These are but some of the major impacts the oil and gas industries have financially on the state of North Dakota. Large amounts of tax revenue is seen and are placed in their appropriate funds. Money also filters back to the communities that are at the center of the healthy industries.
These funds also have resulted in tax relief for citizens across the state, while increasing business for companies associated with the two industries.
A 2007 study by North Dakota State University reports the state's oil industry had an estimated $8 billion gross business volume impact on the state in 2007. This is nearly double the roughly $4.1 billion seen in 2005.
Pam Sharp, director of the North Dakota Office of Management and Budget, said the oil and gas industry is important to the state. When looking at the states gross domestic product, the oil and gas industries fall under the mining category. The overall mining category made up 4 percent of North Dakota's GDP in 2008. Sharp said some of the money generated from oil and gas production and extraction taxes in the state are brought into the General Fund, but not all of it.
"Overall in the General Fund, only the first $71 million go into it. The rest are transferred into the Permanent Oil Tax Trust Fund," said Sharp.
The $71 million figure is a statutory cap for the 2007-09 biennium. After that cap is reached, additional funds are either placed into the Permanent Oil Tax Trust Fund or is eligible to be placed there.
The $71 million cap was reached in November 2007. Through June, oil tax collections of $484.3 million since then have either been transferred or are waiting to be transferred into the trust fund.
Sharp said numbers haven't been totally updated and finalized yet, but when things are added, the overall total currently in the trust fund should be somewhere approaching $1 billion.
Don Canton, communications director and policy advisor for Gov. John Hoeven, said the oil and gas industry have steadily risen in recent years to become a significant and important source of revenue for the state. Canton said the industry is an important part of the whole when it comes to the overall budget.
He said it's not the most important part overall, but it definitely plays a key role in various ways. One impact from the large amount of revenue and taxes collected is the money that is sent back to the counties that are major oil-producing areas in the western part of the state.
"The counties get a share. In 2005-07, the amount was capped at about $70 million for the 17 oil-producing counties. That increased to $117 million 2007-09; that's a significant increase," said Canton.
The amount of money making its way to oil-producing counties could be set to increase even further after a change in state law passed during the last legislative session.
House Bill 1304, introduced by state Rep. Bob Skarphol, R-Tioga, modified the oil and gas tax allocations to counties, cities, schools and townships as well. The bill takes the caps off for the oil-producing counties and is set to provide an additional $30 million to communities in western North Dakota if oil prices are in the $50 per barrel range or higher.
House Bill 1304 also changed the formula for allocations to Williams and Stark counties as well. The new legislation has Williston receiving $1 million more per year and smaller communities in Williams County will receive nearly four times what they were before.
Canton said this increased money will be put to good use in the western counties that need it.
"They're going to use a lot of improving the local infrastructure," said Canton.
He said this is a good thing, as well as critically important. Infrastructure such as roads and pipelines have been issues in getting oil out of the region and upgrades have been needed, particularly in roads.
Canton said because of the infrastructure needs and due to federal stimulus money, the state this biennium put together by far its largest bloc of funding ever for transportation. Funding for transportation infrastructure is a staggering $1.35 billion.
Canton said another impact for citizens of North Dakota is how they are able to use the revenues gathered from the oil and gas industry to achieve another goal, tax relief. Tax relief in the amount of $300 million was given to state taxpayers by using that much money from oil and gas tax revenues.
Ron Ness, president of the North Dakota Petroleum Council, said the industry has an enormous impact on the state. He said the $8 billion gross business volume number from the 2007 NDSU study is staggering and represents how the oil industry is just about the largest individual business sector in the state.
Ness said oil going to well over $100 per barrel in 2008 just as there was a boom in western North Dakota provided a huge impact in tax collections.
"There were $527 million in oil and gas tax collections in 2008; nearly 110 percent over 2007, which in itself was a very good year," said Ness.
Ness said the positive influence of the oil industry, along with other strong economic factors in the state, have made North Dakota prosperous. Ness said the strong oil numbers have factored into over a $1 billion surplus going into the latest legislative session and the 36 percent increase in state spending during its session.
"I think certainly the industry has helped in giving us a surplus. The legislature and the governor were very successful during the 2009 session. They're going along at a strong pace compared to what's going on in the rest of the country," said Ness.
Ness said things are going quite well, but it's going to take more hard work to maintain. He said the state has done a good job and needs to work to maintain the positive situation.
Ness also said the state's congressional delegation in Washington needs to continue in trying to help out North Dakotans as well. He said some proposed federal energy and environmental legislation could be harmful to the state.
"We're very concerned. So far they've opposed things that could hurt our economy. We urge them to continue to do so," said Ness.
Robert Harms, president of the Northern Alliance of Independent Producers of Bismarck, said the oil and gas industries have had an amazing and far-reaching impact on the state.
Harms said the financial impacts range from the enormous sums from oil and gas tax collections, the budget surplus during the recent legislative session and the number of jobs its helped produce overall in the state.
Harms said around 46,000 jobs are in some way connected to the industry. He also said the jobs aren't just benefitting people and businesses in the western counties.
"It impacts places like Bismarck, Fargo and Grand Forks, too. It impacts chemical companies, manufacturing companies and so on throughout the state," said Harms.
Harms added it's also providing opportunities for young people and more technical jobs as well in the different parts of the industry.
"It's created the high-tech jobs that are around now. People have this idea that the oil workers are 'roughnecks' or something, and that's false. There's a lot of high-tech skills in math, science and the need for computer skills and training required," said Harms.
Harms said the Northern Alliance is working with the state and federal government to improve a number of things that could help the industry and the state even more. He said these issues are going to require a lot of hard work to achieve.
One goal of the group is to reduce North Dakota's 11.5 percent tax on gross revenues to make the state the state more competitive nationally. Currently, this rate is a combined 5 percent gross oil production tax and a 6.5 percent extraction tax. The Northern Alliance proposes lowering the tax to a combined 9 percent.
On the federal level, they hope to fight off proposed regulations and increases in taxes to the U.S. oil industry.
Other issues that must be tackled are the pipeline capacity in the Williston Basin and the discounts that come from it.
"Discounts have been between $8 and $35 per barrel," said Harms.
Despite these major issues, Harms thinks they can win these battles and keep moving North Dakota forward.
"I think we're getting there. It's going to take some time, but we think at a national level, we see a pretty good opportunity of being able to fight these things back," said Harms.
Working to improve conditions in an already good economic situation in the state is a key part to maintaining them, said Harms. He said what has been done already has been huge.
"It's the difference between an economy on the rocks and that, as they say, is rocking now," said Harms.
For more information on the North Dakota Petroleum Council, visit their Web site at www.ndoil.org.
For more information on the Northern Alliance of Independent Producers, visit www.northernproducers.com.
For more information on the Office of Management and Budget or any other State of North Dakota agency, visit the state's Web site at www.nd.gov.
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