BISMARCK, North Dakota — The Bismarck Tribune, Bismarck, Dec. 31, 2014
Prices bring uncertainty to oil patch
As oil prices have decreased, conversations on what it might mean to the state have done exactly the opposite. The newest oil boom that has enveloped western North Dakota has meant new jobs, rising state tax revenues, some definite growing pains and now, a level of uncertainty.
With the production volume and associated tax revenue hitting all-time highs in 2014, the obvious question is what impact sustained oil price declines might have on the state's fiscal budget for the upcoming biennium. Fewer new wells placed into service combined with tax revenue declines related to lower prices, mean a substantial hit to state coffers at first glance.
Clearly, the difficulty in projecting inbound tax revenue is reliant on being able to somewhat accurately predict the future price of oil. Admittedly, it's extremely difficult to forecast oil prices with any level of certainty, for any period of time, given an infinite number of factors that influence crude oil pricing.
Global production compared to consumption, geopolitical events, environmental concerns and government regulation, trade agreements between countries and monetary policy of major oil producing countries around the world, all make projecting price an economic ambiguity.
The reality is that projections are only as good for as long as they remain accurate, which typically isn't for very long. Case and point — the latest Energy Information Agency monthly forecast for the price of crude oil is down significantly — 18 percent from the same forecast issued only one month earlier.
It stands to reason that from a basic supply-and-demand standpoint, oil prices will likely remain low well into 2015. Presently, oil production on a global basis is outpacing usage. Higher shale oil production levels in the U.S. and abroad, driven by advanced recovery tactics, including hydraulic fracturing, have helped increase worldwide supply.
Higher production levels if they remain, will continue to place downward pressure on crude oil pricing. Plays with higher cost-per-foot drilling costs and deeper formations like the Bakken, likely will be among the first to be affected in terms of a drilling slowdown.
In addition to production-related revenue losses the state could incur, price triggers that drop the extraction tax either in part or entirely if the average price for WTI drops to $55 for one month or $52.50 over a five-month period respectively, also are a definite possibility.
There's little doubt that in the upcoming legislative session, oil tax revenues will be a hot topic. Some will attempt to make political hay, citing overly optimistic price projections. Others will see this as an opportunity for the state to catch up on housing and infrastructure.
North Dakota has done a good job in not becoming overly reliant on oil tax revenues as a whole, despite predictable political rumblings. The reality is that only a very small percentage of oil tax revenues make their way into the general fund. Most, is allocated to various reserve funds. The impact a drilling slowdown has on sales tax revenues however, could be more significant, and will have to be weighed out.
The current drop in oil prices while certainly painful to some, serves as a strong reminder that becoming overly reliant on revenues generated from any commodity-based industry, comes with inherent risk. It's fortunate state leaders will now be better prepared going into the 2015 legislative session.
Minot Daily News, Minot, Jan. 1, 2015
Supporting our police officers
It's been a rough few months on law enforcement officers around the nation.
After months of protests due to officer-involved shootings around the country, the stakes have escalated over the last few months. The whole nation knows about two New York City police officers who were gunned down while sitting in their cars.
But many do not know about a Durham, North Carolina, officer who narrowly avoided a similar fate last week when two men tried to attack him in his car. In Florida, two officers in separate cars came under fire and narrowly avoided injury. In Los Angeles, two men opened fire on a police officer, who was luckily not hit.
Being a police officer has always been a dangerous job, but it seems like things have grown progressively more difficult over the last year. In 2014, 126 police officers were killed in the line of duty, a big increase over 2013.
As we celebrate the beginning of a new year, we stand with our local law enforcement. Whether it's the Minot Police Department, Ward County Sheriff's Office, North Dakota Highway Patrol or the number of smaller departments in the region, we stand with the men and women in uniform who work around the clock to protect the rest of us.
Minot Police Chief Jason Olson would be the first person to admit not all officers around the country are perfect. There are bad officers, and like and men and women, police do make mistakes.
But in this part of North Dakota, we are fortunate. The men and women who put on the uniform every day serve us well. They enforce laws others make, and typically do it with compassion and courtesy.
Being a police officer is not an easy job. Officers encounter people every day at the worst moments of their life. They frequently deal with individuals suffering from mental illness or who are high on drugs or alcohol. They respond to calls every day regarding individuals with weapons and stop vehicles every day without knowing for sure what they are about to find. And for the most part, they do the job for less money than most of us make.
And most of them wouldn't have it any other way. Law enforcement officers are a special breed. They don't work for money or fame. They do their job because they love it and because they feel called to serve the community.
And we appreciate everything they do. As 2015 begins, we stand side by side with our local officers.