New Mexico’s royalty rates generate revenue from oil and gas production on state lands, contributing to the state’s fiscal resources.

New Mexico Royalties — figure 2
Fig. 2 of 3 · Chart 5 · Source: EPRINC
New Mexico Royalties — figure 3
Fig. 3 of 3 · Chart 5 · Source: EPRINC
  • New Mexico produces approximately 10% of U.S. crude oil and 5% of U.S. natural gas production, nearly all of which comes from public lands.
  • For fiscal year 2019, Federal oil and gas royalties funded 19.1% ($1.5 billion) of the state budget, much of it dedicated to public schools, health, and higher education.
  • The revenues New Mexico acquires from oil and gas development on federal lands represents “economic rent,” i.e., revenue above the cost of production and cost of capital.
  • If New Mexico curtails oil and gas production, these supplies will be replaced by foreign producers & other U.S. owners of mineral rights, who will get the economic rent instead.
  • Reducing New Mexico’s oil production will not result in lower oil and gas consumption, but higher imports.

From the EPRINC Chart of the Week archive.