It is no secret, North Dakota has become more reliant on energy activity over the last decade. The state budget relies heavily on oil revenues. The problem this reliance poses is the volatile swings in oil prices. It leads to budgeting uncertainty. The higher the price, the more activity, the more revenue the state accrues. Today, the President cheered for lower prices. Knowing lower oil prices negatively impacts North Dakota, it is remarkable to see state leaders remain silent.
Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy! $54, was just $82. Thank you to Saudi Arabia, but let’s go lower!
— Donald J. Trump (@realDonaldTrump) November 21, 2018
Where is Senator-elect Kevin Cramer? He campaigned almost entirely on being with President Trump “100% of the time.” Where is Senator John Hoeven? He serves on the Senate Energy and Natural Resources Committee. Where is Congressman-elect Kelly Armstrong? He works in the oil industry, and named dropped Harold Hamm in his first interview with Gray TV in Washington? Where is Ron Ness and the ND Petroleum Council? They invited Donald Trump Jr. to North Dakota to speak at their conference. Trump Jr. urged the eager crowd to support his father because he gets the industry. Do any of them believe “oil prices getting lower” is “great” for North Dakota or the industry? Are they chanting “let’s go lower!” today?
A drop in price at the gas pump is welcome no doubt, but what is the impact to North Dakota’s budget if prices continue to fall? During the midterm election, Republican candidates made payout promises in hopes to retain legislative seats. Infrastructure investments paid for by oil revenues was the promise. Senate Majority Leader Rich Wardner called it “Operation Prairie Dog.” It relied on oil being at $52.50 per barrel. At $54 now, that promise can’t afford for it to drop much lower.
It isn’t just infrastructure promises that are threatened by the drop in oil prices. It is public education needs. When asked if North Dakota can afford their bipartisan k-12 initiatives, the same Senator Rich Wardner said: “If the price of oil stays at around $60 a barrel, we will be able to meet some of these needs.” We are currently below $60 a barrel. What does it mean for education?
The uncertainty of budgeting on volatile commodities such as oil led to a Legislative study on how the state budgets. Rather than offer suggestions, the committee threw up its hands and said what they’re doing is, “a good way to handle it.” I suggest asking residents of rural North Dakota who lost their Department of Transportation maintenance shop or public employees who haven’t received a raise if the Legislature is handling the budget in “a good way.”