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Legislative News and Views - Rep. Paul Anderson (R)

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Update of state economy, petro production and more

Monday, December 9, 2013



By Rep. Paul Anderson


For the fifth-straight time, a budget surplus has been forecast for Minnesota. These major projections are released two times a year, in November and again in February, and the one released last week was especially impressive. It calls for a surplus of just over $1 billion at the end of the 2014-15 biennium, some 19 months away. If these numbers hold true, it would allow the total payback of the school shift to the tune of $246 million and also the replenishing of the state Airport Fund for $15 million. And it would still leave a surplus of around $825 million.

Already, there are proposals for what to do with this potential “extra” money, but it’s far too early in the budget cycle to actually spend any of it. The first thing I would support is the repeal of over $200 million in business-to-business taxes that were passed last session. This includes the sales tax on farm repairs and tax on storage and warehousing.


Addressing the annual meeting of CHS in Minneapolis last week, CEO Carl Casale told those in attendance that the “boom years are over” in the areas of grain and energy. He was referring to lofty profits made by both farmers and agribusiness in the buying and selling of grain and refined fuel products. “But,” Casale added, “we expected that to happen, and we must position ourselves and adjust to this changing marketplace.”

On another topic, he said that CHS, like many other companies, is having a challenging time in securing new employees to replace those who are retiring and also as they expand various segments of their business. Casale called it a “big challenge” and mentioned a program his company will be expanding in the future. He said, “There are over 230,000 retirees from the military every year, and over half of them have some kind of rural connection. We see that as an excellent source of new employees for CHS.”


Those of us old enough to remember the gas crisis of the early 1970s and the long lines at filling stations have heard much talk over the years about the United States and its dependence on foreign oil. For a long time, well over half of our petroleum needs have been supplied by other countries, many of whom are not the friendliest to us. Well, that’s finally changing, and a big reason is the rapidly growing production in America. It’s estimated that by 2015, our country will be the largest producer of crude oil in the world. A major reason for the resurgence in American energy production is the Bakken field in North Dakota. It’s estimated that in the next five years, production in our neighboring state will GROW by 500,000 barrels per day. Nationally, that growth is expected to approach three million barrels a day and, as a nation, we should be producing over nine billion barrels a day by 2017.

An interesting note about the oil being produced in North Dakota is that it’s known as “light, sweet crude,” which makes it even more valuable because of its lower refining cost. That characteristic does have a down side however, as this type of crude oil, when refined, produces more gasoline and less diesel fuel than other “heavier” types of crude. And with demand for gasoline decreasing in this country and the demand for diesel fuel growing, the challenge becomes one of producing enough diesel to satisfy the market and being able to sell all the gasoline that’s also produced. Research shows that vehicle-miles driven per capita peaked in this country in 2008 and have decreased since. That fact, along with cars getting better mileage, accounts for the drop in gas demand. Just the opposite is true of diesel, with nearly all large commercial engines using that type of fuel. In addition, auto makers will introduce around 40 light-duty vehicles that run on diesel fuel by 2015.


Congratulations to Dr. Bob Bösl, of Starbuck, who was named Country Doctor of the Year recently by Staff Care, a temporary physician-staffing company. The award recognizes the spirit, skill and dedication of America’s rural medical practitioners. This is a national award, and all who know “Doc” agree that the honor is well-deserved.