BISMARCK, N.D. (AP) — Unless oil prices increase dramatically in the remaining days of October, North Dakota’s treasury won’t be banking the benefits of a tax increase on drillers that has bumped state tax collections by $120 million since June, the state tax commissioner said Monday.
The increase in state oil tax collections was possible because of a state law that adjusts North Dakota’s oil extraction tax when the three-month average price of a barrel of oil went above a specified “trigger” price of $94.69. Oil prices have fallen well below the benchmark in recent weeks, and will almost certainly wipe the increased tax off the books on Nov. 1, North Dakota Tax Commissioner Brian Kroshus said.
“Unless there is a significant geopolitical event or supply disruption of some sort, it will revert back,” Kroshus said.
The monthly averages are figured using West Texas Intermediate prices, the U.S. benchmark set at Cushing, Oklahoma.