As I adjusted to the news over the weekend that our country and Israel had attacked Iran, I began devouring updates — from the death of Iran’s Supreme Leader, Ayatollah Ali Khamenei, to President Trump’s encouragement that Iran’s population rise up and replace the 47-year-old theocratic regime.

At some point, I began wondering how war-making more than 7,000 miles away, as the crow flies, might affect New Mexicans.

It seems that New Mexicans will feel it in at least two consequential ways: Higher prices at the gas pump, which is already happening according to oilprice.com, and, potentially, more money flowing into New Mexico’s coffers to pay for state programs and services, if the price of oil stays high.

New Mexico is a major oil and gas producer, second only to Texas in the U.S. And the global price of oil helps determine what New Mexico’s industry charges for the oil and gas it produces.

Global oil markets are very sensitive. As the New Mexico Legislature’s budget arm, the Legislative Finance Committee, wrote in a June 2024 memo: “Forecasting oil prices is especially difficult because demand and supply can change with the weather, geopolitics, and other unpredictable conditions.”

War falls under the geopolitics category in that sentence.

The degree to which New Mexico will feel the impact from the war with Iran will depend on how long the conflict lasts (President Trump has said the war could last four to five weeks) and whether Iran uses its strategic leverage over the Strait of Hormuz to slow the amount of oil and gas that moves through that waterway. More than 20% of global oil supplies move through the Strait of Hormuz every day.

Another factor is how many refineries in the Middle East are shut down because of the war. Refineries break down crude oil into petroleum parts, from oil used in cars, trucks and other transportation, to home heating For example, “the Saudi state-owned oil company Aramco shut its Ras Tanura refinery on the country’s East Coast — which processes about 550,000 barrels a day — early on Monday after it was struck by debris from intercepted Iranian drones,” the Guardian newspaper reported.

“While we do not know where these disruptions will end or how the conflict will ultimately resolve, the nearterm result is likely to be heightened volatility in global energy markets and a potential rerouting of global oil and gas cargoes,” Kenny Zhu, research analyst at Global X told Reuters over the weekend.

All these factors squeeze the global supply of oil and gas. That, in turn, leads to a jump in the price of a barrel of oil.

And generally, “a dollar increase in the per barrel price of oil translates into about $45 million” for the state of New Mexico and a “10 cent increase in the price per thousand cubic feet of natural gas translates into $27 million in additional revenue,” according to the LFC.

Most years, direct and indirect revenue — taxes, royalties, fees — from the oil and gas industry “make up 25 percent to 30 percent of total general fund revenue, although that figure fluctuates depending on economic conditions and the health of the energy industry,” the LFC notes.

Because of decisions made by the Legislature and Gov. Michelle Lujan Grisham in recent years, the overflow revenue from higher oil prices won’t all flow into the state’s main checking account, the general fund. Instead, some of the unanticipated revenue will flow into new endowments — such as the Early Childhood Education and Care Fund, which helps pay for programs and services, created several years ago.

It is weird to think that war, carnage, and death on a mass scale half a world away can affect New Mexico and New Mexicans. But it does, which is both worthy of reflection and a reminder of the interconnected world we all live in; that how the world goes, so goes New Mexico, especially when we’re talking about oil and gas.

Trip Jennings started his career in Georgia at his hometown newspaper, The Augusta Chronicle, before working at newspapers in California, Florida and Connecticut. Since 2005, Trip has covered politics and state government for the Albuquerque Journal, The New Mexico Independent and the Santa Fe New Mexican. He holds a Master’s of Divinity from Columbia Theological Seminary in Decatur, Ga. In 2012, he co-founded New Mexico In Depth.