Skip to main content

'A real wake-up call': Falling oil prices take major toll on ND state budget

  • Author:
  • Updated:
    Original:

Depressed crude oil prices are dealing heavy blows to North Dakota's tax revenues, to the extent that it will likely need to update budget forecasts for future years.

State lawmakers were told Wednesday that general fund tax revenues fell $41.7 million short of projections in July and August, the Grand Forks Herald reports, with individual income tax collections $7 million below projections.

"This is a real wake-up call, I think," House Majority Leader Al Carson (R-Fargo) said. He also asked for projections on the effects further tax revenue reductions could have on state budgets, the newspaper notes.

It comes at a time when falling oil prices have caused multiple drilling rigs in the state's Bakken shale formation to be idled. According to state figures, there are 70 active rigs as of Thursday, down from 193 just a year ago.

The current prices for WTI (West Texas Intermediate) and Brent crude oil – the two U.S. benchmarks – are currently hovering around the $44 and $48 per barrel marks respectively, down around 50 percent on a year ago, according to CNBC.

The fall in individual income tax revenues highlights the toll the idled rigs are taking on oil field workers, with CNN Money noting the number of mining and logging jobs in the state have fallen by 3,700 (down 12 percent) since March.

The website notes sales tax collections in the previous two months were 33 percent below forecasts – $44 million short in August alone – while car and truck registration taxes fell 20 percent short.

"If you were to extrapolate this out, I think that we better be really aware of the fact that this could cause some significant problems for our next budget. I mean, how many months in a row of $44 million can we take?" Carlson said, according to the Grand Forks Herald.

While oil production hasn't declined despite falling prices (barrels produced are 5.1 percent higher than a year ago), Bakken Shale News reports that production is likely to go down this fall.

The website claims producers in the shale industry have lost an estimated $32 billion since Jan. 1 because of declining prices.

Next Up

hennepin county sheriff water patrol lake minnetonka

Scuba diver found dead in Lake Minnetonka identified as 20-year-old

The Hennepin County Medical Examiner's Office said 20-year-old Brady Alan Aune, from Elko New Market, died of freshwater drowning on June 3.

Screen Shot 2022-06-30 at 11.18.35 AM

Felony charges filed after authorities search 'Peacebunny Cottage'

The president of the rabbit rescue non-profit faces multiple animal cruelty charges after over 40 rabbits were found dead inside the organization's barn.

monkeypox virus

Minnesota up to 6 confirmed cases of monkeypox virus

Most people recover at home within 2-4 weeks.

thc edibles

Did Minnesota just accidentally legalize THC?

A Republican lawmaker who voted to approve the new law in May is already talking about rolling it back.

Screen Shot 2022-06-30 at 3.19.42 PM

Gasoline may be cause of sewer explosion on U of M campus

An all-clear was given around 9 p.m. Thursday, with residents in the area allowed to return to their homes.

image

Overwhelming demand for THC products on first day of new law in MN

One shop owner said his Chaska store broke the online sales record before they opened Friday morning.

Flickr - Lake Minnetonka boat - Greg Gjerdingen

Increased drunk boating enforcement over 4th of July weekend

The increased enforcement is part of the Operation Dry Water initiative.

Kayak

Four kayakers stranded, rescued in Chisholm park

The kayakers became stranded at Redhead Mountain Bike Park Thursday afternoon.

SherburneCoJailDrugArrests

Duo charged after 10-pound meth package sent to wrong address

More than 10 pounds of meth are off the street thanks to a delivery error.

Screen Shot 2022-07-01 at 11.01.32 AM

Bird Rides' suburban expansion continues in Minnesota

Its scooter season in Minnesota. The latest on where you can find Bird e-scooters:

Flickr - police lights squad siren - Edward Kimmel

Man found dead with 'trauma to his face' in St. Paul

A man was found dead with "trauma to his face" in St. Paul after 3 a.m.

Hibbing ambulance

Boyfriend jailed after woman found dead in Hibbing

The woman was found dead on Tuesday, June 28.

Related