Posted 1/06/15 (Tue)
By Neal A. Shipman
Americas are relishing in low gasoline prices that they are now paying at the pump thanks to the plunging oil prices. With the price of regular gasoline selling at $2.19 a gallon on a national average, consumers are saving big money. And when compared to the average of $3.17 per gallon that people were paying one year ago, that $1 a gallon means real savings to millions of Americans.
The $50 a barrel drop in oil prices, and the subsequent $1 a gallon decrease in gasoline prices is probably the best boost in income that many families have seen in the past several years. And those savings at the pump translate into millions of dollars that consumers can now spend on other things. Things like paying their rent, buying clothes, dining out, or splurging on a vacation.
While America, as a whole, is somewhat giddy about the sudden and dramatic drop in oil prices, the same cannot be said for states like North Dakota that have benefitted greatly by high oil prices. Thanks to high oil prices, North Dakota become the mecca for thousands of unemployed Americans who came for good jobs in the state’s oil patch.
But the unemployed and those seeking to better their lives weren’t the only ones who benefited as North Dakota’s economy boomed with the development of the Bakken and Three Forks formations. The state of North Dakota benefited greatly as hundreds of millions in new tax revenues flowed into the state’s coffers. Thanks to that newfound wealth, the state has been able to reduce property taxes, build roads, improve our education systems, and pour billions of dollars into other needed projects across North Dakota.
High oil prices and high gasoline prices brought a mixed bag of emotions. And now, those same mixed emotions are being played out as oil prices and gasoline prices plunge.
Yes, the sudden drop in oil prices has sent a shock wave through the American economy. The stock markets, both American and foreign, are struggling to find a balance as a result of the low oil prices worldwide, and because of the inability of the oil-producing countries to come to grips with their over-production. Some oil companies are seriously rethinking their drilling plans, while other companies see the low prices as an opportunity for growth.
Closer to home, one has to wonder how the drop in oil prices will play out in the North Dakota Legislature, which is just beginning its 80-day session. No doubt there will be some legislators who believe that the drop in prices warrants a dramatic cut in state spending. And there will be those legislators who recognize that even at $50 per barrel oil prices, North Dakota will still be on the receiving end of hundreds of millions of dollars in oil revenue.
The only thing that is certain is that oil prices go up and they go down. Some oil experts believe that there is still room for oil prices to go lower. Others believe that this drop in oil prices is short-lived, and that they will soon return to previous levels.
And that is something that members of the North Dakota Legislature need to keep in mind as they tackle the state’s budget for the next two years.