The plunge in oil prices has blown a $4 billion hole in North Dakota's budget in the space of just a month.
Lawmakers have accepted a revised forecast that projects the state will collect $4 billion less in oil and gas tax revenue between 2015 and 2017 compared to a forecast in December, the Fargo Forum reports.
According to the Wall Street Journal, the price of a barrel of oil dropped below $44 in same-day trading for the first time since 2009 Thursday, and these plummeting prices are taking a toll on rigs in the Bakken oil patch.
The Fargo Forum says the assumptions were based on discussions with the state tax department and oil and gas industry officials. The new forecast projects tax revenues will be down $4.05 billion in the 2015 to 2017 cycle.
The new figures reflect the lower oil prices and anticipate that a number of oil rigs will suspend operations, the Star Tribune reports.
The report assumes there will be 53 fewer oil wells in production each month, 135 compared to 188 operating last year, and total oil royalties lost, which include income taxes collected from workers, will total $4.9 billion.
Gov. Jack Dalrymple's budget plan in December was based on a price of between $74 and $82 a barrel between 2015 and 2017, the Washington Times reports. The new forecast is based on prices of between $45 and $65 a barrel.
A final revenue forecast will be presented in mid-March. That will be used to formulate the 2015-2017 state budget.
Senate Majority Leader Rich Wardner told the Washington Times the state’s economy remains healthy and oil production is forecast to remain steady despite sagging prices.