Taxes could flow with Dakota Access pipeline
BISMARCK: North Dakota stands to gain more than $110 million annually in tax revenue after oil begins coursing through the Dakota Access pipeline, an analysis by The Associated Press shows.
The calculation shows the potential payoff for a state whose officials have supported the pipeline despite concerns from Native American tribes and other opponents who fear it could harm drinking water and sacred sites. The money the state stands to make in just one year far outstrips the $33 million in costs to police a section of the pipeline that has been the subject of intense and sometimes violent protests over the last year.
“The amount of the windfall to the state doesn’t surprise me at all,” said Payu Harris, an American Indian activist and pipeline opponent. “That’s why the state of North Dakota expended the resources they did.”
Dallas-based Energy Transfer Partners’ $3.8 billion pipeline will carry oil more than 1,000 miles to a shipping point in Illinois and may be moving oil as early as next week. Its completion would be welcome both for drillers seeking a cheaper path to market and for the state government in North Dakota, where declining tax revenue has clouded its budget.
“Every dollar they get extra is good for the state as well,” state tax commissioner Ryan Rauschenberger said.
State budget analysts and an economic consulting firm working on the revenue forecast that lawmakers will use to create a spending plan for the next two years may take the potential tax benefits into account, State Budget Director Pam Sharp said. The new forecast will be released next week.
North Dakota in the past decade has become the second-biggest oil producer in the US, behind Texas. But its location in the northern Plains, far from major oil markets, means less profit on each barrel of oil. North Dakota lowers its tax on each barrel to keep its crude competitive with other states.
Much of North Dakota’s oil is shipped by truck or train. The Dakota Access pipeline would carry the oil through South Dakota and Iowa to a shipping point in Illinois. It could shave shipping costs by more than $3 a barrel, according to Ron Ness, president of the North Dakota Petroleum Council. State tax officials estimate every dollar saved means about $33.6 million in added tax revenue each year.
“Every dollar back is a win for producers, the state and mineral owners,” said Ness, who called the Dakota Access pipeline the most important infrastructure project in North Dakota since the interstate highway system.