State Farm’s decision to stop providing new homeowners insurance policies in California is an indicator of the growing damage caused by climate change. As climate-driven disasters lead to higher losses, insurers like State Farm will raise prices and cut back coverage or even flee.
To be clear, there is no question that climate change is disrupting insurance markets. The rising frequency and severity of disasters are driving up the cost of insurance and destroying some insurance markets entirely by rendering areas “uninsurable.”
But there’s more going on here than a simple story of climate disasters disrupting the math of insurance.
The root cause of the climate crisis is the rampant burning of fossil fuels. Insurers are critical gatekeepers for the fossil fuel industry, providing the insurance that allows companies to operate. As experts in evaluating risk and extreme weather, insurers knew about climate change early on. But in their pursuit of short-term profits, they didn’t stop underwriting fossil fuels.
Many are still underwriting the most reckless and dangerous parts of that sector, like the expansion of fossil fuels. Some insurers, largely in Europe, have begun restricting their underwriting of fossil fuels, but U.S. insurers are dragging their feet, even as they increasingly abandon homeowners.
Insurers also invest heavily in fossil fuels, unconscionably using their customers’ premiums to profit from businesses that will destroy their homes and, in some cases, even kill them while driving up insurance costs and making many areas uninsurable.
State Farm is a prime example of insurers’ hypocrisy. Rather than suffering financially in California, the company has made substantial profits in the state in recent years, along with other homeowner insurers whose profits in California have been four times the national average, even after accounting for major wildfires. At the same time, the latest data shows State Farm alone had $30 billion invested in fossil fuels and the industry overall had over $500 billion.
The crisis has also been a boon for industry lobbyists who have seized it as an opportunity to bully states and bilk customers. When State Farm announced its decision to stop offering new California homeowners’ policies, the industry’s primary lobbying group, the American Property Casualty Insurance Association, claimed insurers must be allowed to use secret models to set profitable rates. The industry has long wanted those models because they make it harder to catch insurers overcharging for policies. Rather than work on a transparent approach to modeling climate impacts, the industry is pushing a consumer protection rollback it has sought for decades.
The industry playbook appears to be this: Profit as long as possible from fossil fuels. Stick customers with not just direct climate harms, but also higher premiums, while delaying, denying and low-balling claims. Bully regulators for giveaways. Then leave.
Some neighbors.
Although the industry isn’t putting forward serious solutions, there are steps insurance regulators and legislators can take. In an emergency, the first step is to stop the harm. California can start by requiring insurers to align their underwriting and investments with science-based climate targets to stop insurers from contributing to this crisis.
Regulators can also explore transparent solutions for pricing climate-related risk and consider developing public solutions to provide reinsurance, which is essentially insurance for insurance companies. Public reinsurance programs would facilitate reimbursements for claims above a high dollar amount to insurers that expand their coverage, allocating risks in a way that creates stability for insurers and a stronger safety net for the public.
As insurers leave vulnerable areas, and unregulated reinsurance prices soar, a public backstop for the highest losses would provide more certainty for insurers who want to offer coverage in vulnerable areas while creating a stronger safety net for consumers.
After each disaster and withdrawal, industry trade groups will push for their wish list — with no promise to stay, even if they get everything on it. It’s time for the public and regulators to advance real solutions.
After learning her gas stove was leaking methane, one reporter consulted public health experts to learn about the scope of the problem and what people can do to reduce these risks at home.
Illustration by Laila Milevski, special to ProPublica
As a climate reporter, I was well aware of the growing concern about the gas stoves in people’s homes leaking dangerous pollutants, like methane, a potent greenhouse gas and explosive hazard; nitrogen dioxide, which worsens asthma; and benzene, which causes cancer. But I was a renter who had no control over my appliances. So I mostly ignored it — until one day last fall when I smelled the rotten-egg odor of leaking natural gas while baking focaccia.
