New Mexico Oil Industry Faces Rocky Road Before 9/11
New Mexico's oil industry faced significant challenges in the years leading up to the 9/11 attacks. Despite a brief surge after the price shock of 1990, oil production remained stagnant, hovering between 65 million and 70 million barrels for much of the decade.
The three main headwinds facing New Mexico oil producers were American refineries taking in increasing amounts of imported oil, economic problems in Asia causing a drop in oil prices, and an import glut weighing on oil prices. From 1990 to 1999, imports increased by 1 billion barrels, while the price of oil fell from $21.76 per barrel in January 1997 to $8.60 per barrel in February 1999.
By the time former Governor Gary Johnson took office in 1995, natural gas production had already surpassed coalbed methane technology, with production exceeding 1.6 billion cubic feet, more than double the totals from 1986. Johnson's fiscal conservatism and veto of over 700 bills helped balance the budget, but oil prices only rose to levels not seen since the 1986 oil bust when they hit $21 per barrel.
The resulting increase in state revenue was substantial, with $956 million generated from oil prices rising to a yearly average of $21 per barrel. However, this growth was short-lived, as the dot-com bust of 2000 saw oil and technology trading places in New Mexico's economic hierarchy on the eve of 9/11.