Much of the shale oil boom has taken place in North Dakota at what's known as the Bakken site.
The uplift to the state's coffers comes in more ways than one. In 2013 North Dakota took in more than half of its tax revenues from oil and gas. Anyone who's followed the boom there knows the state is short on pipelines, an important factor in the cost of production and shipping.
Oil and gas pipelines are hardly on the invited guest list of most environmentalists.
What’s troubling for North Dakota is that not only does the state have one of the highest oil production taxes in the nation at 11.5 percent, but thanks to the state’s extreme weather conditions and lagging infrastructure (we need pipelines!), the state is also one of the most expensive oil plays in the nation.
Meaning that if oil prices drop, one of the first places in the nation it’s going to become unprofitable to pump oil is North Dakota.
That makes the Keystone/Sandpiper pipeline delays loom large, as well as the Legislature’s decision to not only refuse reform for the state’s taxes on oil production but to actually raise them last year.
The oil markets being what they are, who knows what will happen, but suffice it to say that while dropping oil prices might be good for the rest of the country, they’re potentially devastating for North Dakota.
My guess is that these fears probably won’t put much of a damper on spending (naturally), but you can bet that those looking to abolish the state income tax (of which there are a growing number) will have to overcome this obstacle.
http://bakken.com/news/id/223068/bad-falling-oil-prices-hurt-nd/
When you factor in things like population, housing, industry and commerce, the state, as the chart shows, is one of the ones that has been most rewarded by rising oil prices.
There are a couple of issues here like those looking to get rid of the state income state tax as more and more around the nation realize that they're getting less and less for their trouble.
Bureaucratic greed is another issue, but we'll leave that for later. In any upcoming slowdown or recession these issues will only get larger.
Sure there are concerns about a global slowdown. But to those who hail the U.S. oil glut as the second coming of cheaper energy as far as the eye can see, we have three words: Not so fast.
t. man hatter