A new analysis by The Associated Press finds that North Dakota will gain over $110 million annually in tax revenue after oil begins flowing through the Dakota Access Pipeline. The $3.8 billion pipeline, which is set to come online later this month, will provide a safer, cost efficient avenue for Bakken drillers to ship product to key refining markets in Illinois and the Gulf Coast.
North Dakota in the past decade has become the second-biggest oil producer in the United States, behind Texas. But its location in the northern Plains, far from major oil markets, means less profit on each barrel of oil. North Dakota lowers its tax on each barrel to keep its crude competitive with other states.
Much of North Dakota’s oil is shipped by truck or train. The 1,200 Dakota Access pipeline would carry the oil through South Dakota and Iowa to a shipping point in Illinois. It could shave shipping costs by more than $3 a barrel, according to Ron Ness, president of the North Dakota Petroleum Council. State tax officials estimate every dollar saved means about $33.6 million in added tax revenue each year.
In addition to oil tax revenue, the Dakota Access Pipeline also stands to generate upwards of $55 million annually in property taxes, including $10 million in North Dakota. “It’s going to benefit schools and counties and more valuation means lower property tax bills for everybody,” said North Dakota tax commissioner Ryan Rauschenberger.