In North Dakota, Countdown Looms For $5.3 Billion Oil Tax Break
BISMARCK, N.D., Dec 19 (Reuters) - Tumbling U.S. oil markets hit an important if obscure milestone on Thursday, closing for the first time at a price that could trigger a $5.3 billion, two-year tax break for North Dakota oil drillers as soon as next summer.
Under a decades-old law, the state at the heart of the U.S. shale oil boom would waive its 6.5 percent oil extraction tax once the average monthly price of benchmark West Texas Intermediate (WTI) crude at Cushing, Oklahoma, falls below a certain threshold for five consecutive months.
For next year, that price is $55.08 per barrel. On Thursday, U.S. crude oil futures settled at $54.11 per barrel, the lowest close since May 2009 and the latest leg of a rout that has halved the price of crude since June.
It is unlikely that the clock would start ticking in December, since the average price is still above $61 a barrel. But if prices remain this low into next year, it could be a reality as soon as next June.
"We're really at the point where we could start calculating this," Ryan Rauschenberger, North Dakota's tax commissioner, said in an interview.
The hope of a future tax break will be cold comfort for North Dakota's beleaguered oil producers, including Continental Resources Inc and Oasis Petroleum Inc, which plan to spend less money in 2015.
The tax break "would be an important incentive for the industry to continue investing," said Ron Ness, president of the North Dakota Petroleum Council, an industry trade group.
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