Former Governor Ed Schafer Calls On North Dakota’s Legislators To Lower Oil Extraction Tax

It didn’t make news, but at the recent Williston Basin Petroleum Conference held in Bismarck former North Dakota governor Ed Schafer called for a reduction in the state’s oil tax. I don’t have any audio of Schafer’s comments, but my good friend Scott Hennen was on hand and took down a key quote:

I often wonder why we don’t support [the oil industry] better in our state. When I was governor we drove legislation that created incentives for horizontal drilling, work over projects and changed the framework of stripper wells to encourage continued production. We also put in a 6.5% extraction tax for 60 months of development on Indian reservations. And we generated the Permanent Oil Tax Trust Fund paid for by an 11.5% gross receipts tax. That didn’t seem so bad when I was in the Governor’s office but today that tax is the third highest in the nation and we have the booming economy that should allow us to reduce that cost to your operations. …

…we are seeing some traction to lower the extraction tax to a 9 and ¼ % rate for new wells at least. I call on our legislators and likely new governor in the next session to lower the taxes for the oil industry to spur investment that will continue to grow our economy.

Sounds like a good idea to me, especially given the national political environment. Remember that while North Dakota may be, despite the third-highest extraction tax in the nation referenced by Governor Schafer, relatively oil-friendly the oil industry is a national, indeed a global, market. And nationally, globally, the mood is very anti-oil.

If we want to ensure that oil development and production – along with all the jobs and prosperity it brings the state – continue in North Dakota we need to do exactly what Governor Schafer is proposing. The state is running massive budget surpluses.

Let’s allow the oil developers to keep some of their money and invest it in more activity in North Dakota that will put more North Dakotans to work and keep our state economy thriving.

Rob Port

Rob Port is the editor of In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters.

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