Texas, New Mexico Oil Producers Push for Import Limits

April 2016, Vol. 243, No. 4

ALBUQUERQUE, N.M. (AP) — Oil drilling companies and royalty owners from the Texas Panhandle to New Mexico’s stretch of the Permian Basin are embarking on a grass-roots campaign to limit foreign oil imports, salvaging what they say is a major sector of the U.S. economy.

“American oil is competing against a cartel of government operators which has a stated initiative of driving an American industry out of business,” said Tom Cambridge, one of the Panhandle producers leading the campaign.

The grass-roots movement is pushing for the next president of the United States to issue a proclamation setting quotas for imports — something that hasn’t been done in more than four decades.

“It’s not that this is the first time but this is a more concerted, deliberate effort and I think it’s gaining ground,” said John Yates Jr., a member of a well-known family that is a leader in the industry and has over the last century developed some of New Mexico’s largest and most significant oilfields.

Under the plan unveiled by the Panhandle Producers and Royalty Owners Association and other supporters, import quotas could be imposed within the next administration’s first 90 days in office. Canadian and Mexican oil would be exempt.

Quotas on heavy crude oil would be phased in and imports would eventually be limited to around 10 percent of total demand.

Supporters say they’re drawing a line in the sand after more than a dozen oil-rich nations failed to agree during a recent meeting in Saudi Arabia to freeze production. They blame Middle East producers for flooding the market and fueling the price war as a means to stifle domestic production.

Oil fell in the past two years from above $100 a barrel to touch 12-year lows under $30 a barrel earlier this year, and U.S. production has dropped by as much as 700,000 barrels a day and the number of rigs in the field has sunk to historic lows.

By 2017, crude oil production is forecast to average around 8 million barrels per day, nearly 1.5 million less than in 2015, according to the U.S. Energy Information Agency.

Oilfield equipment along one of the two-lane highways that link West Texas and southeastern New Mexico sits idle in company yards, and local governments and schools are feeling the pinch as severance taxes and royalties dwindle.

“Service companies, restaurants, real estate, the people building motels and hotels — there are a lot of impacts,” said Yates told The Associated Press.

Daniel Fine with the Center for Energy Policy at New Mexico Tech has been commissioned by the quota supporters to bring the idea before lawmakers and other elected leaders.

“The idea is to support domestic energy sources against import reliance and the risks that come with that,” said Fine, who is also an energy policy adviser to Gov. Susana Martinez’s administration and a former MIT research associate.

Supporters acknowledge that some in the industry aren’t in favor of quotas and refineries would likely oppose reductions in cheaper imports.

The effort launched this week with forums in Amarillo, Texas, and Artesia, New Mexico.

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