FORBES: Fracking Fuels An Economic Boom In North Dakota
When the oil boom hit North Dakota in 2008, few could have predicted the overall explosion the oil industry would bring to the region where the Bakken formation, a subsurface rock formation stretching 200,000 square miles within the Williston Basin, lay waiting. Fast forward six years to the present day, and North Dakota is sprinting past the remaining 49 states, similar toUsain Bolt winning the gold medal at the Olympics, in total economic growth. With crude oil output set to reach over one million barrels per day in 2014 (941,637 barrels per day as of October 2013), North Dakota has become the second-largest oil producing state in the nation, second only to Texas, and the fastest growing economy in the U.S. amidst a debilitating recession.
Having recovered only 244 million barrels of the estimated 6.5 billion barrels of recoverable oil available between the two largest shale formations in the state, it’s safe to say the economic growth of North Dakota won’t be slowing down any time soon. So let’s delve deeper and examine how North Dakota performed in 2013 and what to expect moving forward.
According to the most current figures (November 2013) from the Bureau of Labor Statistics, North Dakota had a labor force of 402,398 with an unemployment rate of 2.6 percent. Allow me to reiterate that fact: North Dakota has the lowest unemployment rate in the nation, at 2.6 percent. That’s incredible given that pro-growth states such as Florida, Texas, and Georgia, which also saw business, individual, and wealth gains, had unemployment rates of 6.4 percent, 6.1 percent, and 7.7 percent, respectively, and the population of North Dakota grew from 701,345 in 2012 to 723,393 in 2013, as reported by the U.S. Census Bureau.
Based on our data, we at How Money Walks predict the relative employment gain of North Dakota in 2014 will be 1.72 percent, surpassing both Florida (1.57 percent) and Texas (1.56 percent).
In addition to having a record-low unemployment rate and ever-growing population, North Dakota, based on a map released by the U.S. Census Bureau last year, was also the state that had the most counties with increases to median household income from 2007 to 2012 – again beating the likes of Florida, Texas, and Kansas.
For those who may think this increase in median household income is limited only to counties containing a large quantity of oil rigs, we should note that this growth is statewide. People outside of the oil industry, such as carpenters, waitresses, and others involved in service industries, are reaping the economic rewards as well.
Moving forward, North Dakota can expect continued migration into the state as companies continue to grow and expand. One company, Power Fuels, put out a call for 300 new employees before the start of the holidays. These new hires for oil companies are going to require places to live, tools, food, entertainment, and transportation upon relocation, thus providing the perfect opportunity for entrepreneurs and native North Dakotans not involved in the oil business to open stores and provide these necessary services. In doing so, North Dakota opens the doors for larger businesses and corporations to invest within the state.
At the end of the day, it is the oil industry that is attracting people and driving the unrivaled economic growth for North Dakota. While other states, such as California and New York, have oil deposits that could produce enough barrels of oil to create the same economic surge, political reasons keep this oil in the ground and off-shore. It is these ill-conceived policies that are keeping these oil-rich states from tapping into their full potential, creating economic and job growth, and digging themselves out of the red and into prosperity. If 2013 taught us anything going forward, it’s that fracking oil is a big deal for growing state economies.