Energy, Utilities and Environment

Gessing and Rep. Bill McCamley discuss 2015 Legislative activities on KRWG TV

I was recently in Las Cruces and had a chance to sit down with Fred Martino of KRWG (the public television station in Las Cruces) to discuss what happened in the 2015 legislative session and special session. Las Cruces area state Representative Bill McCamley, a Democrat, was also on the air and, believe it or not, we found a few areas of agreement.

Freer trade could help New Mexico oil and gas industry

No matter what one thinks about recent battles over Trade Promotion Authority and the Trans Pacific Partnership, freer trade would be good for New Mexico's main private sector industry (oil and gas). In this case, as I argue below, freer trade would impact the industries from different angles.

Photo by Rob Nikolewski

When it comes to New Mexico’s economy, there are no bigger players than the oil and gas industries which, combined, contribute 31 percent of the general fund. Natural gas prices remain at historically-depressed levels. Since spiking during the winter of 2014 when the East Coast of the United States saw a series of cold snaps, the Henry Hub price has been on a steady decline. Throughout 2015, prices have been below the historically-low $3/mmbtu line.

Oil prices on the other hand, were elevated until July of 2014 when prices began a steep slide from $100/barrel to less than half that price by January of 2015.

Unfortunately for the industry and contrary to the beliefs of many Americans (at least when prices are elevated), oil and gas producers have little control over the price point at which they sell their product. Collectively, the oil and gas industries can (and have) cut production, but this is a painful and unappetizing process.

Recent Paul Gessing interview: the impact of low oil and gas prices on New Mexico

Natural gas prices have been down for some time but oil has rebounded somewhat in recent weeks. Here's a recent interview I did on the issue and how the prices of these important commodities impact New Mexico.

James Taylor presentation: Affordable Energy Threatened in New Mexico

On April 8, 2015, James Taylor of the Heartland Institute visited Albuquerque to discuss policies that are negatively impacting New Mexicans' access to affordable, reliable energy (especially electricity). You can watch his full presentation below and access his powerpoint slides here:

New RGF report: Obama Administration Clean Air Regulations to Raise Electricity Costs by 18 percent, cost 5,000+ New Mexico Jobs

(Albuquerque, NM) – The Rio Grande Foundation, using data produced by the Beacon Hill Institute at Suffolk University (BHI) has analyzed the Obama Administration Environmental Protection Agency’s proposed “Clean Air Regulations” and found that if consumers are concerned with the electricity rate hikes being proposed by Public Service Company of New Mexico (PNM), they will face an even greater impact under the new federal regulations.

The new report is available here. Among the report’s findings:

• Before factoring in PNM’s proposed 12 percent rate hike, New Mexico’s electricity prices are relatively high compared to other states. In part this is due to aggressive renewable portfolio standards;

• The EPA has introduced three new emission rules that will either force coal-fired generation plants to close or adopt expensive and unproven technologies such as carbon capture and storage;

• These rules will cost the New Mexico economy $185 million between implementation and 2030, according to data provided by the Beacon Hill Institute at Suffolk University;

• The rules’ effects on reducing the supply of inexpensive electricity production will increase electricity prices by 18%, cost 5,170 jobs, and reduce real disposable income by $578 million, according to the report.

According to Rio Grande Foundation president Paul Gessing, all of this economic harm amounts to “all pain and no gain” since EPA administrator Gina McCarthy, in September 2013 testimony before a House committee, conceded that the agency’s climate-change regulatory regime would not affect the climate because the preponderance of current and future greenhouse-gas emissions originate in Asia.

“Of course,” argued Gessing, “The pain of dramatically-increased electricity costs will further hinder New Mexico’s already anemic economy while having real-world impacts on the thousands of hard-working taxpayers who are destined to lose their jobs under this misguided proposal.”

With PNM already looking for a 12 percent rate hike and many of New Mexico’s utilities looking to increase their “renewable” portfolios from 15 to 20 percent by 2020 to comply with New Mexico’s “renewable portfolio standard,” the price of electricity in the Land of Enchantment has already risen dramatically in recent years (as seen in the chart below) and is likely to rise dramatically in the years ahead.

