Economic forum looks at the future of San Juan County, New Mexico and the United States
FARMINGTON — Economists at the inaugural Northwest Economic Outlook Forum said a recession is coming, but they didn't say when. They did agree on one thing: the strong economic growth seen nationally in recent years may slow a bit soon.
"We will have another recession," said Jim Peach, an economist from New Mexico State University. "I doubt it's coming in 2020."
The forum put on by Four Corners Economic Development brought experts from Wells Fargo, New Mexico State University and the New Mexico Department of Workforce Solutions to speak about the challenges and opportunities facing the nation, state and region during a three-hour event at San Juan College.
Rachel Moskowitz, the bureau chief of the Economic Research and Analysis Bureau at the New Mexico Department of Workforce Solutions, said San Juan County's dependence on the natural gas industry meant it was hit harder than many places by the recession in 2008. The county has never recovered, meanwhile the nation has rebounded and seen 11 years of economic expansion.
“We are now in the longest economic expansion in modern record,” said Sarah House, a senior economist with Wells Fargo Securities, speaking about national trends.
She anticipates growth will be slower in 2020 than it has been in the last couple of years.
Peach agreed with House that national economic growth will likely slow in 2020.
While the national trends have a large impact on New Mexico's economy, Peach focused most of his presentation on the oil and gas industries' impact on the state's economy.
“The story of the New Mexico economy right now really is oil,” Peach said.
He said in 1970 New Mexico was producing 120 million barrels of oil annually. In 2008, the state was producing 62 million barrels and everyone thought oil production would continue to decline. Then the Permian Basin began to boom. In 2018, the state produced about 249 million barrels of oil. Peach said the final numbers for 2019 have not been released yet. However, he said New Mexico produced more than 300 million barrels of oil in 2019 and that number is likely closer to 320 million.
"That means that the increase in production from 2018 to 2019 is greater than the total that we produced a little over a decade ago," he said.
The majority of that oil — 95% — is produced in Eddy and Lea counties, Peach said.
Peach said economists do not know how long the boom in the Permian Basin will last.
The success of the Permian Basin has not translated over to the San Juan Basin and Peach did not have much good news for San Juan County.
The San Juan Basin is a natural gas basin. He said natural gas is also being produced in the Permian Basin as a byproduct of oil production. The price of natural gas is so low that Peach said the product is being flared or burned in the field.
"I looked and I looked and I looked and I tried to bring you some good news about natural gas prices because that would affect you right here," Peach said. "And you know what, I couldn't do it. There is so much natural gas that we’re going to have low natural gas prices for a long, long time to come."
Peach also spoke about the percentage of the New Mexico population who live below the poverty level. New Mexico has one of the highest rates of people living below the poverty level — 19.5%. San Juan County has an even higher rate than the state at 24.4%, Peach said. Those numbers get even worse for children living below the poverty level.
"If we can't fix this, we can't fix the New Mexico economy," he said.
Peach said education can help lift people out of poverty.
Local officials who spoke during the forum remained optimistic.
Farmington City Manager Rob Mayes discussed the city’s efforts to keep the San Juan Generating Station open by partnering with Enchant Energy to retrofit the plant with carbon capture technology.
Mayes said there are still challenges ahead, but he believes the city has moved from a "possible dream to a likely and probable outcome" to save the jobs at the power plant and create more, as well as adding educational opportunities in carbon capture.
Meanwhile, Farmington Economic Development Director Warren Unsicker emphasized the city’s efforts to promote outdoor recreation and manufacturing.
"We have seen declines in the energy industry just by the very nature of innovation and technology that has come down the pipe because of the changes," Unsicker said. "All of these companies have become more efficient and require less staff."
Unsicker said Farmington is not developing away from energy, but rather around energy. He said one of the low-hanging fruits identified was outdoor recreation.
Bloomfield City Councilor Ken Hare spoke about the variety of economic development efforts underway. In January 2017, Bloomfield commissioned an economic development study that showed its biggest weakness in terms of attracting new businesses was the community's aesthetics. One of the strengths identified was the location on U.S. Highway 550 between Durango, Colorado, and Albuquerque.
Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at email@example.com.
Support local journalism with a digital subscription: http://bit.ly/2I6TU0e