Posted 7/07/15 (Tue)
By Neal A. Shipman
While the level of drilling activity in North Dakota’s oil patch has fallen nearly 40 percent in the past year, that slowdown hasn’t appeared to have had as much of an economic impact in Watford City and McKenzie County as has been felt elsewhere in the region.
During the first quarter of 2015, taxable sales and purchases in Watford City and McKenzie County increased by nearly 11 percent, while the majority of cities and counties in the state’s oil patch saw their sales drop. Williston and Dickinson saw their sales drop by 10 percent during the first three months of 2015 when compared to last year’s numbers, while the cities of Stanley and Tioga saw sales declines of 13 and 25 percent, respectively.
The decline in sales and purchases in the majority of the state’s oil-producing region is directly related to the drop in oil prices, and the subsequent scaling back of drilling activity.
McKenzie County, which leads the state in the production of oil and natura gas remains the epicenter of the state’s drilling activity.
During the first quarter of 2015, according to the North Dakota Tax Department, Watford City’s taxable sales and purchases grew 10.75 percent from $51,810,270 in 2014 to $57,381,058 in 2015, while McKenzie County’s sales increased from $63,693,900 in 2014 to $70,681,240 in 2015, a 10.97 percent increase.
During the first quarter of 2015, Watford City became the state’s ninth largest city in terms of taxable sales and purchases as it moved ahead of Mandan, while McKenzie County became the state’s seventh largest county in terms of sales.
North Dakota’s taxable sales and purchases for the first quarter of 2015, according to Tax Commissioner Ryan Rauschenberger, saw a slight increase over the first quarter in 2014. Taxable sales and purchases for January, February and March of 2015 were $5.826 billion, a 2.26 percent increase over those months in 2014.
“With declining oil prices in the first quarter of this year, we expected to see a negative economic impact including a decrease in North Dakota’s taxable sales and purchases,” stated Rauschenberger. “An increase of 2.26 percent is a good sign.”
Nine of the 15 major sectors reported taxable sales and purchases gains when compared to the first quarter a year ago. The most noticeable increases were to the retail trade industry with a $43.5 million increase, the manufacturing industry with a $41 million increase, the utilities industry with a $26.1 million increase, and the accommodation and food services industry with a $25.6 million increase.
“The retail trade industry continued to stand out in the first quarter,” noted Rauschenberger. “The 3.12 percent increase is still well above the rate of inflation.”