I borrowed a $30 gas leak detector from a friend (a fellow climate reporter, of course). When I turned on the oven in my New York City apartment, the lights for a “significant” leak lit up. My kitchen was filling up with methane. According to the user manual, that meant I should “VENTILATE THE AREA IMMEDIATELY and move to a safe location” in case of an explosion. I opened the windows and ignored the evacuation advice (don’t follow my example), too intent on taking a video of the leak as proof for my landlord before turning off the oven. Then I vented my frustration by panic-texting friends and eating too much focaccia — after cutting it into pieces and baking it in my toaster oven. Luckily, my landlord replaced my faulty stove within days. I made sure to check the new stove (still gas, alas) for leaks after it was installed.
“People still don’t recognize that there are health downsides to cooking with gas in your home,” said Regina LaRocque, a Harvard Medical School professor who does research on medicine and public health. “This is the 21st century, and we have better ways of cooking than over a fire.”
LaRocque uses a traditional electric coil stove at home. But she and other experts advocated for induction stoves, which use electromagnets to heat up food. These stoves are growing in popularity as consumers choose them for climate, health and safety reasons, though they can cost more than twice as much as a gas range.
The federal Inflation Reduction Act will provide rebates to upgrade to electric or induction home appliances (here’s a Wirecutter guide on that program). Some states, including Massachusetts, offer their own rebates as well.
Induction stoves are much more common in Europe, LaRocque said. That cultural shift has yet to occur in the United States, where more than a third of households use gas stoves. As Mother Jones reported, the gas industry embraced the term “cooking with gas” in the 1930s; an executive even made sure to get it worked into Bob Hope’s comedy routines. More recently, the industry has opposed electrification efforts with lobbying and social media influencers who tout gas as a “super cool way” to cook.
I consulted multiple experts on the hazards of gas stoves and what people can do about them. Their advice boiled down to this: homeowners who can afford it should switch to an induction or electric stove. For renters and others who can’t replace their appliances, the experts provided tips on lowering the health risks.
What Are the Risks of Gas Appliances?
Credit:Illustration by Laila Milevski, special to ProPublica
Methane is a greenhouse gas. The gas that’s piped into your house is virtually all methane. When you burn methane to cook food, it turns into carbon dioxide. But unburned methane trickles out from loose fittings and faulty stovetop igniters. Every pound of methane released into the air is 30 to 86 times more effective at warming the planet than a pound of carbon dioxide.
When researchers analyzed 53 homes in California last year, they found methane leaking from almost every stove. More than three-quarters of that methane came from stoves that were turned off. The act of igniting a burner or oven released additional puffs of methane. If these leaks are consistent across the nation, then annual methane emissions from U.S. gas stoves would equal the greenhouse gas emissions of half a million cars.
These leaks are “pretty much universal,” said Robert Jackson, a Stanford University professor and a study co-author. Jackson, who’s spent more than a decade studying methane leaks from gas wells, pipelines and other fossil fuel infrastructure, said it can be hard to predict where the leak is coming from. Based on the description of the leak in my kitchen, he told me it likely was caused by ignition problems with the oven. Jackson’s research has inspired him to ditch his gas stove, furnace and hot water heater in favor of induction and electric appliances.
“I did not expect to see the high levels of indoor air pollution we saw consistently,” he said. “It strongly motivated me to replace my own stove.”
Large methane leaks can cause explosions. If you smell gas in your home, leave the building and call your gas company. The distinctive rotten-egg odor comes from chemicals that gas companies add to the methane to make it easier to detect, since the gas is naturally odorless.
Some people are much more sensitive to the smell than others, so it’s not a foolproof warning for explosive risk. Eric Lebel, lead author of the methane study Jackson worked on, recalled smelling gas in some of the homes where he did the testing, even though the homeowners couldn’t smell anything. Lebel is a senior scientist at PSE Healthy Energy, a nonprofit science and policy research institute.
Burning natural gas releases nitrogen dioxide, a respiratory irritant. Nitrogen dioxide exacerbates asthma and impairs lung function. The Environmental Protection Agency regulates these emissions from cars and power plants with national air quality standards, but those regulations don’t apply to indoor air.
