North Dakota Oil Tax Trigger Will Not Go Into Effect

The state’s large oil tax trigger will not go into effect, allowing for nearly half a billion dollars more in revenue collections, the state tax commissioner confirmed Monday. Tax Commissioner Ryan Rauschenberger said the price of oil in May averaged $59.47 per barrel. In order for the trigger to have hit, it would have had to average below $55.09 per barrel for five consecutive months; prices had been below the trigger prices for the previous four months. The trigger is based on the West Texas International benchmark price used in the U.S. based out of Cushing, Okla.

“Virtually all production in the state would’ve been at a reduced (rate),” Rauschenberger said.

Without the trigger in place, nearly $80 million per month in additional oil extraction tax revenue will be collected, or $480 million overall from June to November.

Lawmakers passed legislation in April lowering the state’s 6.5 percent oil extraction tax to 5 percent effective Jan. 1, 2016, and raises the threshold for hitting the state’s large oil tax trigger after that date.