Written By Jim C. Manatt, Jr.
Published in the Las Cruces Sun-News
What an ironic news day March 5. The headline was the $5.6 billion state budget with a $230 million tax increase. The same day, the New Energy Economy environmentalists sought natural gas emission cap revisions in Santa Fe. These events are connected.
New Mexico is a poor state by many standards but we are a richly endowed energy resource state. The oil and gas industry is New Mexico's largest private sector revenue source, contributing $2 billion annually in taxes, depending on commodity prices, adding another $1 billion in "indirect" during a good year. Ninety-five percent of our $12 billion Permanent Funds come from oil and gas, funding about 70 percent of our kids' education. For every $1 change in the price of natural gas, it means $100 million to our state revenues. Net effect today: $850 million less for New Mexico.
We are bombarded with news of man-caused global warming, attributed to the burning of fossil fuels, causing increased CO2 in our atmosphere. This is the premise for the New Energy Economy's petition to the EIB to impose a 25 percent greenhouse gas emission reduction by 2020, far beyond any conceived federal standard.
We are told that the jury is in: 95 percent of climate scientists agree. Man is the cause for an alarming temperature rise on planet earth. One senses an increasing animosity towards New Mexico's largest private sector revenue source.
Consensus is not science, and science is not consensus. Most scientists agreed in the 14th century that the earth was flat. Climate science is a relatively new field developed with the advent of the computer for complex climate modeling. There are other members of the scientific community who know something about the climate, and they have a lot more data. They aren't included in the U.N.'s "conclusive" poll. Geo is Greek for earth. Geologists and geophysicists have been studying the fossil record of the earth for centuries. They have 570 million years of data to study and model climate change.
Major climate changes cause sea level to rise or fall. World population centers are located along coastal shorelines. Over time there have been perhaps 500 cycles of major change and thousands less major events, all before civilized man arrived about 10,000 years ago. The geologic record documents that some cycles were hotter, faster (and cooler, faster) than anything like what may or may not be happening today in our climate. The most dire climatological models, used as the basis for emissions caps, do not fit the norms. They are sometimes extreme extrapolations, as in recent IPCC e-mail revelations.
Climate models asserting man-caused global warming magnify 4th-order effects. There are higher order effects, truly the elephants in the room when it comes to climate change, over which mankind has no control. A 1st-order process is solar luminosity interacting with our atmosphere. A 2nd-order process is continental drift and oceanic changes. A 3rd-order process is our planet's orbital wobble, affecting ocean tides. Finally, we have 4th order-effects like CO2 in the atmosphere. CO2 is a trace gas, accounting for 0.0325 percent of our atmosphere and, yes, it is rising. But CO2 is a lagging indicator of climate change, sometimes by 100 years or more.
Climatologists study ice cores, several hundred thousand years of record, versus 570 million years geologic record. Ice core data is being used selectively to argue a point, while other data seems to be ignored. Using ice cores as a proxy for heating/cooling trends, earth appears to be approaching a very predictable, regular end of a heating cycle, poised for the next ice age. Twenty years, 200 years, we don't know. In either case, a blink of Mother Nature's eye.
Cap and trade makes the lowest cost energy resources more expensive to you and me, so that less economic alternatives can compare more favorably.
No one opposes development of all economic energy resource, emphasis on "economic". Whatever emissions control the New Energy Economy environmentalists convince the EIB to pass, if they do, will have no significant impact on New Mexico's environment or our planet. Western Refining has announced plans to close their Bloomfield refinery.
Those jobs will be exported elsewhere. New emissions caps will have a significant negative impact on New Mexico's revenues and your pocket book. Cap and trade regulation sends negative messages to our principal private sector industry. New ergs will cause energy developers to look elsewhere, at just the wrong time for us.
Consider, instead, two opportunities to provide incentive to produce natural gas and reduce emissions.
During the natural gas bust of the 1980s, the Alberta legislature enacted an incentive program increasing their state's revenues while all around were in decline. The idea was, since nobody was drilling any new wells, thereby producing no new revenues, why not offer a one-year tax "holiday" on new wells. They literally had nothing to lose. The program resulted in new wells being drilled in Alberta, new revenues beginning in year two and for a long time thereafter.
Natural gas burns much cleaner than coal and oil. Carbon emissions are 23 percent less than coal and 30 percent less than gasoline. Rather than impose emissions caps, shutting down power plants and refineries, why don't we enact a market-driven solution like conversion of our state (and federal) transportation fleet to natural gas? This could achieve reductions sought by New Energy Economy environmentalists in a way that would benefit all the people of New Mexico, stimulating increased production and revenues here.
We need to get up on the right side of the bed tomorrow morning and think about this for just a minute.
Jim Manatt lives in Roswell and is a former president of the New Mexico State University Board of Regents. He is the past president of the Roswell Geological Society and earns his living in the oil and gas industry.