The Lebel and Jackson study measured nitrogen dioxide and a related compound. They found steadily rising emissions after turning on burners and ovens.
“Simply having a combustion stove in your home is a health risk,” LaRocque said. In poorly ventilated kitchens, nitrogen dioxide levels could exceed outdoor air standards. “It would be like standing behind an idling car, or standing in a smoke-filled room,” she added. “I think if my child had asthma, I would definitely want to intervene.”
Gas stoves leak benzene, a carcinogen that can cause leukemia. In a separate study published last fall, Lebel and his colleagues analyzed gas samples from residential kitchens. Out of 160 samples, all but one contained benzene.
“If there’s a leak from that appliance, it likely contains benzene,” Lebel said. “It’s a rather unavoidable cost of owning a gas appliance.”
Raw natural gas contains a mix of methane and toxic chemicals like benzene, toluene or formaldehyde. Gas companies strip out the impurities before piping the processed gas to homes, but they don’t eliminate all the toxins.
Lebel’s team modeled the benzene concentrations from the leaking stoves and found a handful that failed to meet California’s benzene safety guidelines. They also found traces of other harmful compounds, including toluene, ethyl benzene and xylene, which can cause dizziness, nausea and liver damage. A separate study of gas appliances in the Greater Boston area found benzene in 95% of samples, though at lower levels than Lebel’s study.
How Can I Protect Myself?
Credit: Illustration by Laila Milevski, special to ProPublica
Turn on the range hood above your stove. Paul Francisco, associate director of building science at the University of Illinois Urbana, Champaign, suggests cooking on the back burners and using the hood whenever you turn on the stove or the oven. The fans improve ventilation and will pull benzene, methane and nitrogen dioxide outdoors.
However, this only works if the hood connects to the outside of your house. Follow the piping on the hood: If the top of the device goes through the ceiling or the wall, then it should help with air quality.
Another type of range hood, called a “ductless” hood, simply recirculates indoor air. If your hood has grilles or vents on the front, then it’s likely, but not guaranteed, to be ductless, Francisco said. These fans won’t cut down on harmful gases, but they might be able to reduce particulate matter — tiny particles created during cooking, which can cause or exacerbate respiratory illness. A 2014 study found that cooking on induction stoves produced far fewer particles than cooking on gas or electric stoves.
Open a window to improve ventilation. At a minimum, an open window will dilute toxic gases.
If your kitchen is in the upper half of a building, opening the window should draw the contaminants outside as long as there’s no wind and it’s warmer inside than outside, Francisco said. If you live in the lower half of a building, opening a window in the winter won’t be as effective, he said, though any ventilation is better than none.
Get an induction hot plate. If you can’t replace your stove, experts said the next best thing is to buy an induction burner. Here are some consumer guides with reviews of portable hot plates.
During last summer’s heat waves, when I couldn’t fathom lighting a fire inside my kitchen, I did almost all my cooking using an induction hot plate, an Instant Pot and an electric toaster oven. Excessive heat is another reason why some chefs advocate for induction burners.
What about air purifiers? These devices have become more popular as a way to improve air quality and reduce the risk of COVID-19 infections. Most air purifiers won’t have any effect on toxic gases, though they do remove particulate matter, Francisco said. Some specialty models filter out volatile organic compounds, a class of chemicals that includes benzene.
It’s much harder to monitor for benzene or nitrogen dioxide. The types of instruments used by Lebel and Jackson cost tens of thousands of dollars and require users to undergo extensive training.
The South Coast Air Quality Management District, a regulatory agency in California, maintains a list of “low-cost” air quality sensors (less than $2,000) that can be used by citizen scientists and advocacy groups. These sensors can be used to detect particulate matter, nitrogen dioxide and volatile organic compounds.
Lebel said it shouldn’t be up to individuals to solve a systemic issue. It seems problematic, he said, “to be asking citizens to be scientists and try and discover if their stove is leaking.”
