Drop in demand for oil forces North Dakota leaders to cut agency budgets



North Dakota is facing significant belt-tightening as a result of low commodity prices and the COVID-19 impact on the oil and gas industry.

It means the state which had the nation’s second highest oil production, some largely due to the exploratory efforts of Oklahoma-based Continental Resources is forced to cut state agency budgets.

The state’s economy is dependent on oil and agriculture, but farmers are receiving less money for what they grow and the drop in demand for oil has led to reduced oil production and idled wells reported Prairie Public Broadcasting.

Additionally, because of a judge’s order to shut down the Dakota Access Pipeline while an environmental impact statement is being completed, more oil will move by rail, making North Dakota oil less attractive to buyers.

When Republican Gov. Doug Burgum issued his guidelines for state agencies to prepare their budget proposals for the 2021-2023 budget, he asked agencies to find between 5% and 15% reductions in spending.

“We as legislators and politicians understand the bottom has dropped out,” said Sen. Ray Holmberg, a Republican and chairman of the state’s Senate Appropriations Committee. “We have less revenue, no state interest in raising taxes — and that means as legislators we have the luxury of no choice.”

Lawmakers will tap into a number of rainy day funds set aside for times like this.

Source: Prairie Public Broadcasting in North Dakota.