Putting a monetary figure on the impact of a potential shutdown of the Dakota Action Pipeline isn’t easy, apparently.
Operators of the line say it will inflict “$7.5 billion in losses on North Dakota companies, employees and the state budget alone through 2021.” Proponents of closing the line say the tepid atmosphere of North Dakota’s oil industry means economic losses won’t be that bad.
And some believe the line shouldn’t operate no matter how it impacts the state. Its potential detriment to the environment is too great, they say.
The issue came to a head earlier this summer, when a federal judge ruled the DAPL must shut down, pending a lengthy environmental review. The review ordered by the courts likely will take a year or more, but an appeal by the U.S. Corps of Engineers and by the pipeline company means DAPL can continue to pump Bakken crude while the issue is sorted out. Already, more than a dozen legal briefs have been filed through the U.S. Court of Appeals.
And that projected $7.5 billion in economic loss in North Dakota?
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"The devastation arguments are wildly overblown and I think neutral observers would agree," Jan Hasselman, a lawyer for EarthJustice who represents the Standing Rock Tribe against Dakota Access, said in a statement to our sister paper, The Forum of Fargo-Moorhead.
But impact, like beauty, is in the eye of the beholder.
When DAPL was granted the ability to remain open as legal issues are debated, Gov. Doug Burgum said that "shutting down this state-of-the-art pipeline would have had a devastating effect on North Dakota’s economy. ..."
We agree with Burgum and those who have concerns about what a DAPL shutdown will mean to North Dakota’s economy.
It’s possible the $7.5 billion impact may be overstated. But there can be no doubt that DAPL’s potential closure will be harmful to the state.
This week, Bakken oil is selling around $32 per barrel. It means the state’s cut of oil extraction taxes is considerably lower than it was during the peak of the oil boom. Or even last year, for that matter.
Add to that the immediate and certain impact that will come when oil companies are forced to find other means to ship their oil. If DAPL does indeed close, it will mean companies will be forced to pay about $5 per barrel more in shipping costs. So, for instance, $32 per barrel automatically adjusts downward to $27 per barrel.
Will companies invest here for $27 per barrel? Or will they move on to regions where transporting the product is cheaper?
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Cutting the already slim margin certainly means oil production in the state will decrease further, which means fewer dollars coming to North Dakota’s piggy banks.
And it all comes during the economic downturn brought on by the coronavirus pandemic.
Bakken oil should flow through the DAPL pipeline. We concede the debate about its true economic impact for the state, but it’s hard to deny that now isn’t the time to shut it down.