Democracies are making more progress than autocracies when it comes to climate action. But divestment campaigns can put pressure on the most recalcitrant of political leaders
Autocrats are often directly the result of fossil fuel. Composite: The Guardian/Getty Images
At first glance, last autumn’s Glasgow climate summit looked a lot like its 25 predecessors. It had:
A conference hall the size of an aircraft carrier stuffed with displays from problematic parties (the Saudis, for example, with a giant pavilion saluting their efforts at promoting a “circular carbon economy agenda”).
Squadrons of delegates rushing constantly to mysterious sessions (“Showcasing achievements of TBTTP and Protected Areas Initiative of GoP”) while actual negotiations took place in a few back rooms.
Earnest protesters with excellent signs (“The wrong Amazon is burning”).
But as I wandered the halls and the streets outside, it struck me again and again that a good deal had changed since the last big climate confab in Paris in 2015 – and not just because carbon levels and the temperature had risen ever higher.
The biggest shift was in the political climate. Over those few years the world seemed to have swerved sharply away from democracy and toward autocracy – and in the process dramatically limited our ability to fight the climate crisis. Oligarchs of many kinds had grabbed power and were using it to uphold the status quo; there was a Potemkin quality to the whole gathering, as if everyone was reciting a script that no longer reflected the actual politics of the planet.
Now that we’ve watched Russia launch an oil-fired invasion of Ukraine, it’s a little easier to see this trend in high relief – but Putin is far from the only case. Consider the examples.
Brazil, in 2015 at Paris, had been led by Dilma Rousseff, of the Workers’ party, which had for the most part worked to limit deforestation in the Amazon. In some ways the country could claim to have done more than any other on climate damage, simply by slowing the cutting. But in 2021 Jair Bolsonaro was in charge, at the head of a government that empowered every big-time cattle rancher and mahogany poacher in the country. If people cared about the climate, he said, they could eat less and “poop every other day”. And if they cared about democracy, they could … go to jail. “Only God can take me from the presidency,” he explained ahead of this year’s elections.
A climate activist holds a sign depicting Jair Bolsonaro with the slogan ‘Exterminator of the Future’. Photograph: Luis Robayo/AFP/Getty Images
Or India, which may turn out to be the most pivotal nation given the projected increases in its energy use – and which had refused its equivalent of Greta Thunberg even a visa to attend the meeting. (At least Disha Ravi was no longer in jail).
Or Russia (about which more in a minute) or China – a decade ago we could still, albeit with some hazard and some care, hold climate protests and demonstrations in Beijing. Don’t try that now.
Or, of course, the US, whose deep democratic deficits have long haunted climate negotiations. The reason we have a system of voluntary pledges, not a binding global agreement, is that the world finally figured out there would never be 66 votes in the US Senate for a real treaty.
Joe Biden had expected to arrive at the talks with the Build Back Better bill in his back pocket, slap it down on the table, and start a bidding war with the Chinese – but the other Joe, Manchin of West Virginia, the biggest single recipient of fossil fuel cash in DC, made sure that didn’t happen. Instead Biden showed up empty-handed and the talks fizzled.
And so we were left contemplating a world whose people badly want action on climate change, but whose systems aren’t delivering it. In 2021 the UN Development Programme conducted a remarkable poll, across the planet – they questioned people through video-game networks to reach humans less likely to answer traditional surveys. Even amid the Covid pandemic, 64% of them described climate change as a “global emergency”, and that by decisive margins they wanted “broad climate policies beyond the current state of play”. As the UNDP director, Achim Steiner, summarized, “the results of the survey clearly illustrate that urgent climate action has broad support amongst people around the globe, across nationalities, age, gender and education level”.
The irony is that some environmentalists have occasionally yearned for less democracy, not more. Surely if we just had strongmen in power everywhere they could just make the hard decisions and put us on the right path – we wouldn’t have to mess with the constant vagaries of elections and lobbying and influence.
But this is wrong for at least one moral reason – strongmen capable of acting instantly on the climate crisis are also capable of acting instantly on any number of other things, as the people of Xinjiang and Tibet would testify were they allowed to talk. It’s also wrong for a number of practical ones.
