The recent increase in crude prices is good news for North Dakota’s coffers, but bad news for Bakken oil and gas producers.
Related: State Set to Lose Millions if Tax Incentives Take Effect
North Dakota's oil tax trigger was introduced by lawmakers to provide tax incentives to strained producers to ease the sting of prolonged lower crude prices. The trigger went into effect in February as WTI crude dipped below the $52.58 price point. The formula requires that crude stay below that price for five consecutive months, for the state to waive its 6.5% oil extraction tax.
The oil trigger was expected to take place June 1st, but rising crude prices mean it wont be implemented and producers will miss out on an estimated $480 million over the next six months. Since the nosedive last fall, crude prices inched up after the first of the year and make a sharp rebound in May, increasing almost 25% since April 1.
“State Tax Commissioner Ryan Rauschenberger confirmed this by saying “Given that oil has been trading mostly in the upper 50s, well above $55.09, we will not be triggering.”
To read more, visit nd.gov.