Very rural New Mexico reaps millions in oil revenue

In the U.S., only Texas produces more oil than New Mexico.
(Photo by Laura Mann, Unsplash)

New Mexico's state treasury began reaping millions in oil revenue after global crude supplies were strangled in the Strait of Hormuz. 

Despite the predominantly rural state's dependence on fossil-fuel-generated revenue, the windfall has sparked mixed feelings for "Democrats who oppose the war and would rather reduce their reliance on fossil fuels," reports Morgan Lee of The Associated Press.

The Democratic-led "Land of Enchantment" is second only to Texas for oil production, and the "state’s revenue from taxes, royalties and lease sales helps cover the cost of college tuition, all school meals, health insurance and a new initiative for free universal child care," Lee explains.

Even seemingly small increases in crude oil prices can mean big money for the state. Lee reports, "For every $1 fluctuation in the average annual price of oil, New Mexico sees a roughly $59 million swing in state government income."

The state's treasury automatically channels increases in oil revenue "into a series of trust accounts designed to gradually reduce the state’s reliance on fossil fuels," Lee writes. Through investments, those trusts "underwrite Medicaid, early childhood education, infrastructure projects and an expansion of mental healthcare" in a very rural state that is "entrenched [with] swaths of extreme poverty and the nation’s highest enrollment rate in Medicaid."

New Mexico isn't the only rural state to see surges in state income because of the war with Iran. Lee adds, "In Alaska, the state forecast an additional $1.05 billion for the current fiscal year and the one beginning July 1."