Lance Wilbanks was looking forward to a rebirth for his trucking company, which saw its business hauling drilling rigs across southeastern New Mexico drop from around two dozen a month to just a handful during the pandemic.

But with President Biden moving Wednesday to halt new oil and gas leasing on federal land, Mr. Wilbanks is worried that the bounceback might never come.

The freeze is “a gut punch to follow up the worst year we’ve had since the early 2000s,” he said, noting that he has already had to cut down from 300 to 100 employees over the past year. “I expected there to be changes, but to move this fast, I didn’t expect it at all,” he added.

Mr. Biden’s action, the start of a sweeping plan to tackle climate change, has raised concerns across New Mexico, where local officials, state representatives and businesses dependent on oil and gas are trying to size up the impact for an industry that made up roughly a third of the state’s general fund revenue last year.

The reaction in the state of 2.1 million, which Mr. Biden won with 54% of the vote in November, shows the potential pitfalls the president faces in seeking to promote cleaner energy and phase out fossil fuels, which continue to be significant economic engines in parts of the U.S.

A long-lasting freeze on new leasing would curb royalties and revenue New Mexico uses to pay for schools, Medicaid and public safety, and could move lawmakers to consider drastic options to address lost funding, such as cutting spending or drawing from state reserves, officials and regional economists said.

“It could be a devastating blow to our budget,” said Democratic State Rep. Patricia Lundstrom, chair of the state house’s appropriations and finance committee. “We’re not a wealthy state. We have to stretch every dollar.”

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