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We are not there yet. At least we weren’t in February. Of course in the depths of winter, one of the worst winters in a long time what do you expect, but boy is this country lucky. Just think of all the American men and women who are alive today because of The Bakken, oil and gas.

I just read recently that America will reach a point of being a net exporter of oil. Just think of those long lines at the gas pump. Think of all the articles, the dire articles that were written about our future. Yes, others will gain as well, and some of them are not too nice, but with the proper leadership, well things are looking good again for America.

That doesn’t mean we can not be concerned about global warming, or at least studying the science to see if it is true. That doesn’t mean we shouldn’t design safe pipelines, or tank cars. But just think of how much better the American economy is today because of fracking. All those railcars, all those pipes, all those people employed. All that money including in our taxes. Especially what we are setting aside for our children and grandchildren, even great grandchildren.

What will they write about us in the books a hundred and two hundred years from now.

So, here is the current data. Now it will get interesting as we go into the summer.

 

Should we call it “The Perfect Storm”? I, along with most economists who write about agriculture because it is so important to those areas we are writing about have been saying crop prices are going to go down and that means the incomes we look at are going to decline.

We apparently were right. If you read Moody’s Analytics chart of wheat and soybeans, two important ND crops, that is what has been happening. Their prices are declining. As always I am surprised about Moody’s analysis. Where is the corn. It isn’t on the chart and it certainly has become important to ND. So too have been dry beans and they are also not charted.

So, take the figures with a grain of salt, no, at least a half teaspoon of salt. With what they show though wheat and soybean prices are more than 20 percent about the 2010 base. Of course in 2011 and 2012 they both were as much as 60 percent higher than in 2010 and that is significant. If they were shown, so too would corn and dry beans. Moody’s show all food commodities at about 25 percent above the 2010 average, down from a peak in late 2012 of about 35 percent above the 2010 base of 100.

If you don’t believe that has made a difference just drive by the implement dealers lots and look at all the machinery in their lots. If that doesn’t convince you go inside and ask a salesman. Watch their eyes.

As for Moody’s projections, they are only short about a percent a one-half in sales taxes. That is certainly within the realm of acceptability. However, individual income tax collections are nearly 40 percent above their predictions and so too the corporate income taxes, collections more than 40 percent above their predictions. Auto sales excise taxes are 10 percent short of what they predicted.

They are so far off on so many accounts that when it comes to the bottom line the net figure collected is only a little more than 6 percent greater than their predictions.

This begins to get complicated, but please note: The general fund cap for oil and gas taxes contains two tiers. The first tier of $200.0 million was reached in October 2013. Additional oil taxes will flow to the property tax relief fund until that fund receives $341.8 million, after which time the general fund will receive an additional $100.0 million. Total production and extraction tax collections were $250.3 million in February 2014. Monthly allocations to the property tax relief fund were $73.4 million; allocations to the legacy fund were $69.6 million.

Standby. A significant negative in collections could lead to an interesting situation before the biennium is completed. I don’t know the people in OMB, and I have tried to keep my comments from being partisan in anyway, but I am glad that Jack Dalrymple is the Governor. They may have a tiger to ride before the biennium is over.

 

Well the first half is done and it appears I was right about that. There was not much movement from a month ago. Some up a little. Some down a little. Not enough of any magnitude to tell us what to expect. Now, hold onto your seats.

Of course like any good economist I have to give myself a little cover. It is certainly possible we won’t see much in another month, especially if this cold weather sticks around and no one wants to get excited about the coming year, especially if we are only going to not have any shocking news in the around the world.

Anyway, I have expanded the report some this month. Not only am I showing what has happened in the past month, but also the changes from a year ago. That is interesting, to put it kindly. What it shows is just how much crop prices have declined in the past year. Again, thank you Harold Hamm. If we don’t realize how much this means, the new oil extraction technology I mean, well we are really stupid. It will take some time to get all the reports, but by Christmas we should be able to come up with some pretty accurate data of just how deep a hole we would have in our state if it wasn’t for what this man and others have handed us.

I will do my best to keep working on this and show you just what this means compared to these changes in the past. Keep reading.

One final comment, note how on a couple of crop categories that in order to not show individual income we can not report the prices because of the crop concentration. I am a capitalist, but this concentration is not capitalism, and it is not good for society.

I have tried to keep politics out of these reports, but we need to examine this change and its effects on the culture we are part of.

More on that later.

 

Here are two new reports.First is the North Dakota General Fund Revenues and Transfers for the biennium through December.

Below that is the city sales tax reports. It is in detail for Grand Forks, and then compares several of the major cities in the state. The sales taxes are for the checks the cities received on February 15th.

So, to begin, the state report:

We are now one-fourth of the way through the biennium and the collections are nearly 20 per cent ahead of last biennium’s revenues. Also, revenue is about 9 percent ahead of the projections the state bought. That doesn’t sound too bad, but the devil is in the detail.

In this case, major special fund transfers are already at their limit and so do not add to the error. Actually the three major funds we really need to look at are sales tax, individual income tax and corporate income tax.

The sales tax collections are only a short four percent over projections. That is certainly within expectations. Where the projections are really off is in both the individual and corporate income taxes, about 50 percent for both, and that is too much. If this keeps up the Governor and legislature will need to come into the session with a plan of what to do with the extra money. Of course if the ag economy turns out much worse than most of us expect we may be happy to have this money.

If a special session occurs that too may change everything. Because of all the problems I don’t expect that. In the meantime, you and I can only see what the leaders decide.

 

Not much to write about concerning the jobs in the northern plains for December 2013 if you have been paying attention over the past three years. North Dakota leads the nation in the unemployment rate. That is, it has the lowest unemployment in the nation. As we enter the winter months there is a slight increase in the amount of unemployment. There are times it is nearly impossible to work under the situation that exists. We all know that and in fact it is expected.

Actually the surprising thing is that the amount of work that gets done gets done. We think the weather man overplays the wind chill, but we know how it is all but impossible to be out in those conditions up on one of those rigs.

So, we see a small increase in unemployment for two or so months and then as things moderate some through March we get moving again. Just watch.

So, we will have that seasonal slowdown and soon we will be back at it. So too will the ranchers with their early calves. Just watch. It is our history. They are a tough bunch whether it is calving, or fracking. Couldn’t be a better place for it to have happened.