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Donald Trump’s World Trade War threatens the US horn that voted largely for the Republican president last year, oil producer North Dakota.
It could also raise the president’s plan to boost fossil fuel production in the states that launched the American shale revolution.
Trump’s tariff rhetoric has led to the sale of crude oil prices, with US prices falling below $60 per barrel (West Texas Crude settled on Monday at $63.08 a barrel). The escalation has sparked concerns about the imminent slowdown across the US shale patch, part of America’s redest part.
“It’s just scary,” said Tracey Dolezal, a commissioner for Dunn County, one of the top oil-producing regions in North Dakota’s Bucken Basin. “It’s just scary,” The Tracey Dolezal told the Financial Times. The county received about $40 million last year in oil and gas taxes, more than half its total revenue.
“There are some unemployment. Some companies really feel it’s working when prices continue to fall,” Dorezal said, adding that counties that have overwhelmingly voted for Trump in the last three presidential elections may need to reduce infrastructure upgrades if prices go down even further.
North Dakota Commission Chairman Tracey De Lezal said “There will be some unemployment” © Colby Lysne/ft
The recession exacerbates the already crude, already bearish view. The industry is also competing with new taxes from the Trump administration in February, regarding the imports of steel and aluminum used in drilling and pipelines.
Matthew Bernstein, manager of upstream shale solutions at Rystad Energy, said Trump’s tariff policy was “one of the biggest headwinds we’ve faced for a long time.”
“It’s persisting and if it’s a recession, you’re seeing potential growth from US oil this year,” he added.
North Dakota is the third largest oil producer and is particularly vulnerable to crude price drops and slowing production. An increasingly integrated and financially restrained industry with reduced well inventory has slowed the drilling of Bakken.
“It’s certainly not that the price of a falling and unstable commodity price does not encourage businesses to get involved and want to act,” said Ron Ness, president of the North Dakota Petroleum Council.
“When production drops and prices drop, things become more difficult” © Colby Lysne/ft. “It becomes more difficult,” says Daniel Stenberg, director of economic development for Mackenzie County, North Dakota.
The White House has been hoping to see prices fall further last month with trade adviser Peter Navarro, suggesting that $50 in oil will help tame inflation.
“When production drops and prices drop, things become even more difficult,” said Daniel Stenberg, Bucken’s other top-produced county and Mackenzie County’s economic development director, whose 85% of the population last year voted for Trump.
“$50 oil isn’t good for the local economy,” said Reed Olmstead, executive director of Upstreem Research at S&P Global Commodities Insights. The price decline “will certainly have a ripple effect across the region,” he added.
North Dakota enjoyed the benefits of a technological breakthrough in the 2010s, when advances in horizontal drilling and hydraulic fracturing triggered the US shale revolution and changed the property of the agricultural state.
Bucken production peaked at 1.4 million barrels per day under the first Trump administration in 2019, and is projected to decline sharply in the 2030s, according to Wood Mackenzie. State officials have warned that without technical breakthroughs, production is on the path of “terminal decline.”
The state hopes that a controversial technique known as carbon-intensive oil recovery will inject gas into wells to extract hard-to-reach oil reserves, extending the lifespan of Bakken. A state commission report released in January estimates that carbon dioxide injections can unlock 500 million to 8 billion barrels of oil over the next 30-50 years, adding up to $9 billion in tax revenue within the next 10 years.
“We’re a huge bucken operator, Jacob Odelman, spokesman for Code Energy,” said:
