Tuesday, January 24, 2012

Bakken Shale Oil Continues to Fuel a Shovel-Ready Successful Job Stimulus Program in North Dakota

The state of North Dakota continued to lead the country in December with: a) the lowest state jobless rate at 3.3%, and b) the highest annual rate of employment growth in December at 5.7% (BLS data here), which also set a new all-time North Dakota record for the largest 12-month percentage employment increase since monthly records started back in 1990.  The 5.7% over-the-year percentage job gain for North Dakota in December was almost twice the 3% pace of job growth in Utah, the state with the second highest job growth in 2011.

Job growth in the state's booming oil industry was spectacular, with almost a 40% increase in mining jobs in 2011.   Further, North Dakota has nine counties with jobless rates at 2% or less for November, and one county - Williams County, at the epicenter of the Bakken oil region - with a jobless rate less than 1%.    

The chart above shows the phenomenal employment growth in North Dakota since 2000, especially during the last three years.  Over the 12-year period since 2000, U.S. payroll employment has been almost flat, with only a slight 0.86% increase between January 2000 and December 2011.  During that same period, North Dakota employment grew by 24% overall and by 448% for the state's mining sector.

In a related story, Investor's Business Daily (IBD) reported this yesterday:

"High oil prices hurt at the gas pump. But they help at the wellhead pump. That has boosted profit margins at Continental Resources (CLR) the largest landholder in the Bakken Shale oil and gas play in parts of North Dakota, Montana and Canada. Continental generated almost 63 cents of profit for every dollar of sales last year, topping IBD's Screen of the Day for Monday, which ranks firms by that key metric.  Northern Oil & Gas (NOG), another Bakken Shale play, also ranked high, with a 58.1% profit margin." 

In a separate news item, IBD reported that Continental share prices hit a three-and-a-half year high Jan. 10 because of the recent strength in the oil market.

Bottom Line: Drill, drill, drill = jobs, jobs, jobs and also = profits, profits, profits. But don't tell Rep. Dennis Kucinich, he'll want to establish the first "Reasonable Profits Board" in the state of North Dakota. 

5 Comments:

At 1/24/2012 2:32 PM, Blogger Benjamin said...

Commodities "inflation" is usually a good thing, helping spur new production and conservation.

It will be fascinating to watch super-fracking go national and global.

The Fed should worry more about growth, and less about fighting inflation--especially with the last CPI readings flat to negative.

 
At 1/24/2012 3:49 PM, Blogger Larry G said...

I bet if Obama knew about this - he'd not stand for it and find a way to outlaw it, eh?

 
At 1/24/2012 4:14 PM, Blogger VangelV said...

Bottom Line: Drill, drill, drill = jobs, jobs, jobs and also = profits, profits, profits. But don't tell Rep. Dennis Kucinich, he'll want to establish the first "Reasonable Profits Board" in the state of North Dakota.

What profits are you talking about Mark? The shale gas and oil producers are bleeding red ink as a sector. While there are a few decent core areas I do not see any of the producers paying dividends or generating much in the way of free cash flow. The shale gas sector is already on life support and it won't take much to tip it over the edge. If you recall, the same job creation story that you are writing today could have been written by the internet sector or housing sector right before their bubbles burst. There is no reason to suspect that it will be different this time around.

In fact, there are already signs that things are not as they have been portrayed. I look forward to your reporting of that development.

 
At 1/24/2012 10:25 PM, Blogger Hydra said...

Meanwhile, in India, the price of solar energy is now lower than the percent of diesel fuel. This has prompted Simil Mittal to abandon diesel in favor of solar.

 
At 1/25/2012 10:12 AM, Blogger VangelV said...

Meanwhile, in India, the price of solar energy is now lower than the percent of diesel fuel.

Link please.

The facts are still clear. The cost of producing solar is still much higher than the cost of producing diesel. Unless you can bank on the solar subsidies continuing it will be hard to justify betting on solar.

 

Post a Comment

Links to this post:

Create a Link

<< Home