Santa Fe New Mexican (January 29, 2024) – New Mexico’s fossil fuel industry is enjoying a record boom in the Permian Basin, and state officials want the education system to benefit even more than it has from the oil-rich region by making companies pay more to drill on state lands there.
The House Commerce and Economic Development Committee voted 6-5 Monday, mostly along party lines, in favor of House Bill 48, which would raise the maximum royalty rate on state lands to 25% from the current 20% — the first such increase since the 1970s.
An industry advocate said large companies can absorb the higher royalty rate, but it would slam smaller operators who work on thinner profit margins.
“This raise does disproportionately hurt them,” said Jim Winchester, executive director of the Independent Petroleum Association of New Mexico. “While in Texas, operators do pay a royalty rate of 25%, it is not an apples to apples comparison when you put in all the expenses here in New Mexico.”
Those include severance and ad valorem taxes, Winchester added.
