Low Oil Prices Could Stall Explosive Growth In Montana Boom Town | KERA News

Low Oil Prices Could Stall Explosive Growth In Montana Boom Town

Mar 10, 2015
Originally published on March 10, 2015 3:52 pm

What happens when the price of oil tanks and suddenly you're faced with a whole lot less money to deal with your town's explosive growth?

If you're 52-year-old Rick Norby, you lose a lot of sleep.

"I haven't slept since I became mayor," he says. "I really ain't kidding you."

When Norby became mayor of Sidney, Mont., oil prices were about $100 a barrel. A year later, they've fallen to roughly half that. Yet oil production has continued to churn right along.

"All the action is still happening," says Norby, who has lived here all his life. "We haven't seen a slowdown one bit in anything."

The problem is Norby figures he'll get about $600,000 less in tax revenue from oil production — and an untold drop is predicted for hotel and gambling taxes — to deal with all this. That's a big deal when your whole budget is $11 million and your town now has a major highway running right through it.

Infrastructure, Services Strained

Sidney lies at the western edge of the Bakken oil patch, one of the country's top drilling regions. In the past few years, this once-sleepy farming town on the state line with North Dakota has been transformed into an oil boom city.

On Central Avenue, despite the low oil prices, a parade of oil tanker trucks still rumbles through downtown carrying Bakken crude to the refineries 270 miles away in Billings.

Norby's wearing a gray ball cap and the trace of his chew can is worn into the seat pocket of his jeans. He likes to take visitors out for a look at the divots from the wheel tracks.

"It's taking its toll," the mayor says. "This was probably [only] built three years ago."

Norby's lived here all his life and he loves Sidney. After he graduated from high school he farmed sugar beets and corn. Before the oil boom, he sold the farm and moved back into town. He says he's grateful for that because he couldn't afford a house here now.

After work, the Loaf and Jug gas station is still packed with young men in muddy Carhartts filling up their pickups. Up the road, dozens of new condos with pre-fab siding are still being built.

The money coming from the oil boom pays for fundamental services that are stretched thin. Sidney is looking for $30 million to build a new truck bypass. A new $70 million water treatment plant is also needed.

Around town, there are little one-bedroom houses with a half dozen oil workers living in them. The population has nearly doubled since 2010. The police department struggles to keep pace with even routine patrols. Since 2010 when the oil boom began in earnest, DUI arrests are up 300 percent. Felony assaults are up twice that much.

"We could use three or four more people in the immediate time," says Chief Frank DiFonzo. Behind his John Wayne coffee mug, his desk is cluttered with stacks and stacks of case files.

The thing is the chief is probably not going to get the money to hire anyone new due to the forecast drop in oil revenues. DiFonzo really needs a detective so that his officers can spend more time out on the streets.

Schools Bracing

There's a lot of uncertainty over what might happen these next few months with oil prices, and the resulting stream of oil revenue. In Sidney, schools are tied a little more closely to oil production taxes than city hall.

At West Side Elementary — a kindergarten through third grade school — a cluster of modular homes sits next to the playground. Most teachers starting out can't afford Sidney's rents, which run close to $2,000 for a one bedroom.

"You're living in limbo a little bit, with everything," says Principal Jon Skinner, a big, friendly man with a shake that will crush your hand if you're not ready. He was a star football player at the University of Montana.

Walking the halls, Skinner knows every student, which is tough in a boom town school where some kids are only here for a couple of weeks and then they move. Almost a third of the students are considered special needs, because moving so much puts them behind in schoolwork.

Lately, the extra oil revenue had helped him hire more teachers and classroom aides. They recently started a long-term facilities plan. But he says that never considered oil falling below $70 a barrel.

"We've gotten accustomed to having a little bit more funding, gradually," Skinner says. "One of my biggest fears is that tomorrow, all of the sudden, it's gone."

From the schools to the police station to city hall, people in Sidney are worried right now about what the drop in oil prices is going to mean for them. Mayor Rick Norby says the only option is to start cutting, unless the state Legislature taps emergency funds to help out boom towns like his.

"That's why we're screaming," Norby says. "We're drowning, we need help."

Copyright 2017 NPR. To see more, visit http://www.npr.org/.

LINDA WERTHEIMER, HOST:

We're going to look now at what the low price of oil means when you're trying to deal with explosive growth in a boomtown. Sidney, Mont., lies at the western edge of the Bakken oil patch, one of the country's top drilling regions. Pay a visit there, and you'd never know the price of oil is as low as it is. Production is churning right along. But now the town's leaders are bracing for much less oil tax revenue, and they need that money to deal with the effects of the boom. NPR's Kirk Siegler reports.

KIRK SIEGLER, BYLINE: The mayor of Sidney, Mont., Rick Norby, is one of the most worried men in America right now.

MAYOR RICK NORBY: I haven't slept since I became mayor. So, yeah, it does keep me up at night.

SIEGLER: I hope you're kidding.

NORBY: No, I really ain't kidding you.

SIEGLER: In the past few years, Sidney has been transformed from a sleepy farming town on the state line with North Dakota to an oil boom city. Since Norby took over as mayor this time last year, oil prices have fallen by 50 percent.