Those practical problems begin with the fact that autocrats have their own vested interests to please – Modi campaigned for his role atop the world’s largest democracy on the corporate jet of Adani, the largest coal company in the subcontinent. Don’t assume for a minute that there’s not a fossil fuel lobby in China; right now it’s busy telling Xi that economic growth depends on more coal.
And beyond that, autocrats are often directly the result of fossil fuel. The crucial thing about oil and gas is that it is concentrated in a few spots around the world, and hence the people who live on top of or otherwise control those spots end up with huge amounts of unwarranted and unaccountable power.
Boris Johnson was just off in Saudi Arabia trying to round up some hydrocarbons – the day after the king beheaded 81 folks he didn’t like. Would anyone pay the slightest attention to the Saudi royal family if they did not possess oil? No. Nor would the Koch brothers have been able to dominate American politics on the basis of their ideas –when David Koch ran for the White House on the Libertarian ticket in 1980 he got almost no votes. So he and his brother Charles decided to use their winnings as America’s largest oil and gas barons to buy the GOP, and the rest is (dysfunctional) political history.
The most striking example of this phenomenon, it hardly need be said, is Vladimir Putin, a man whose power rests almost entirely on the production of stuff that you can burn. If I wandered through my house, it would be no problem to find electronics from China, textiles from India, all manner of goods from the EU – but there’s nothing anywhere that would say “made in Russia”. Sixty per cent of the export earnings that equipped his army came from oil and gas, and all the political clout that has cowed western Europe for decades came from his fingers on the gas spigot. He and his hideous war are the product of fossil fuel, and his fossil fuel interests have done much to corrupt the rest of the world.
Vladimir Putin and Alexei Miller, CEO of Russian natural gas giant Gazprom, attend a ceremony to mark the launch of the Sakhalin-Khabarovsk-Vladivostok natural gas pipeline in 2011. Photograph: Sasha Mordovets/Getty Images
It’s worth remembering that Donald Trump’s first secretary of state, Rex Tillerson, wears the Order of Friendship, personally pinned on his lapel by Putin in thanks for the vast investments Tillerson’s firm (that would be Exxon) had made in the Arctic – a region opened to their exploitation by the fact that it had, um, melted. And these guys stick together: it’s entirely unsurprising that when Coke, Pepsi, Starbucks and Amazon quit Russia last month, Koch Industries announced that it was staying put. The family business began, after all, by building refineries for Stalin.
Another way of saying this is that hydrocarbons by their nature tend towards the support of despotism – they’re highly dense in energy and hence very valuable; geography and geology means they can be controlled with relative ease. There’s one pipeline, one oil terminal.
Whereas sun and wind are, in these terms, much closer to democratic: they’re available everywhere, diffuse instead of concentrated. I can’t have an oilwell in my backyard because, as with almost all backyards, there is no oil there. Even if there was an oilwell, I would have to sell what I pumped to some refiner, and since I’m American, that would likely be a Koch enterprise. But I can (and do) have a solar panel on my roof; my wife and I rule our own tiny oligarchy, insulated from the market forces the Putins and the Kochs can unleash and exploit. The cost of energy delivered by the sun has not risen this year, and it will not rise next year.
As a general rule of thumb, those territories with the healthiest, least-captive-to-vested-interest democracies are making the most progress on climate change. Look around the world at Iceland or Costa Rica, around Europe at Finland or Spain, around the US at California or New York. So part of the job for climate campaigners is to work for functioning democratic states, where people’s demands for a working future will be prioritized over vested interest, ideology and personal fiefdoms.
But given the time constraints that physics impose – the need for rapid action everywhere – that can’t be the whole strategy. In fact, activists have arguably been a little too focused on politics as a source of change, and paid not quite enough attention to the other power center in our civilization: money.
If we could somehow persuade or force the world’s financial giants to change, that would yield quick progress as well. Maybe quicker, since speed is more a hallmark of stock exchanges than parliaments.
