(John Kemp is a Reuters market analyst. The views expressed are
By John Kemp
LONDON May 10 North Dakota's oil boom is
creating fabulous wealth for a small number of families lucky
enough to own mineral rights in the four counties sitting above
the most productive part of the Bakken shale.
The extent of the cash gusher is revealed in statistics on
adjusted gross income and tax returns published by the U.S.
Internal Revenue Service (IRS).
For the 16,500 federal income tax returns filed by
individuals from the four counties at the epicentre of the
Bakken (Dunn, McKenzie, Mountrail and Williams), average
adjusted gross income increased by more than 60 percent between
2004 and 2009, according to IRS.
In 2004, the average adjusted income in these sparsely
populated rural communities was just under $41,000 - putting
them behind the rest of the state ($45,000) and well behind
Texas ($48,000) and California ($57,000).
By 2009, however, averaged adjusted income in the
four-county area had leapt to $66,000, far ahead of the rest of
North Dakota ($54,000), Texas ($52,000) and California
($58,000). Adjusted income was almost 20 percent above the
In 2009, McKenzie ranked 103rd, Williams 113th and Mountrail
170th out of 3,143 counties in the United States by average
adjusted income, according to the IRS.
Only the states of Connecticut, Maryland, Massachusetts and
New Jersey, as well as the District of Columbia, had higher
average adjusted incomes than the four Bakken counties.
Wages and salaries have grown rapidly in all four
jurisdictions, reflecting the booming local job market. But
income from the other components of adjusted gross income, which
the IRS does not report separately but which includes payments
for oil leases, has grown almost twice as fast.
Owners of mineral rights typically receive a cash bonus upon
signing an oil lease, delay rental payments while waiting for
the first well to be drilled, and then a share in the oil and
gas revenues from each producing well in the form of royalties.
The IRS has not yet released detailed data on county-level
tax returns for the 2010, 2011 and 2012 tax years. But when it
does, it will reveal an even more dramatic impact on local
Four-county oil production quadrupled from 54 million
barrels in 2009 to 203 million in 2012, and the price per barrel
rose 50 percent, so royalty payments could be up to six times
Never one to forget the adage about "rendering unto Caesar",
the tax collectors from the IRS cannot be far behind.
(editing by Jane Baird)