Check out this new video outlining the serious issues facing the Obama Administration's plan:

A freedom outlook for New Mexico’s 2015 legislative session

A freedom outlook for New Mexico’s 2015 legislative session

Posted By Paul Gessing On January 20, 2015 @ 1:13 pm

NewMexicoFlag [1]

By Paul Gessing | Watchdog Opinion

The 2014 elections represented nothing less than a seismic shift in New Mexico’s political system. Gov. Martinez won re-election handily, but the real story was the Republican takeover of the House of Representatives for the first time in 62 years.

For New Mexico, this political shift is nothing less than a once-in-a-lifetime opportunity to improve itself. New Mexico has traditionally struggled with high poverty rates, poor education levels, and an over-reliance on both federal spending and mercurial commodity prices, particularly oil and natural gas.

In recent years, oil and gas alone have generated 31 percent of New Mexico’s General Fund revenues. Also, according to data from the Mercatus Center, New Mexico topped the nation with 32 percent of its workforce occupied in public-sector and federal-contract jobs as a percentage of total jobs.

With federal employment stagnant, natural gas prices continuing to hover at historically-low levels and the recent collapse in oil and gas prices, policymakers in the Land of Enchantment face a dire need to jump-start the State’s weak private sector. An indicator of that weakness is that New Mexico is home to only one publicly-traded company headquarters, those of PNM, the State’s largest utility.

What is to be done?

For starters, the Legislature is going to be considering several labor reforms, most notably “right to work” legislation. Currently, 24 states have such laws on the books. These laws simply prohibit union membership or the payment of union dues as a condition of employment. Recently, “rust-belt” states of Indiana and Michigan have adopted similar laws.

Energy Expert Robert Bryce Discusses "Smaller, Faster, Lighter, Denser, Cheaper" in Albuquerque

Robert Bryce is one of America's foremost authors and experts on energy. Specifically, he is an optimist about America's economic future fueled in part by affordable, reliable energy. Bryce is also a skeptic regarding the "politically-correct" sources of energy beloved by environmentalists.

He discussed his book and his views on some important energy issues including the "shale revolution," coal, "renewables," and his optimism about America's future. Video is available below:

Robert Bryce discusses, Smaller, Faster, Lighter, Denser, Cheaper in Albuquerque, NM on December, 9, 2014 from Paul Gessing on Vimeo.

Rio Grande Foundation Submits Comments in Opposition to EPA’s Clean Power Plan

(Albuquerque, NM) —The Rio Grande Foundation today joined with elected officials and organizations from 50 states representing a wide range of industries to voice strong concerns with the U.S. Environmental Protection Agency (EPA) flawed “Clean Power Plan.”

For more than 70 years, New Mexico has exercised exclusive jurisdiction over its retail electricity markets. With the passage of the Federal Power Act in 1935, the Congress codified New Mexico’s—and all States’—prerogative to oversee their retail electricity markets, unencumbered by federal intrusion. EPA’s Clean Power Plan, by its very terms, would erase this “bright line” in jurisdiction between federal and state governments.

In addition to usurping the state’s authority, the rule adds insult to injury by imposing unreasonable costs on New Mexico ratepayers. Residential rates are projected to increase by 13 percent to 14 percent, while industrial rates are projected to increase by 23 percent. Making matters worse, the rule also poses a threat to electric reliability.

In response to previous EPA rules, utilities already have announced the closure of 633 megawatts of coal-fired electricity in New Mexico. EPA modeling for the Carbon Pollution Rule projects that the regulation would cause an additional 1,001 megawatts of electricity generating capacity in New Mexico to retire.

The Rio Grande Foundation’s comments are available online.

Said Paul Gessing, president of the Rio Grande Foundation which organized and submitted the comments, “Reliable and inexpensive electricity is critical to creating a prosperous economy. Working class New Mexicans, small businesses, and those on fixed incomes, cannot afford to see electricity prices skyrocket due to unnecessary and ineffectual federal regulations.”

Gessing further noted that it is not just his opinion that the regulations will be ineffective, in September 2013 testimony before a House committee, EPA administrator Gina McCarthy conceded the agency’s climate-change regulatory regime would not affect the climate, because the preponderance of current and future greenhouse-gas emissions originate in Asia.

In conclusion, the EPA is imposing significant costs on New Mexico businesses and rate-payers for no net reduction in current and future greenhouse-gas emissions.

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