Nick Piatek IPANM Northwest Vice President | Independent Petrolium Association of New Mexico
New Mexico's rapid rise in energy production has played a significant role in boosting the state's economy and funding local public programs. Tapping into the Permian Basin's reserves, the state surpassed 2 million barrels per day in oil production in 2024, more than doubling its output from 2019. This growth has positioned New Mexico as a leader in U.S. energy production, standing second only to Texas.
"The nation's leading oil and gas resource, the Permian Basin, extends westward from Texas—No. 1 in oil production—to New Mexico, which is ranked No. 2," stated the report published by the Federal Reserve Bank of Dallas. Exploration primarily in Eddy and Lea counties has been a major driver for the state's production expansion.
Comparing U.S. oil production since the 2019 pandemic recovery, New Mexico outpaced states like North Dakota, Oklahoma, and California, where production stagnated or declined. Production in the Permian Basin exceeded 6 mb/d in 2024, benefiting from more drilling locations and a favorable regulatory environment.
New Mexico's increased oil and gas activity has had significant economic impacts, particularly through tax revenues. Eddy and Lea counties contribute notably to state revenues with their oil production, which accounted for about $11.3 billion in state receipts by mid-2024.
The oil and gas sector also plays a crucial role in funding education. "Oil and gas revenue provided roughly one-third of general fund recurring revenue in fiscal 2024," the report detailed, highlighting support for various state funds, including the General Fund and the Early Childhood Trust Fund.
The Early Childhood Trust Fund, established in 2020, is supported by oil-driven revenues. It aims to ensure high-quality, universal early childhood education, benefitting half of the state's children from low-income families. State Sen. John Arthur Smith noted, "The riches [they’re] seeing from the oil boom in the Permian have provided … a remarkable opportunity."
In light of the industry's volatility, New Mexico has established the third-largest state permanent fund, behind Alaska and Texas. These funds can cushion the state against economic changes, with projections for production growth persisting through the decade.
Despite the positive outlook, legislative proposals introducing drilling setbacks could impact future growth. These setbacks, like those in Colorado that coincided with a production decline, could reduce drilling site availability. However, ongoing cooperation between federal, state, and private sectors continues to harness the Permian's resources, signaling optimism for New Mexico's economic future.
