{"id":88819,"date":"2020-05-02T01:00:43","date_gmt":"2020-05-02T07:00:43","guid":{"rendered":"https:\/\/dh.durangoherald.com\/tj\/will-oil-natural-gas-price-declines-affect-four-corners-revenue\/"},"modified":"2020-05-02T01:00:43","modified_gmt":"2020-05-02T07:00:43","slug":"will-oil-natural-gas-price-declines-affect-four-corners-revenue","status":"publish","type":"post","link":"https:\/\/dh.durangoherald.com\/tj\/will-oil-natural-gas-price-declines-affect-four-corners-revenue\/","title":{"rendered":"Will oil, natural gas price declines affect Four Corners revenue?"},"content":{"rendered":"\n

\"With
With more natural gas wells, like the one pictured here in 2018, than oil wells in the San Juan Basin, experts say La Plata County revenue will not be significantly affected by the declining oil market prices.<\/span>Jerry McBride\/Durango Herald file<\/span><\/figcaption><\/figure>\n<\/p>

FARMINGTON \u2013 With the COVID-19 pandemic spreading across the world, the global demand and consumption of oil took a sharp decline, culminating in a historic drop in oil prices last month.<\/p>\n

So what does the drop in oil prices mean for the tax base for Four Corners communities?<\/p>\n

\u201cWe likely won\u2019t see much of an impact as long as natural gas prices stay steady,\u201d said Gwen Lachelt, La Plata County commissioner. The majority of La Plata County\u2019s energy sector revenue comes from natural gas and relies very little on oil, she said.<\/p>\n

What\u2019s more, the change in market price wouldn\u2019t have an immediate impact on county revenue, she said. \u201cWhatever the price is, whatever is producing now, the county will get those revenues two years from now,\u201d she said. \u201cSo what we\u2019re getting right now is based on the price from two years ago.\u201d<\/p>\n

The county\u2019s budget is not as reliant on oil or even natural gas as it was before 2013, when the natural gas market took a sharp hit, Lachelt said. She estimates the natural gas revenues the county receives have declined by about 50%.<\/p>\n

\u201cThe largest share of the county budget comes from sales tax, then property tax, then state and federal grants, and then energy,\u201d she said.<\/p>\n

According to Lachelt, after the decline in natural gas prices and revenue in 2013, the county took a cautious approach for the past seven years and built up its fund balance. The county is in a stronger financial situation because it diversified away from the energy sector, allowing it to weather the pandemic without having to do layoffs, at least so far, she said.<\/p>\n

The same might not be the case for New Mexico.<\/p>\n

\u201cIt could have a devastating impact on New Mexico because the state relies so heavily on oil and gas to fund a big portion of its budget,\u201d Lachelt said.<\/p>\n

The majority of New Mexico\u2019s oil wells lie in the Permian Basis in the south, while San Juan County \u2013 like La Plata County \u2013 primarily has natural gas wells, according to the county.<\/p>\n

\u201cOil and gas and coal are huge for San Juan County,\u201d said George Sharpe, investment manager with Merrion Oil & Gas. \u201cWhen the coal and power plant go away, property tax will go up because they\u2019ve lost a big tax base.\u201d<\/p>\n

The San Juan Generating Station in Farmington is scheduled to end production in 2022.<\/p>\n

Another side effect of the decrease in oil prices could be a slowdown or decrease of investment in new wells, Sharpe said.<\/p>\n

Sharpe said there has been speculation in the industry that the price of natural gas could increase because of the hit to the oil industry.<\/p>\n

\u201cIn April, gas prices have never been lower than they are currently, but they\u2019re forecast to go up,\u201d he said.<\/p>\n

With the price of oil lower, the production of oil will decrease. Since natural gas is often produced alongside the oil, once companies quit producing so much oil, they will also quit producing natural gas alongside it, Sharpe said. This could cause the price of natural gas to increase, since demand has remained relatively stable. Natural gas is primarily used in manufacturing, powering homes and electricity, he said.<\/p>\n

Yet Sharpe said any increase in demand would most likely not be enough to stimulate new development of natural gas wells.<\/p>\n

Overall, oil development has been more impacted by the pandemic than natural gas, Sharpe and Lachelt said.<\/p>\n

\u201cIt\u2019s a bigger deal here in Farmington than it is for Durango, which has a significantly more diverse economy than Farmington does,\u201d Sharpe said<\/p>\n

lweber@durangoherald.com<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

saw the sharpest decline in oil prices<\/p>\n","protected":false},"author":1,"featured_media":88821,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[],"tags":[685,221,28,1512,443],"naviga_topic":[],"class_list":["post-88819","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","tag-coronavirus-covid-19","tag-gas-and-oil","tag-headlines","tag-la-plata-county-government","tag-san-juan-county-new-mexico"],"acf":[],"author_name":"dh_admin","_links":{"self":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/posts\/88819","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/comments?post=88819"}],"version-history":[{"count":0,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/posts\/88819\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/media\/88821"}],"wp:attachment":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/media?parent=88819"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/categories?post=88819"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/tags?post=88819"},{"taxonomy":"naviga_topic","embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/naviga_topic?post=88819"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}