A new report shows New Mexico’s oil and gas support services industry was the biggest beneficiary of Paycheck Protection Program (PPP) loans in the state – ahead of restaurants.
Data from the U.S. Small Business Administration shows oil and gas support services were approved for more than $223 million in Paycheck Protection Program funding, via 842 loans.
Paul Gessing, president of the Rio Grande Foundation, a free-market research institute, said this isn’t particularly surprising. The oil and gas industry is one of New Mexico’s critical industries and revenues comprise nearly 40% of the state’s budget, he said.
“When it comes to jobs, it’s certainly not on par with retail or some of those other private sector job groups, but you have a lot of highly paid, technical workers in that industry who were undoubtedly negatively impacted by COVID-19, the collapse in travel, the collapse in oil prices,” he told The Center Square. “There’s no doubt that the oil and gas industry in New Mexico is one of virtually all industries in the country that experienced some serious ramifications from the COVID lockdowns.”
A more important thing to note, however, is that it’s not really about who got what or how much, Gessing said; it’s about the people whose jobs were taken away for an extended period of time by the government shutdown. If you operate on the assumption that the shutdowns were necessary, he said, then government interference to support those affected was also necessary.
“I don’t think it’s really though about a specific industry,” he said. “What we’re dealing with is human beings and human lives and livelihoods, and if we’re going to go forward under the assumption that you shut down the economy for a virus that really is most harmful for 65-year-old-and-up people, but everybody outside of a few critical industries is going to be largely shut down, that means demand for oil and gas is going to be dramatically curtailed and those workers are going to be sent home with little in the way of opportunities to make money.”
Gessing said, from a free-market perspective, PPP loans are not ideal.
“We were never enthusiastic about states locking down under COVID, and the idea that we should somehow massively put our lives on hold throughout the United States,” he said.
He adds, however, that what’s done is done.
“When you talk about economic stimulus packages and massive infusions of federal cash into the economy, there are worse approaches than what was done with the PPP program,” he said.
Gessing was also positive about the fact that PPP was a bipartisan effort and did not target any one favored or disfavored industry.
“It may have benefited certain industries more because of the way they were structured, but it wasn’t designed inherently to benefit, say, oil and gas,” he said. “Any oil and gas specific benefit was based on the way that industry is formed and how its people are hired and paid.”
This article was originally posted on Oil and gas support was New Mexico’s biggest beneficiary of PPP after lockdowns