This is bad news for New Mexico and it’s dependence on oil revenues as about a third of our state’s revenue comes from oil production. So the drop in the market is hitting New Mexico oil producers hard.
“So what we’re seeing with the lower oil prices more recently of course with the deep dive that occurred today is that a lot of operators are simply shutting off their wells and will wait until oil prices pop back up to allow them to operate at some profit level,” said Executive Director of Independent Petroleum Association of New Mexico, Jim Winchester.
There is a big problem storing all this oil since there is still a relatively high supply but little demand. So in the state, some oil producers have started laying off workers because of the economic shocks from this pandemic. However, people in the oil business said there is some hope. They expect an increase in oil demand for June and July.
“As we are able to deal with this virus and are able to successfully defeat the coronavirus and begin to return back to our normal lives, then you’ll see the demand increase once again and you’ll see the market prices will rebound and recover,” said President of N.M. Oil and Gas Association, Ryan Flynn.
Right now, oil prices are negative $37 per barrel. An oil trade group said for New Mexico oil producers to break even, they have to make $40 to $50 per barrel. New Mexico’s oil fields were one of the last spots in the U.S. to feel the impact of the virus and people here said the oil industry in our state should be one of the first to recover in the country.
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