And here the news is a little better. Take my country as an example. Political power has come to rest in the reddest, most corrupt parts of America. The senators representing a relative handful of people in sparsely populated western states are able to tie up our political life, and those senators are almost all on the payroll of big oil. But money has collected in the blue parts of the country – Biden-voting counties account for 70% of the country’s economy.
That’s one reason some of us have worked so hard on campaigns like fossil fuel divestment – we won big victories with New York’s pension funds and with California’s vast university system, and so were able to put real pressure on big oil. Now we’re doing the same with the huge banks that are the industry’s financial lifeline. We’re well aware that we may never win over Montana or Mississippi, so we better have some solutions that don’t depend on doing so.
The same thing’s true globally. We may not be able to advocate in Beijing or Moscow or, increasingly, in Delhi. So, at least for these purposes, it’s useful that the biggest pots of money remain in Manhattan, in London, in Frankfurt, in Tokyo. These are places we still can make some noise.
And they are places where there’s some real chance of that noise being heard. Governments tend to favor people who’ve already made their fortune, industries that are already ascendant: that’s who comes with blocs of employees who vote, and that’s who can afford the bribes. But investors are all about who’s going to make money next. That’s why Tesla is worth far more than General Motors in the stock market, if not in the halls of Congress.
Moreover, if we can persuade the world of money to act, it’s capable of doing so quickly. Should, say, Chase Bank, currently the biggest lender on earth to fossil fuel, announce this year that it was quickly phasing out that support, the news would ripple out across stock markets in the matter of hours. That’s why some of us have felt it worthwhile to mount increasingly larger campaigns against these financial institutions, and to head off to jail from their lobbies.
The world of money is at least as unbalanced and unfair as the world of political power – but in ways that may make it a little easier for climate advocates to make progress.
Putin’s grotesque war might be where some of these strands come together. It highlights the ways that fossil fuel builds autocracy, and the power that control of scarce supplies gives to autocrats. It’s also shown us the power of financial systems to put pressure on the most recalcitrant political leaders: Russia is being systematically and effectively punished by bankers and corporations, though as my Ukrainian colleague Svitlana Romanko and I pointed out recently, they could be doing far more. The shock of the warmay also be strengthening the resolve and unity of the world’s remaining democracies and perhaps – one can hope – diminishing the attraction of would-be despots like Donald Trump.
But we’ve got years, not decades, to get the climate crisis under some kind of control. We won’t get more moments like this. The brave people of Ukraine may be fighting for more than they can know.
This story is published as part of Covering Climate Now, a global collaboration of news outlets strengthening coverage of the climate story
New Mexico Stuck With $8 billion in Cleanup for Oil Wells, Highlighting Dangers From Fossil Fuel Dependence
The oil industry boasts that it fills state coffers with revenues from drilling, but a new study finds a serious gap in funding available to tackle the environmental legacy of abandoned wells.
New Mexico is facing more than $8 billion in cleanup costs for oil and gas wells, an enormous liability that taxpayers could be left to pick up if drillers go out of business or walk away from their obligations.
Cleaning up old wells at the end of their operating lives can be expensive, and typically states require drillers to cover part of the cleanup cost at the outset, known as financial assurance requirements. The money is tapped later on when the well or pipeline must be dismantled and cleaned up.
But a study commissioned by the New Mexico State Land Office published on April 30 found that “financial assurance requirements do not exist for much of the oil and gas infrastructure explored in this study, and in some cases where such requirements are imposed, operators may have multiple ways of minimizing or avoiding those requirements.” The study was conducted by the Center for Applied Research, an independent analytical firm.
Inadequate bonding requirements means there is a serious gap in available funding to properly clean up after the fossil fuel industry. According to the report, it could cost as much as $8.38 billion to clean up the state’s tens of thousands of wells and associated pipeline infrastructure. Alarmingly, however, New Mexico only has $201 million tucked away for cleanup, leaving a hole of $8.1 billion.
“That’s $8.1 billion that we don’t have,” New Mexico Commissioner of Public Lands Stephanie Garcia Richard said in a statement. “Enormous sums of taxpayer money and money meant for public schools, along with the long-term health of our lands, are on the line.”
