Gessing: New Mexico’s Senseless Shutdown Status

By PAUL J. GESSING
Rio Grande Foundation

New Mexico is among the most tightly shut down states in the entire country. This is according to the website Wallethub, which has been ranking the various US states on how “open” or “closed” they are.

New Mexico was tied with Washington State as the 44th most open or, with the inclusion of Washington, DC, 7th least open.

There is a clear partisan divide among the “openers” and “closers”. Until you hit Ohio, the 14th most “closed” state all of the “closers” are led by Democrats. And, while Wisconsin (with a Democrat governor) jumped to the top of the list of “open” states thanks to a judge’s order it is not until West Virginia, the 14th most-open state that we see a Democrat-run state among the most open.

Notably, New Mexico’s neighbors are ALL far more open than we are. As of writing this piece May 19, most of New Mexico’s neighbors ALSO have fewer deaths per million than we do. Colorado is the notable exception, yet Colorado also ranks as the 31st most open, 13 places above New Mexico.

In addition to being stricter than most, Gov. Lujan Grisham has steadfastly refused to consider a regional process whereby relatively Virus-free areas open first. Economic activity in these areas could help offset the dramatic decline (both in terms of jobs and tax revenues) in others.

Speaking of tax revenues it is impossible to consider New Mexico’s economic condition without discussing the dire condition of the oil and gas industry. The fact is that our State relies on oil and gas for 40 percent of its budget. While prices have rebounded from their sub-zero close a few weeks ago, the barrel price remains well below the $40 break-even point for most Permian producers. Consumption is well below pre-crisis levels.

As the US and global economies continue to open, prices will rebound, but it is noteworthy that the barrel price had dropped to the mid $40 range before both the crisis and the price war between the Russians and Saudis broke out. Even if the price war ends it will take a long time for aviation and other forms of business and leisure travel to return to something akin to normal. In fact, that may never happen. Telecommuting has long been a bigger “threat” to oil and gas usage than either mass transit OR electric vehicles.

While telecommuting doesn’t work for everyone many Americans will be doing so for the next several months regardless. Will it be a shock to see a lot more businesses and individuals choosing to forego the time and cash expense of commuting and/or renting office space?

What we are seeing is a massive market shift that will make New Mexico’s most important product less important and in-demand for years to come.

So, where does this all leave our State?

The conclusions that an objective observer can draw here are:

  • Outside of New Mexico’s Four Corners and Navajo Reservation, Gov. Lujan Grisham’s tight lockdown of New Mexico’s economy was questionable at best. Her refusal to consider opening up relatively unaffected areas more quickly than others is unjustified based on what we know of the science of this Virus and makes no sense whatsoever from an economic perspective.
  • New Mexico and its citizens simply cannot afford to remain unnecessarily locked down. The economy and how our State will deal with the budgetary and economic fallout from the Virus and the Governor’s lockdown must be considered more carefully and publicly.
  • Our unique reliance on a devastated oil and gas industry combined with our relative poverty mean New Mexico’s recovery will be more difficult than that of most states.

For the good of our State and its people it is past time to reopen New Mexico as local conditions and desires warrant.

Gessing is president of the Rio Grande Foundation an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

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