by Caleb James

The price of oil has dropped so low that New Mexico leaders have passed a rule allowing companies to temporarily stop paying rent.

The loss in revenue, for now, is a Band-Aid that officials say will help avoid disaster for the bleeding industry.

Consider this analogy: If you knew you weren’t going to make enough money to make rent for the next couple of months, your landlord would be saving you from financial ruin by letting you stay rent free temporarily. That’s what the state has decided to do for oil producers free rent until the money comes.

For the prospector and businessman alike, the New Mexico plains might as well have been covered in dollar signs for decades, but the price of oil has plummeted. In 2014, 100 new rigs popped up. In 2016, just 30.

 With prices so low and low producing rigs unprofitable, there’s often just one option.

“You turn off the well,” said Wally Drangmeister, an official with the New Mexico Oil and Gas Association.

Drangmeister said entire operations have shuttered and rigs ground to a halt for good. The state land trust on Halloween took a dramatic step, passing a rule to allow unprofitable oil rigs to temporarily shut down and resume paying rent to the state when they’re making money again.

“It’s a place-holder and it’s way better than the alternative to permanently close those wells,” Drangmeister said.

It’s an intervention to save smaller gas producers from a bitter end. According to the state land trust, it’s the lesser of two evils. A break on rent means oil and gas company money won’t be going to New Mexico schools where it normally ends up.

“The beneficiaries of state trust lands — mainly the public schoolchildren of New Mexico — will be better served if wells are temporarily shut in, rather than producing at a lower price,” Land Commissioner Aubrey Dunn said.