Sittin' pretty in energy country


There's a whole lot of oil coming out of North Dakota these days -- so much that pipelines can't handle it all. This August, production in the Bakken Shale was 83 percent above 2008 levels, and the boom times aren't expected to ebb anytime soon. One oil executive recently crowed that the Bakken's recoverable reserves are five times what the federal government has estimated. The oil and gas company Hess Corp., meanwhile, is trumpeting that it will more than triple its production in the Bakken over the next five years, according to the Tulsa World.

Thanks to this heady boom, North Dakota's unemployment rate is the lowest in the country, at just 3.8 percent. And it's bucking another national trend: It's one of only four states in the nation running budget surpluses.

Wyoming is another of those lucky few, and like North Dakota, it has rampant energy development to thank for its cushy position. Wyoming is an energy mecca. Coal, gas, oil, wind -- the place has got it all. It's the number one coal producer in the country, and number three for natural gas. And state officials aren't shy about taxing the hell out of the companies that exploit the state's resources. As former HCN editor Jonathan Thompson wrote last year, "the state's coffers are as dependent on fossil fuel tax revenues as a baby is on its mother's breast."

But Wyoming milks its cash cows wisely. Since 1975, Wyoming has directed revenue from severance taxes on the gross value of oil, gas, coal and other minerals produced in the state to its Permanent Mineral Trust Fund. Currently, the value of the account is nearly $5 billion, and it earned the state $2.7 billion in investment income between 1975 and 2009, according to the Wyoming Taxpayers Association. Those earnings, some of which feed the state's general fund, are partly to thank for the state's budget surplus, which could reach $1 billion this year. There's some dispute over whether Wyoming should squirrel away as much money as it does -- Gov. Matt Mead, R, wants to divert some of the trust fund money to local governments and highway improvements, for instance -- but the fund will undoubtedly soften the blow of any future busts. (North Dakota appears to have followed Wyoming's lead; in 1997, they established their own oil tax trust fund, though lawmakers recently discussed dispensing with it.)

Meanwhile, the West's less energy-rich states are still facing tough times. Arizona's budget gap could top $1 billion in the next fiscal year. Gov. Jan Brewer has proposed deep cuts to heath care spending, state universities and community colleges. Education is on the chopping block in Nevada, too, and Gov. Brian Sandoval is considering consolidating a number of state agencies to help close a budget gap between $1 and $3 billion. But if those figures sound large, consider the stitch California is in: their budget shortfall is hovering around $25 billion. Gov. Jerry Brown has proposed tax increases, and deep cuts to the court system, health care and universities.

For more information on the budget woes of your state, visit the Center for Budget and Policy Priorities.

Cally Carswell is HCN's assistant editor.


energy country
larry kurtz
larry kurtz
Feb 02, 2011 09:03 AM
Thank you for shining light on these very dark and dirty trends.

It's important to remember that the oil and coal in the areas you describe are laden with heavy metals that act as lethal neuro-toxins released during extraction, refinery, and oxidation. Downwind states become collateral damage where cancers are spiking in younger and younger people.

Koch Industries and Canadian conglomerates are spending millions on politicians and candidates bent on gutting the power of the EPA to police serial offenders.
More carbon=increased budgets
Kale Casey
Kale Casey
Feb 03, 2011 10:01 AM
Cally -
Economic times are tough, and increased budget revenues are the envy of every state in the nation. You educated me to the alarming fact that the pipelines in North Dakota can not handle the increase in oil shale production. Shale oil is among the dirtiest and most difficult to produce fuel sources on earth. The budget windfalls of today have a cost that many scientists believe we cannot afford. It is clear that there is no path for reducing carbon emissions - or even a real conversation about one - when state budgets are dependent on fossil fuel tax revenues. Where does that leave us? Living for today and praying for the future?