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Forum editorial: ND oil revenue still flows

The slowdown in North Dakota's Oil Patch is not a sky-is-falling calamity. Despite a spate of hand-wringing and worry, the evidence on the ground thus far is that the oil and gas industry and oil-impacted communities are weathering an oil price c...

The slowdown in North Dakota’s Oil Patch is not a sky-is-falling calamity. Despite a spate of hand-wringing and worry, the evidence on the ground thus far is that the oil and gas industry and oil-impacted communities are weathering an oil price collapse that has not translated into a disastrous bust. The boom is not booming, but activity in the Oil Patch has not ceased.
It is certain a slowdown in drilling and a per-barrel price drop from near $100 to near $50 will have consequences in oil country and for state coffers. Among the questions: How long will it last? What is the immediate impact?
Although recent reports indicate job losses have been minimal, it would be unrealistic to expect no job losses. But the jobless rate in oil communities has been below 1 percent. Many oil-related businesses still can’t find the workers they need. Others are not shedding employees because the expectation is that oil prices will stabilize and rise slowly. Businesses don’t want to have to rehire in what still is a tight labor market.
As for state revenues, the latest projection is that $4 billion less will be collected over the next biennium because of the slowdown. By any measure, that’s a lot of money. But the state is such good fiscal condition that a “shortfall” of $4 billion is not a shortfall in the sense that state needs will not be met. Rather, it’s fewer dollars in an unprecedented revenue stream that shows no signs of falling off to pre-boom levels. Another revenue projection comes out in early March, and that report likely will affect appropriations.
However, state reserves – dedicated funds of all kinds – have more money in them than ever before in history, and continue to grow at rapid rates. There is more than enough money for those statutory and constitutional piggy banks to meet or exceed mandated or discretionary draws.
That being said, fiscal conservatism is the way North Dakota does business. That philosophy of money management has served North Dakotans well for generations; and even in the best of times – like now – saving for a rainy day is wise. Thus, North Dakota has squirreled away billions of dollars in special funds and other accounts that can be tapped if the need arises.
The slowdown in oil country, and thus across the entire state, is real. The numbers don’t lie. But North Dakota is well positioned, and has in place an extraordinary system of buffers, to adjust to a period of lower-than-expected oil prices.

Forum editorials represent the opinion of Forum management and the newspaper’s Editorial Board.

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