“During the Bakken development oil extraction and production taxes are more than 44% of all taxes collected by the state,” a study commissioned by the North Dakota Petroleum Council and the Western Dakota Energy Association states. “During the Bakken development oil extraction and production taxes are more than 44% of all taxes collected by the state.”
The research was conducted by Brent Bogar of Jadestone Consulting using publicly available data.
Those are remarkable figures. All the more so when you consider that we’re only talking about revenues generated by direct taxes – the production and extraction taxes, specifically – on the oil industry. Not included are the revenues driven into state coffers by the oil industry through other taxes.
Like the sales tax, for example. At times during the oil boom Williams County (Williston) was seeing more taxable sales than Cass County (Fargo) despite having a fraction of the population. That’s because oil activity drives a lot of commerce, and that commerce in turn produces revenue by way of the sales tax. The income taxes. Etc., etc.
In total, per the report (which you can read below), the oil industry has generated nearly $18 billion in oil and extraction tax revenues for the state from 2008 to 2018.
This is both good and bad.
It’s good because oil exploration and development is happening in North Dakota. It’s creating jobs and prosperity and, yes, tax revenues. It is a blessing to have that happening in our state (though you wouldn’t know that listening to the way some politicos talk about it).
It’s bad because we getting half of our tax revenues (and more, again, when we count the impact on other tax streams) from one industry is a too-many-eggs-in-one-basket problem.
We want the oil activity, but we need our economy diversified so that we aren’t so dependent on the oil industry. Which, as the past couple of budget cycles have shown us, is extremely volatile.
Here’s the full report: