New Mexico Economic Development and Revenue Strategy
Alternative Scenarios Suggest Long Term Risk in Reliance on Oil and Gas
In order to extrapolate a 15-year State baseline forecast, PFM inferred a State projection
from the various growth rates embedded in the committee presentation's charts and
tables from the summer meeting.
Then, PFM conducted a systematic regression analysis of dozens of available oil and gas
historical data points and tested their predictive relationship to New Mexico's General
Fund revenues, applying a line that statistically "fit" the data to a forward-looking estimate
of the portion of future revenues anticipated to be derived from oil and gas.
⚫ When PFM modeled various price and production scenarios, we found that the inferred
State forecast may be overstating aggregate revenues by $26 billion to $36 billion over
the next 15 years - or up to $3 billion annually at the end of the projection period (For
more discussion of methodology, see Appendix A).
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