North Dakota Mineral Resources Director Lynn Helms says it’s now likely that the so-called “big trigger” for oil taxes will go into effect in June.
The big trigger is pulled when oil prices drop below $55.09 a barrel for five consecutive months. And that means oil taxes drop from 11-and-a-half percent to five percent – and they’ll stay there until the price climbs above $55.09 for five consecutive months.
Last month, Helms predicted the big trigger would not go off. And he says he based that on history.
"We've had more years of trigger off than trigger on," said Helms at his monthly "director's Cut" briefing.
Helms says what caused him to change his mind – is the amount of crude oil inventory.
"Cushing, Oklahoma is 70 percent full, and is filling at about a million barrels of oil a day," said Helms. "It runs out of storage capacity sometime between April 15th and May 15th."
Helms says the only other tank farm that has any room is Houston – but there are limits to that facility as well.
Senate Appropriations Committee chairman Ray Holmberg (R-Grand Forks) says he wasn’t surprised by predictions that the so-called “big trigger” will fire in June. He says the Legislature had already anticipated that.
"In January, we built in and anticipated when we did that tapering of the budget -- the 'bridge to March' -- we anticipated the trigger going into effect," said Holmberg. "The projected loss was $1 billion. We have taken the big pain in January."
Holmberg says the only question is – how long with that lower oil tax remain in effect. And he says that’s driven by oil prices.