Bakken Formation: Energy Production = Budget Surpluses

By December 8, 2008Economy, Energy

That’s a connection worth considering: Energy production helps boost the economy, government tax revenues and employment in states like North Dakota, where the Bakken Formation and good ag prices have spread the wealth.

From The New York Times, “ A Placid North Dakota Asks, Recession? What Recession?”

While dozens of states, including neighboring ones, have desperately begun raising fees, firing workers, shuttering tourist attractions and even abolishing holiday displays to overcome gaping deficits, lawmakers this week in Bismarck, the capital, were contemplating what to do with a $1.2 billion budget surplus.

And as some states’ unemployment rates stretched perilously close to the double digits in the fall, North Dakota’s was 3.4 percent, among the lowest in the country.


North Dakota’s cheery circumstance — which economic analysts are quick to warn is showing clear signs that it, too, may be in jeopardy — can be explained by an odd collection of factors: a recent surge in oil production that catapulted the state to fifth-largest producer in the nation; a mostly strong year for farmers (agriculture is the state’s biggest business); and a conservative, steady, never-fancy culture that has nurtured fewer sudden booms of wealth like those seen elsewhere (“Our banks don’t do those goofy loans,” Mr. Theel said) and also fewer tumultuous slumps.

The increased oil production comes in great part from development of the Bakken Shale, a formation that has been accessed profitably through hydrofracturing and horizontal drilling.

Falling oil prices will obviously have an impact on the energy production, and farm commodity prices are also slumping. Manufacturing has also suffered its hits. Still, we bet there are a lot of states that would love to have North Dakota’s problems.

In related developments….


FARGO, N.D. — Federal Customs and Border Protection authorities are preparing to launch unmanned aircraft patrols from this state, the first time such monitoring will occur along the nation’s northern border.

A Predator B aircraft, delivered to Grand Forks on Saturday, will make runs along the northern edge of North Dakota using sensors that can provide video and detect heat and changes to landscape, Customs and Border Protection officials said.

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