High oil prices are good for the ND treasury, not the roads

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BISMARCK, ND (AP) – The same higher than expected oil prices that are inflating the North Dakota treasury could also reduce dollars for road construction next year, officials said Thursday.

The petroleum is used for road construction and the manufacture of asphalt. The state Department of Transportation has already approved 174 contracts for roads, bridges and other projects this year, totaling $ 350 million, agency spokesman David Finley said. Bids on these projects arrived earlier this year before oil prices started to soar, he said.

Bids for next year’s construction projects will begin in November, but most will arrive in the spring of 2022, Finley said.


Steve Salwei, director of transportation programs at DOT, said none of the state-funded projects underway this year were affected by the rise in crude prices. Next year, however, things could be different.


“We can only build with the money we have to pay for it,” he said.

There seem to be plenty of contractors right now and competition could lower project costs, Salwei said.

The state is typically required to contribute 20% of federal funding used for road construction, Salwei said. North Dakota’s share of the funding won’t be known until a new federal freeway bill is passed, he said.

Oil prices are a key factor in the wealth of North Dakota, which is neck and neck with New Mexico as the second largest oil producer behind Texas. North Dakota budget officials estimate that every dollar a barrel of oil rises or falls has an annual impact of more than $ 40 million on the state treasury.

Lawmakers this spring assumed oil prices were $ 50 a barrel when they drafted their current two-year budget. Including federal funds, the spending plan is $ 17 billion, about $ 2.1 billion more than the budget cycle that ended on June 30.

North Dakota oil has cost around $ 65 a barrel in recent weeks.

In 2015, the drop in oil prices that forced the North Dakota Legislature to cut some state spending also stretched road construction dollars further due to the cheaper petroleum-based asphalt. , allowing the realization of more projects.

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