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oil rig
An oil drilling rig is seen outside of Tioga, North Dakota, March 12, 2013. REUTERS/Shannon Stapleton

How will the drop in oil prices affect ND’s budget?

Last month oil prices unexpectedly dropped from around $90 per barrel to $70 per barrel. Oil companies and market experts have been restructuring their businesses and figuring out where to go after the recent panic in the market. Tu-Uyen Tran of Forum News Services reported Saturday that the Office Management and Budget’s advisory committee concluded last summer that oil prices would be at around $90/barrel when the biennium met, but found last week that it would now be more realistic to assume $74/barrel. But, how would this drop in price affect North Dakota’s state budget? How much does North Dakota depend on its oil tax revenue? Most of the state will find out on Dec. 3 when the Governor releases his annual budget report. Spokesmen for Jack Dalrymple recently stated that the state isn’t all that reliant on the oil and natural gas extraction tax and the forcasted drop in oil prices won’t affect most of the state’s budget. However, there is concern that it may affect the Strategic Investment Fund, which aids Oil Patch communities who are hoping to repair their infrastructure. It’s hard to say how the market will rise or fall prior to the state’s budget announcement. If oil prices drop to a low enough for companies such as Continental Resources to hold back on production there would be a greater concern for the North Dakota budget. For now, though, the state should view these fluctuating prices as just part of the cycle.

 

 

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