NM’s lousy economic numbers: Are they connected to natural gas?
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By Rob Nikolewski │ New Mexico Watchdog
SANTA FE – New Mexico’s economy has been struggling for years, and the Land of (Dis)Enchantment’s woes are put into sharp relief by an interactive graphic called the which ranks the economic health of all 50 states plus the District of Columbia.
The chart begins in the first quarter of 1995 and goes through the end of 2011. The bad news? New Mexico ranks 51st:
New Mexico actually ranks pretty high in personal income growth and employment and performs badly in equity, home prices, tax revenue and mortgage delinquency.
There was a period when New Mexico’s economy was humming along. Between 1995 and the end of 2008, New Mexico actually ranked No. 2 in the nation in the Bloomberg chart:
of the Albuquerque free-market, libertarian think tank, the , wrote recently that the gains may be attributed, at least in part, to the tax-cutting portion of the administration of then-.
Perhaps, but I took a look at the numbers in relation to the price of natural gas and came up with interesting results.
Why natural gas? Because the New Mexico economy gets a lot of bang for its buck when it comes to natural gas. The state is a big producer and, according to the in the Roundhouse, a in the price per thousand cubic feet of natural gas translates into $10 million extra into New Mexico’s general fund.
For example, of natural gas in January 1995 was just $1.61. It was $3.83 in January 1997 and just $1.80 in January 1999.
But it jumped to $9.17 in January 2001, went down to $5.18 in January 1993 and then started climbing. In January 2006, it was up to $9.93, and take a look at New Mexico’s performance in the Bloomberg rankings by early 2007. New Mexico was third in the nation in comparison to its 1995 numbers:
The money came in, with the rally for natural gas prices peaking in June of 2008, when the Henry Hub price hit $12.30. And take a look at New Mexico’s performance by the end of the year in 2008 — it’s No. 2 in the nation:
But then the slump in natural gas prices started. By January 2009, the price dropped to $5.64 and kept falling. So did New Mexico’s economic prospects. By the end of 2009 — in the space of just four quarters — New Mexico dropped from No. 2 in the Bloomberg rankings to No. 38:
By the third quarter of 2010, New Mexico was 49th since 1995, then 50th three months later and has bottomed out to 51st in the final three quarters of the rankings since.
There is some hope natural gas prices are going back up. They’ve during the first half of 2013, compared to the same period in 2012. With Washington discussing a possible free trade agreement with natural gas-hungry Japan to import U.S. liquefied natural gas, the price could rise even more.
Of course, one could also argue New Mexico needs to diversify its economic base so the state is not so dependent on energy resources.
But that’s a discussion for another day. Class dismissed.
to see the interactive chart for the Bloomberg Economic Evaluation of States; you can move around the quarterly numbers by date.
Contact Rob Nikolewski at and follow him on Twitter @robnikolewski