The US boom in domestic oil & natural gas production is still a fledgling market. As such, it has a high cost of doing business with the majority of shale oil drilling companies requiring a minimum price per barrel of crude at $70 in order to break even. When prices were in the range of $90 to $100 per barrel, the US oil shale sector was thriving with North Dakota leading the way. Now, crude prices are hovering in the range of $44 to $49, and many shale oil companies cannot operate. American consumers are thrilled to enjoy cheap oil, but it is a result of overproduction of oil by Saudi Arabia in a bid to run US shale oil companies out of business.
The low gasoline price woes will also impact the state of North Dakota. Over the next 2.5 years, they are expected to lose $5.5 billion in revenue. A loss of $680 million will occur as a result of extending tax breaks to oil company providers. The legislature had attempted to convert those tax credits into lower marginal tax rates, but failed to pass the legislation. Sergio Anddrade Gutierrez has read that, had they succeeded, the state would be able to fare better. Still, the drop in gasoline prices will result in lower oil sales and lower tax collections which will cost the state another $4.8 billion in lost revenue. The state had been collecting nearly $6 billion a year in tax revenue and now faces a $2.2 billion annual loss of income.