NORBY: All I can say is all the action is still happening. That's all I can say. I mean, it's not slowing down - period. I mean, we haven't seen a slowdown one bit in anything.

SIEGLER: But one thing is changing. Norby expects he'll get about $600,000 less in tax revenue from oil production. He's also bracing for less money from hotel and gambling taxes. This is a big deal when your whole budget is $11 million and your town now has a major highway running right through it. Sidney's Central Avenue is one of the busiest - if not the busiest - highways in the state. Oil tanker trucks full of Bakken crude rubble through downtown, headed for the refineries in Billings.

NORBY: It's taking its toll. I mean, you can see this road here. I know - you look out, you can see the divots from the wheel tracks. This was built probably three years ago.

SIEGLER: Norby is 52. He's wearing a gray ball cap. The trace of his chew can is worn into the seat pocket of his jeans. He's lived here all his life, and he loves Sidney. After he graduated high school, he farmed sugar beets and corn. A few years before the oil boom hit, he sold the farm and moved back into town.

NORBY: I'm thankful I did the move I made then because you could never afford to buy a house in Sidney, Mont., in my opinion, on what I make, especially being mayor. (Laughter).

SIEGLER: On Central Avenue, Norby points out mom-and-pop businesses that have been here since he was a kid. There are some new places - a microbrewery, a steakhouse and casino that caters to the wealthier oilmen and engineers that have moved to town. You really do get the sense that things aren't slowing down here. After work, the Loaf and Jug gas station is still packed with young men in muddy Carharts filling up their pickups. Up the road, dozens of condos with prefab siding are still being built.

UNIDENTIFIED MAN #1: Shower stalls - (unintelligible) got a whole truck full of shower stalls.

UNIDENTIFIED MAN #2: (Laughter).

SIEGLER: The money coming from the oil boom pays for fundamental services that are stretched thin. Plus, Sidney is looking for $30 million for a new truck bypass, 70 million for a new water treatment plant. Around town, there are little one-bedroom houses with a half-dozen oil workers packed into them. The population has nearly doubled since 2010. The mayor sends us over to another man with a lot on his mind, Frank DiFonzo. He's Sidney's police chief. Asking him what the boom has done to his workload...

FRANK DIFONZO: I had a - Amy, do you still have that?

SIEGLER: DiFonzo is tired. Behind his John Wayne coffee mug, his desk is cluttered with stacks and stacks of case files. DUI arrests are up 300 percent. Felony assaults - twice that much. DiFonzo says he wouldn't even have talked to us if the mayor hadn't insisted. He's that busy.

DIFONZO: I know the mayor told you we could use seven or eight more people, but we could use at least use three or four more people in the immediate time.

SIEGLER: The thing is he's probably not going to get the money to hire anyone now, due to the forecasted drop in oil revenues. DiFonzo really needs a detective so that his officers can spend more time out on the streets. The other guy everybody wants us to meet is over at the elementary school - Principal Skinner. The mayor and a couple of the staffers are driving us by the school right now, and it's adjacent lot of mobile homes where teachers live.

UNIDENTIFIED MAN #3: Just to give you forewarning, when we meet Mr. Skinner, when he goes to shake your hand, brace yourself.

UNIDENTIFIED WOMAN: (Laughter).

UNIDENTIFIED MAN #3: He's a big man.

SIEGLER: No joke - Jon Skinner is a big, friendly man with a shake that will crush your hand if you're not ready. He was a star football player at the University of Montana. Walking the halls, he knows every student, which is tough in a boom town school where some kids are only here for a couple weeks, then they move.

JON SKINNER: You keep up the good work. I like it. Do what you do. Go to recess and have a good math, and I'll see you for computers, OK?

SIEGLER: Almost a third of Skinner's students are considered special needs because they're so behind in schoolwork. The extra oil money revenue that's been coming in has helped him hire more teachers and classroom aids. They recently even started a long-term facilities plan, but he says that plan never considered oil falling below $70 a barrel.

SKINNER: You're kind of living in limbo a little bit with everything.

SIEGLER: And enrollment has stabilized lately.

SKINNER: I think the one thing that I'm scared most about is we've got accustomed to having a little bit more funding gradually. And my - one of my biggest fears is that all of the sudden, tomorrow, it's gone.

SIEGLER: From the schools to the police station to city hall, people in Sidney are worried right now about what the drop in oil prices is going to mean for them.

UNIDENTIFIED MAN #4: One in the middle...

SIEGLER: To illustrate all of this, Mayor Rick Norby takes us in his pickup over to the east side of town by the railroad tracks. A long crude oil tanker train is parked just up from the crossing. Ahead of us, the road dead ends near the Yellowstone River, where a man camp of RVs has popped up on the snowy prairie.

NORBY: Right now - where we sit right now, we have no city water on the other side of these tracks.

SIEGLER: And this is where Norby wants the town to grow. Even when oil prices were high, Sidney struggled to find enough money to do with this boom's impacts. And trying to plan for the future right now with so much uncertainty is nearly impossible. Norby is left hoping the state legislature will tap emergency funds to help out boom towns like his.

NORBY: And that's why we are screaming, we're drowning. We need help.

SIEGLER: Kirk Siegler, NPR News. Transcript provided by NPR, Copyright NPR.