We’re in this together
—Samuel Western, Writers on the Range
There is a house in Rawlins, Wyoming that won’t sell. It’s a bargain, too, at $135,000. In fact, there are forty-three houses in Rawlins selling for under $150,000. This is a booming energy town with a housing shortage. People in Rawlins have money. Wyoming has, in fact, the fastest-growing median household income of any state.
So why does this house remain on the market?
The mortgage crisis created far from Wyoming has changed the rules on borrowing money. No more nothing or three percent down. It’s ten percent up front, and not that many people have $13,500 lying around.
This shifting dynamic is one more blow to the concept of Western exceptionalism. We’ve heard it all our lives: In the West, we’re different. We’ve got great expanses of public land; we’ve cornered the market on natural wonders; we have individual freedom and pay little heed to government; and we certainly don’t care how they do things back East.
But whether it’s ranchette, ranch-style, or ranch, it doesn’t matter: We are common and we are connected. This region is just as liable as any other to feel the splintering jar of the cue ball caroming in from New York, London, or Shanghai.
The crisis also threatens one of the few stabilizing elements of the West. Despite a history of boom-and-bust economies and a transient workforce, homeownership has always been high out here. Utah, for example, is the only state where the homeownership rate has never fallen below sixty percent. We’ve put our eggs in one basket: our homes. Now, forces far afield from our public-land states threaten that investment.
This shattering of nest-egg wisdom reinforces a lesson the West has learned the hard way. Diversity matters in all forms—demographically, ecologically, or economically. In the last forty years, commodities have continually shrunk as a percentage of the West’s economy. That’s a good thing, but now, with energy prices soaring, it’s tempting to slip back into old ways. Let’s don’t.
In July, oil-and-gas-rich New Mexico was projected to enjoy a $400 million budget surplus. Then it fell to $225 million, and now, the projected surplus is around $80 million.
If Lehman Brothers, which was founded in the same year that California endorsed statehood—1850—can get caught with its financial pants down, so can we. Our economies of tourism, healthcare, and creativity require just as much attention as do oil and gas.
The crisis has also driven home the fact that most Westerners live in cities, and all are feeling the brunt of bad choices made in New York and Washington. Western cities are reeling from real estate losses. During the last quarter, at least forty percent of all homes in Las Vegas, Sacramento, Los Angeles, San Francisco, and Phoenix were sold at a loss.
If this continuing crisis has taught us anything, it’s that the West may be exceptional in spirit, but it’s no different from the South or the East when it comes to weathering economic changes in fortune. An emphasis on pride is hardly the point; we need common sense about living within our means. Owning a house now has global implications.
Payments to New Mexico exceed a half-billion dollars for federal oil and gas royalties
A recent report from U.S. Senator Pete Domenici states that for the third year in a row, New Mexico has received more than a half-billion dollars from the federal government for oil and gas production in 2008.
New Mexico earned almost $615 million in federal royalties from the Mineral Management Service (MMS) for minerals—oil, natural gas, and coal—produced within its borders. Royalty payments to New Mexico totaled $553 million in 2007 and $573 million in 2006. In 2003, New Mexico earned $298 million in federal energy production royalties.
“The state has been able to rely on these federal royalty payments to maintain its budget and public education. The 2008 payment to New Mexico reflects the added production activity we’ve had on federal lands in New Mexico,“ Domenici said. “While we continue to push for more clean energy sources, we cannot discount the continued economic importance the oil and gas sector still maintains for our state.“
Only one other state, Wyoming, received more than New Mexico in FY2007 royalty payments—$1.27 billion of the $2.5 billion paid by the MMS to thirty-five states that produce oil, natural gas, and coal on federal lands. Another $534 million was disbursed to thirty-four American Indian tribes and thirty thousand individual American Indian mineral owners.
The MMS is the federal agency within the U.S. Department of the Interior that is responsible for collecting, auditing, and disbursing revenues associated with mineral leases on federal and tribal lands. Disbursements are made to states on a monthly basis as royalties, rents, bonuses, and other revenues are collected by MMS.