Harsh Weather Slowed Growth in North Dakota Economy in 2013

By James MacPherson | May 7, 2014

Severe winter weather during the last three months of the year affected key industries tied to oil extraction, slowing North Dakota’s taxable sales and purchases in 2013, the state tax commissioner said.

North Dakota’s taxable sales and purchases – a key indicator of economic activity in the state – increased less than 1 percent in 2013 following a year of record double-digit growth. Tax Department records show taxable sales and purchases totaled a record $25.4 billion last year, up from $25.2 billion in 2012.

Tax Commissioner Ryan Rauschenberger said that he was pleased with the record-setting year though a “slower and more sustainable growth” was expected in 2013, after taxable sales and purchases in oil-rich North Dakota soared 29 percent in 2012.

“I think we will maintain that growth and hold strong at more sustainable single-digit numbers,” Rauschenberger said.

Rauschenberger said 11 of North Dakota’s 15 economic sectors grew in 2013. But harsher-than-normal weather during the last quarter of the 2013 affected mining and oil extraction, construction, and transportation and warehousing.

“All of those sectors are tied to oil,” Rauschenberger said. “And weather had an impact on those. A big impact.”

The state currently trails only Texas in oil output. North Dakota has risen from the ninth biggest oil state just seven years ago with improved horizontal drilling techniques in the rich Bakken shale and Three Forks formations in the western part of the state.

Rauschenberger warned that a decrease in oil-related sectors doesn’t mean the industries are ailing.

“They show that these industries are moving beyond a period of intensive Bakken-related buildup and rapid expansion and are leveling off to a more sustainable trajectory,” he said.

Taxable sales and purchases have risen nearly 250 percent in the past decade with North Dakota’s newfound oil wealth. The state recorded $7.3 billion in taxable sales in 2003.

Mike Rud, president of the North Dakota Retail Association, said he expects continued economic growth in the state but not at the levels seen in recent years.

“Realistically, you can’t expect that explosive growth year after year after year,” he said. “No way is that sustainable.”

Williston, in the heart of North Dakota’s oil patch, has led North Dakota in taxable sales and purchases since 2011, when it surpassed the state’s biggest city of Fargo.

Last year, the oil boomtown recorded $3.3 billion in taxable sales and purchases. Fargo had $2.6 billion.

Tax Department data show economic prosperity statewide and in communities far from the state’s oil patch. Thirty-four of North Dakota’s 53 counties had growth in taxable sales and purchases during 2013, Tax Department records show. The agency said 120 of the state’s 200 largest cities also showed increases in taxable sales and purchases last year.

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