The clock kept ticking in April on a suspension of North Dakota’s oil extraction tax after a state-calculated average of the month’s crude price fell below $52.59 per barrel for a fourth straight month. The tax break, enacted in the 1980s, had the potential to be worth more than $5 billion to oil producers over a two-year period. However, sweeping tax changes signed into law late Wednesday by Governor Jack Dalrymple effectively ended that boon for the oil industry, though the new law also lowered the overall permanent tax rate.
The tax break would be triggered if crude fell below $52.29 for fifth straight month, but it would only continue through November because of new legislation. The state waives its 6.5 percent oil extraction tax if the monthly price of benchmark West Texas Intermediate (WTI) crude at the Cushing, Oklahoma, transport hub falls below an inflation-adjusted limit, set at $52.59 per barrel for 2015, for five consecutive months.
For April, the average calculated price was $51.62 per barrel, according to data from the North Dakota tax commissioner’s office. The April average was an increase from the March average of $47.76 per barrel, and it was unclear as oil prices rose throughout April if the countdown would continue.
Because oil prices have been below the threshold since January, the tax break kicks in if the average price during May is below that $52.59 level.