The first of two “triggers” for oil tax relief is now in effect.
It’s been dubbed the “small trigger.” It’s based on oil prices below $57.50 per barrel, based on the West Texas Intermediate oil price. It reduces the oil extraction tax on new wells from 6.5 percent to 2 percent. And it would be in effect for the first 75,000 barrels produced from a new well.
"This will provide an incentive to keep rigs out drilling and completing wells," said North Dakota Tax Commissioner Ryan Rauschenberger. "That's also fracking the wells. And a lot of jobs are tied to fracking and drilling. And this incentive is out there to try and keep the rigs going, and those frack crews completing the wells."
The impact would be around $152,000 per well.
The slowdown in the oil industry could mean some of the proposed state budget increases may have to be trimmed.
The Republicans’ recent revenue forecast shows some projected losses in oil tax collections, as well as sales and income taxes. But it’s a forecast. And Senate Majority Leader Rich Wardner (R-Dickinson) says budget writers may add trigger mechanisms – that would allow more spending if the tax collections rebound.
"I think we will," said Wardner. "It'll be on the table, and is something we'll be looking at in each budget and each situation as we go along."
Democrats had earlier called for contingency budgeting.