The industry likes to boast that oil and gas revenues contribute roughly a third of the state’s general fund — a fact that the New Mexico Oil & Gas Association (NMOGA) triumphantly advertised in a recent report and regularly highlights on social media.
Indeed, drilling accounts for a large source of state revenues. In April 2021, for example, the state took in $109 million in royalties, a record high. Those funds will be funneled into public services, including schools and hospitals.
As the report exposed, however, the massive liability put onto the public in cleanup costs somewhat undercuts the notion that the oil and gas industry is a financial godsend.
The industry has helped fill state coffers in recent years, with oil production booming to roughly 1 million barrels per day, more than double production levels from five years ago. According to the report, last year the oil and gas industry produced nearly 370 million barrels of oil and 2 trillion cubic feet of natural gas from roughly 60,000 wells, which was transported on 35,000 miles of pipelines.
But as the State Land Office study highlights, the industry is leaving behind enormous costs for the state and the general public to deal with at a later date, a liability that is mostly obscured from public discussion.
The average cost to plug an old well and reclaim the surface is over $182,000 per well, but the state only has the finances to cover a little over $3,200 per well. The funding gap is even more staggering for pipelines. Decommissioning and reclamation costs are roughly $211,000 per mile of pipeline, but available financial assurance only totals about $51 per mile.
A pump jack in Roswell, New Mexico. Credit: BLM. (CC BY 2.0)
The risk to the public from inadequate bonding requirements is compounded by the fact that oil and gas drillers can go out of business long before wells are cleaned up, which can be years or even decades later. The U.S. shale industry has burned through hundreds of billions of dollars in cash, and there have been more than 250 bankruptcies of North American oil and gas companies since 2015. And as the clean energy transition accelerates, the financial challenges to the industry are likely to only grow more severe.
The state has long suffered from the roller coaster cycles of extractive industry, according to James Jimenez, executive director of New Mexico Voices for Children, a health, education, and economic advocacy organization. “We’ve made policy choices in boom times that have really exacerbated our over-dependence on oil and natural gas revenues,” Jimenez told DeSmog.
“Because of the really volatile nature of the oil and gas industries, we haven’t had sustainability in the programs,” he said. A dependence on a boom-and-bust industry has forced the state to make cuts to school systems during downturns in the past.
“We need to reduce this over reliance we have on oil and natural gas to fund really basic important programs like our K-12 education and higher education systems,” Jimenez said. He added that the state should diversify its revenue base, such as through progressive taxation on the wealthy and supporting non-extractive business sectors.
Even as money flows to the state from drilling today, the unfunded liabilities of cleanup that are dumped onto the public also highlight the downside to such high levels of drilling. “The $8 billion that it would take to do the cleanup would have to come from somewhere,” Jimenez said. Dollars spent on cleaning up the waste from the oil and gas industry, are dollars not spent on other important needs, such as rural broadband or road infrastructure, he added.
“The answers are simple and urgent — raise royalty rates and taxes on the industry, stash away the revenues in our Permanent Fund to stabilize cash flows, and spend current budget dollars on investments to diversify our economy,” Thomas Singer, senior policy advisor at the Western Environmental Law Center, told DeSmog via email.
On top of the financial risks from abandoned wells, the fossil fuel industry brings numerous environmental and public health hazards as well. Oil and gas operations have contributed to a deterioration in air quality in the state. And in northwestern New Mexico, there have been more than 300 accidents since 2019, including oil spills, fires, blowouts, and gas releases, and much of it has occurred on Navajo land, as reported by Capital & Main.
A recently published peer-reviewed study found that shut-in conventional oil wells in the Permian basin could be leaking a substantial amount of methane, a powerful greenhouse gas that exacerbates climate change.
“New Mexicans must recognize that while industrialization of our landscape to produce oil and gas brings revenue today, if not properly cleaned up, it also jeopardizes our economy of the future,” Singer said. Allowing drillers “to defer this obligation indefinitely puts the state and taxpayers at great risk that they will have pick up the tab or leave these areas as polluted sacrifice zones.”
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