Oil Triggers

North Dakota Tax Commissioner Ryan Rauschenberger provided a detailed summary of the current status of the North Dakota oil tax and oil tax incentives, better known as triggers, at a news conference this morning. 

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“Our office has been watching the price of oil very closely,” Rauschenberger said. “It needed to be under $55.09 for the month of May in order for the large trigger to activate on June 1.”

The average price per barrel of oil (as reported for West Texas Intermediate crude) for the past five months is as follows:

January $47.98

February $50.86

March $47.76

April $54.12

May $59.47

“Since the average price per barrel of oil in May was higher than the $55.09 trigger price, the large trigger will not take effect,” Rauschenberger added. “However, the small trigger is still in place through the month of June.”

The small trigger took effect on Feb. 1, 2015. It lowered the oil extraction tax rate from 6.5 percent to 2 percent on the first 75,000 barrels produced or the first $4.5 million of gross value during the first 18 months after completion of a well.

New law via N.D. House Bill 1476 will impose a 5 percent oil extraction tax beginning on Jan. 1, 2016. A new high price trigger will increase the oil extraction tax rate to 6 percent if the price per barrel of oil is greater than $90 for three months. House Bill 1476 also repeals the current small and large triggers.


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