New Mexico Economic Development and Revenue Strategy
The Eventual Decline in Oil and Gas Revenue
⚫ While predictions of the specific timing of industry peaks are just that - predictions - at
some point, State oil and gas revenues will begin to decline permanently.
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The State's Consensus Revenue Estimating Group estimates that oil and gas revenue
will decline to 10 percent of General Fund revenue by 2050.
Given historical volatility and long-term trends, a decline in revenue could begin much
sooner, and there is no guarantee that it will occur in a linear fashion.
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The CREG and LFC staff acknowledge that many factors could contribute to a future
shock to the industry, including recessions, environmental or geopolitical crises,
changes to federal regulatory policy, or technological innovations.
♦ In other words, no matter which scenario one looks at, there is a significant risk in
the continued reliance on oil and gas revenue. Doing so could lead to outyear revenue
gaps that worsen the State's recurring revenue structural deficit.
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