We Just Witnessed History
We just witnessed history, but what does it mean for North Dakota? In case you missed it, oil prices crashed on Monday. As I was watching the price spiral lower and lower, I was in shock as the negative numbers kept scrolling across the screen. The lowest I saw was minus $40.08 as I caught a picture of the price. The price rebounded slightly to minus $37 on the day, but what does it mean?
In North Dakota, the price of Bakken Crude is tied to the WTI price, West Texas Intermediate, plus discounts because we have to ship our oil such a great distance. Much of our economy is tied to oil and the tax collections by the state which help fund everything from schools to roads and municipalities to social programs. Negative oil prices has a negative effect on every citizen of North Dakota.
There were several mitigating circumstances as to why prices crashed, but basically, there was too much supply for the demand as the May contracts were expiring. What becomes important now are the June contracts, which are trading around $20 per barrel. For North Dakota, that means that the sky isn't falling.
Remember the good old days when everyone would go for a Sunday drive? With everyone going stir crazy, the quarantine and cheap gas, we should all start enjoying the Spring beauty of North Dakota by loading up the family and going for a drive.