North Dakota Depends on Its Oil and Gas Industry

September 11, 2020

North Dakota is becoming a hotspot for the coronavirus pandemic and that means even more trouble for the oil and gas industry that the state so heavily relies on.

The Washington Post reports:

Six months after it registered its first confirmed infection, roughly 80 percent of North Dakota’s drilling rigs remain offline and thousands of local workers are still out of a job, cutting deeply into the state’s ability to refine oil and mine hundreds of millions of dollars from the natural resources that flow deep within its borders.

With the prices and need for oil still low, North Dakota workers have never seen anything like this. Ron Ness the president of the North Dakota Petroleum Council said, “The onset of [coronavirus] and the complete crushing of the world demand for oil had a very dramatic effect, one frankly we’ve never seen before.”

This is taking a major toll on workers in North Dakota, The Washington Post reports businesses in the state have let go of 35% of workers in July. The majority of whom are in the oil and gas sector or businesses that support refiners and as prices stay low it is unlikely many will return.

The outbreak arrives as one of North Dakota’s most lucrative industries, oil and gas production, has experienced a massive disruption of its own. With global travel in free fall — and even domestic trips this past Labor Day weekend significantly scaled back — there’s been declining demand for a natural resource that previously generated jobs, tax revenue and an estimated $2.4 billion in gross domestic product for the state, according to federal data.

And it is not just industry workers who will feel the pain with the decrease of oil usage. The North Dakota State budget heavily depends on the taxes generated from oil revenues.

Lynn Helms, the director of the state’s Department of Mineral Resources said, “The decline in production, meanwhile, also threatens to cleave deeply into the state’s budget. Taxes generated from oil revenues are expected to come in $145 million short of what North Dakota leaders had anticipated, said Lynn Helms, the director of the state’s Department of Mineral Resources.”

This is a great example of how heavily the oil and gas industry is relied on in the U.S., especially in middle-American energy-dependent communities. Getting rid of the energy sector is a mistake that could cost not only millions of jobs but disrupt state budgets across the country.