Oil prices are low, and that’s having a big impact on North Dakota’s economy. Just yesterday the state got yet another revised revenue forecast for the 2015-2017 biennium, this one lowering general fund revenue expectations by $1.074 billion (not to mention over $967 million less for tribal/local governments and the state’s various funds). It prompted Governor Jack Dalrymple to call for 4.05 percent across-the-board cuts in state government, and to drain the state’s “rainy day” Budget Stabilization Fund of nearly a half-billion dollars leaving just $75 million in it.
But sounding a note of optimism is the continued investment by the energy industry in the State of North Dakota. According to a press release sent out today by the state Public Service Commission (see below), they approved nearly $2.1 billion in energy-related projects in the state in 2015.
Here’s their summary:
Add to that list the $3.78 billion Dakota Access Pipeline, not included in the 2015 numbers because the PSC just approved it last month. That pipeline could take as much as 600,000 barrels per day of North Dakota’s oil output (more than half of what the state currently produces).
It’s interesting to watch people react to the swings in the commodity markets. When prices are high some will tell you that they’ll never go low again. Now that prices are in the tank, the cynics are quick to pounce and throw the word “bust” around.
But these projects aren’t being built by stupid people. They are a bet that North Dakota’s oil play is not a bust, and will be a boon to the state and the nation for years to come.
Despite what the convention wisdom of the moment may have to say about the matter.
Here’s the full press release: