BISMARCK, N.D. (AP) — North Dakota’s taxable sales and purchases dropped more than 16% during April, May and June compared to the same quarter a year ago because of a decline in activity in the western oil patch.
It is only the second such quarterly decline since 2009, but officials say they’re not surprised nor too concerned given the tremendous growth in taxable sales and purchases the state has experienced in recent years.
“Hopefully this is just a short-term situation,” said Mike Rud, president of the North Dakota Retail Association. “We weren’t going to keep running at levels we were running at anyway.”
The state recorded $5.9 billion in taxable sales and purchases during the second quarter, compared to about $7 billion in the second quarter of 2014, state Tax Commissioner Ryan Rauschenberger said Tuesday. Six of the 15 major industry sectors had gains, but the mining and oil extraction sector was down more than 31.4%.
Oil production in North Dakota — the nation’s second-leading producer behind Texas — remains at near-record levels, but drillers are concentrating rigs in high-producing areas and the overall number of rigs has plummeted.
“When you take that amount of people out of the oil patch, think of the clothes they’re wearing, the food they’re eating, the gas they’re buying,” Rud said. “It’s always scary (to see a drop), though it’s part of the process and we knew it wasn’t going to be able to keep going the way it was.”
The oil patch hubs of Dickinson and Williston saw decreases in taxable sales and purchases of 20% and 36% respectively, as did the counties those cities are located in, Stark and Williams.
However, the drops need to be viewed in context of the growth in taxable sales in recent years when oil was booming, Rauschenberger said, growth that led to a record $28.2 billion in taxable sales and purchases in 2014. For example, he said, this year’s second-quarter figures are more than 70 percent higher than the second quarter of 2010.
The downturn in oil activity even has a bright side — more people are looking for work, according to Rud.
“We want to maintain customer service but that’s been a real struggle,” he said. “We’re 14,000, 15,000 bodies short in the retail sector. And if you look around in the bigger cities, companies are continuing to build.”
Three of the state’s four most populated cities — Fargo, Grand Forks and Minot — had small increases in taxable sales and purchases in the second quarter, of less than 3 percent. The fourth, Bismarck, had a decline of about 2%.