Democratic Gov. Michelle Lujan Grisham is taking a risk by choosing to accommodate rather than fight President Biden’s pause on new oil and gas leases.
“When you have to represent the entire state and 45% of the budget comes from oil and gas, and the majority pays for education, there is a lot going on to consider,” said Rep. Angelica Rubio, a Democrat in the state’s House of Representatives. “New Mexicans have always been heavily reliant on this industry, regardless of what party you are,” Rubio told the Washington Examiner.
Lujan Grisham, who shares Biden’s priority of addressing climate change, hasn’t fulfilled a promise during the 2020 presidential campaign to seek a waiver exempting New Mexico from a leasing pause.
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Her administration has pushed back in quieter ways, writing a letter last month warning that Biden’s orders have “resulted in on-the-ground uncertainties” that have contributed to drilling rigs in the state moving to private lands in Texas.
Another Democratic governor, John Bel Edwards of Louisiana, is responding to a similar fix more forcefully as he looks to stave off Biden’s orders, which also pause oil and gas leasing in federal waters in the Gulf of Mexico.
Edwards, a second-term governor reelected in 2019, has had conversations with the Biden administration to make the case for continued leasing in the Gulf, warning a moratorium “could adversely impact our state, or the energy security of our country.”
“This is a game of Twister for him without a doubt,” Rep. Garret Graves of Louisiana, a Republican, told the Washington Examiner. “He is all wrapped up and twisted trying to navigate through this because one of the first actions from his party is to deliver a real gut punch to Louisiana’s economy.”
Different political landscapes
The Democratic governors’ political incentives aren’t the same.
Lujan Grisham is planning to run for a second term in a state that has moved from red to purple and was won by Biden.
She faces pressure from a wave of liberals elected to the state Legislature, including Rubio, who refused to take campaign donations from the fossil fuel industry. Rubio is pushing legislation to support the growth of a clean energy workforce in order to prepare for the decline of fossil fuels.
Rubio grew up on the New Mexico side of the Permian Basin, the world’s largest oil basin that straddles Texas, and “sympathizes” with oil and gas workers because her own nephews are among them. But she accuses the industry of using “scare tactics” to convince politicians that oil and gas revenue is irreplaceable.
“It’s easy to imagine our state heading in a different direction. For many of our leaders, it doesn’t come that easily,” said Rubio, who added she welcomes the leasing pause because it “forces” New Mexico to consider diversifying its economy to rely less on the booms and busts of oil.
Edwards, an Army veteran, was the first Democrat to win reelection in Louisiana since 1975 and is the only statewide-elected Democratic official in the state.
“The fact he is a pro-life, pro-Second Amendment, pro-oil and gas Democrat makes him somewhat of a unicorn,” said Graves, adding that Louisiana’s reliably red status protects Edwards.
Edwards has argued that Biden’s orders could disrupt his efforts to combat sea level rise caused by climate change by stripping millions of dollars that Louisiana uses from offshore drilling to pay for coastal restoration projects.
The governor last year signed an executive order setting Louisiana on a path to reach net-zero emissions by 2050, and he asked the president last month to “visit our great state to see some of our climate-related work.”
Bel Edwards strikes a balance
Mary Landrieu, a former Louisiana senator and fellow centrist Democrat, credited Edwards with effectively balancing efforts to mitigate climate change while representing his state’s economic interests. About 85% of the oil and gas produced in the Gulf comes ashore in Louisiana, which also hosts the nation’s refining and petrochemical base, along with liquified natural gas export terminals.
“He is in a great position to negotiate a way forward that works for the economy, environment, and the state’s budget,” Landrieu told the Washington Examiner. “He clearly supports continued economic activity, but he doesn’t have his head in the sand that the state should be transitioning to a lower carbon footprint.”
Paul Danos, the owner of Danos, a southern Louisiana-based company that provides support services for oil and gas drillers in the Gulf, said Edwards has “articulated the right position for our state.”
“We need him to continue to fight for us,” Danos told the Washington Examiner.
Danos already operates globally, but he said the company could move more of its support services to overseas waters if Biden’s indefinite leasing pause becomes permanent.
Biden’s halt on issuing new leases has not stopped companies from receiving permits to drill on existing leases stashed before he took office, but the offshore oil and gas industry is capital-intensive and highly speculative, requiring years of planning.
“We would rather work here, but at the end of the day, if we are forced to, we will support production somewhere else in the world because the world needs the oil,” Danos said.
Risks for Lujan Grisham
Lujan Grisham has managed to retain the support of the oil and gas industry as she’s pursued aggressive climate policy.
In 2019, she signed a law mandating zero-carbon electricity in New Mexico by mid-century without blocking fossil fuel development.
Lujan Grisham earned the support of the New Mexico Oil & Gas Association in proposing new rules requiring producers to capture 98% of methane emissions from natural gas by the end of 2026, a measure that is less strict than those of some neighboring states, such as Colorado.
“New Mexico has made significant progress in achieving many of our climate and clean energy goals” while growing the state’s economy, said Susan Torres, a spokeswoman for New Mexico’s Energy, Minerals, and Natural Resources Department. “We look forward to sharing lessons learned with the [Biden] administration,” Torres told the Washington Examiner.
But Lujan Grisham risks upsetting that balance if she’s caught between competing sides.
Allen Davis, the manager of Eddy County, the epicenter of New Mexico’s oil and gas production, said the governor is not sufficiently pushing back on Biden’s leasing pause.
“When the oil and gas production from Eddy and [nearby] Lea counties provide 35% of her state’s general revenue money, you’d think she’d want to understand how the bread is going to be buttered,” Davis, a former employee for U.S. oil giant Chevron, told the Washington Examiner.
Rebecca Sobel, a senior climate and energy campaigner at WildEarth Guardian, says New Mexico doesn’t have much to show for its reliance on extractive industries, performing poorly on metrics such as fiscal stability, childhood education, and air quality.
Sobel, who lives in Sante Fe, said liberals are pressing Lujan Grisham to support Rubio’s legislation to expand job opportunities in not only clean energy but other fields such as outdoor recreation.
Lujan Grisham has received high marks for her handling of the coronavirus pandemic, demonstrating she is “great in crisis response,” Sobel said.
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“If she can do that with the inevitable decline of the fossil fuel industry and the need for transition, I assume voters will support her reelection campaign. If we are still reliant on oil and gas revenue, I trust New Mexico voters to elect a different leader,” Sobel said.
