produce and distribute oil with no environmental regulation costs.
Talk to anyone in the oil patch in New Mexico about how much of what they do is to comply with the state and federal regulations. The Arab oil producing nations have a big price advantage.
This war for market share has happened before. And therein is a lesson: Congressman Steve Pearce had a company in the oil patch when oil prices declined to the point the oil patch essentially shut down. That is where we are headed so we need to take a page from Pearce's playbook.
Steve Pearce and wife Cynthia had a well service business with dozens of employees when an oil price fluctuation stalled production in New Mexico and West Texas. They went against conventional wisdom and keep all of their employees on the payroll unlike other companies who quickly trimmed their workforce because there was no work.
Those workers who were let go went on unemployment and then drifted into other lines of work. Steve and Cynthia's workers kept busy working in the company. They based their extraordinary risk on their personal faith and their sense of the value of their workers.
Early on they decided to go to the very ends of their savings. It was close. Within a couple months of when they would have to shutter the company the oil patch suddenly lurched to life because prices shot up. Their crew was ready and able to work the first day those services were needed. For that giant bet on the future, there was quite a reward for Steve and Cynthia as the only company ready the first day the oil patch revived.
New Mexico needs to go against the wave of oil production closures. Rather than slow down their oil patch companies need to drill more, pump more, build more pipelines and expand distribution channels. Much like when tornadoes and floods and fires happen New Mexico needs to come to the oil patch with low-interest loans and grants so that companies can survive.
New Mexico's government needs to suspend onerous oil patch rules and flood the oil patch with funding for power development for wells, new roads and pipeline construction. We New Mexicans need to be at the forefront of the next boom by getting the state ready now. Keep the companies engaged and keep the workers on the jobs.
The future of our public schools and much of our state's economy hangs in the balance. For the public schools there is nowhere else to make this money. Come now to the aid of our oil patch and we all will prosper together.
Dr. Michael Swickard is co-host of radio talk show News New Mexico 6 to 9 a.m. Monday - Friday on a number of New Mexico radio stations and through streaming. Email: michael@swickard.com
