Montana oil producers face significant challenges posed by new federal regulations

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Montana’s oil industry perked up in the last few months, but it still must deal with challenges created by federal regulations, an industry expert said.

The decline caused by the pandemic shutdowns had a substantial negative impact on many oil producers in Montana, Shelby DeMars, executive director of the Montana Association of Oil, Gas, and Coal Counties, told The Center Square.

“It's definitely perked up in the last few months, but they are still facing substantial challenges posed by anti-development regulations from Washington,” she said.

Some of the recovery can be attributed to cyclical economic trends, DeMars said. A more scarce supply comes with higher prices, which eventually incentivizes additional production. Recovery from the abrupt decline caused by the pandemic also is part of its cause.

“That said, oil producers in Montana and across the U.S. are still facing significant challenges posed by new regulations brought forth by the Biden administration. I think we would be seeing an even greater increase in production if it weren't for some of the federal regulations that are looming over producers,” she said.

An increase in oil and natural resource development would help the local communities, she said. Additional tax revenue would help fund schools, fix roads, support local law enforcement and other critical services provided by local government.

“I think people often forget that it is tax revenue from our natural resources like oil, gas, and coal that enable local governments to address the needs of their communities without having to increase property taxes or pass additional local levies,” DeMars said.

For the sake of taxpayers and state and local economies, government should be doing everything it can to help build on the increases in oil production seen in the state, she said.

In the fourth quarter of 2020, $17.2 million in tax revenue from county oil and gas production was collected, with $8 million of those collections distributed to the counties, the Montana Department of Revenue said.

In 2020, Montana crude oil production fell as low as 39,000 barrels per day in May, not rising much above 50,000 barrels daily through the rest of the year. The first five months of 2021 showed a slight increase to 52,000 or 53,000 barrels per day, slumping to 47,000 in June, the U.S. Energy Information Administration said.





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