States brace for Trump’s push to make oil drilling cheap again

The Associated Press ^ | December 17, 2025 | BY MORGAN LEE

[Oldeconomybuyer]

SANTA FE, N.M. (AP) — A Republican push to make drilling cheaper on federal land is creating new fiscal pressure for states that depend on oil and gas revenue, most notably in New Mexico as it expands early childhood education and saves for the future.

The shift stems from the sweeping law President Donald Trump signed in July that rolls back the minimum federal royalty rate to 12.5%. That rate — the share of production value companies must pay to the government — held steady for a century under the 1920 Mineral Leasing Act. It was raised to 16.7% under the Biden administration in 2022.

Trump and Republicans in Congress say the rate reset will boost energy production, jobs and affordability as the administration clears the way for expanded drilling and mining on public lands.

States receive nearly half the money collected through federal royalties, depending on where production takes place. The environment and economics research group Resources for the Future estimates a roughly $6 billion drop in collections over the coming decade.

The stakes are highest in New Mexico, the largest recipient of federal mineral lease payments. The state could could forgo $1.7 billion by 2035 and as much as $5.1 billion by 2050, according to calculations by economist Brian Prest at Resources for the Future.

[Cletus.D.Yokel]

FYI

[Jeff Chandler]

Production would need to increase by about 33.6% to fully make up for the royalty drop

[Crusher138]

Democrats always play zero sum games.

If taxes are lowered revenue will go down...except that lower taxes increases the rewards for business owners so they will expand and the revenue goes up.

Same with oil. Lowering the lease rate will increase the amount of drilling, thus increasing revenues.

In both cases the unspoken is the true Democrat motivator. Taxes are used as a way to shift power from the people to the government (a plus for the Democrats) and they consider fossil fuels to be a danger to the planet (when actually it is the money from the petroleum industry funding the Republican party that they REALLY want to stop).

[rocksblues]

New Mexico as it expands early childhood education

It's for the children!

[PGalt]

Drill baby drill.

[webheart]

New Mexico needs to expand early childhood education for the children of Old Mexico.

[1Old Pro]

we also need incentives for expanded refineries.

[desertsolitaire]

I wonder if that is indeed a reasonable gosl for increase petcentage, given that New Mexico drags its feet on expanding drilling there. Even though they need the revenue

[willk]

“New Mexico as it expands early childhood education”

AP worried that leftists won’t be able to brainwash kids at an earlier age.

[spokeshave]

we also need incentives for expanded refineries.

Valero just quit California,

Scrapped their entire refinery...storage tanks...pipelines and the crude oil cracking towers.

[hanamizu]

So, if I’m reading the article correctly, the royalties paid to states was 12 1/2% for over a century. Biden, (or his handlers) raised it for 2 years to 16.7% and bringing back to what it had always been is causing a major problem for New Mexico?

Trump and his Big Beautiful Bill is destroying America!!! /s

[FreedomPoster]

New Mexico is largely a Dem disaster likely full of graft. It just means their state government has less money to steal and otherwise misuse.

Good.

[nwrep]

The first sentence is almost a parody of an irony.

[CedarDave]

It will be interesting to witness the result in New Mexico. The anti-fossil fuel enviro-radicals in Santa Fe will hate it because the last thing they want to see is increased drilling.

On the other hand, O&G revenues fund about 40% of the state budget and the current billion dollar surpluses have allowed the Dims that control all of state government to have every liberal/socialist wet dream come true by expanding state government budgets 19% in recent years. Now fully funded are free government day care for all, regardless of income and other social welfare giveaways. So far none of these have increased education outcomes (still #50 in education, vouchers a no-no to teacher’s unions that control public schools) and SNAP payments are needed for 21.5% of the population. The legislature will have to look carefully on spending in the coming years; taxes on new marijuana “dispensaries” and hoped-for AI data centers will do nothing to make up the current benefits from the O&G industry.

[556x45]

You left the punch line…saving for the future 🤣

[iamgalt]

“States brace”. F’n AP. Yeah the poor states suffering with lower energy costs.

[CedarDave]

NM list PING!

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[CedarDave]

Thanks for that info. I didn’t read the entire article, just your posting.

[ssfromla]

Many wells (oil, gas) are capped off in Louisiana. They're everywhere.

Would they be used again?