Tuesday, April 03, 2012

North Dakota: America's "Economic Miracle State"

The Philadelphia Federal Reserve released February Coincident Economic Activity Indexes today for all 50 states along with a national coincident economic activity index.  These indexes are based on four economic indicators: a) nonfarm payroll employment, b) the unemployment rate, c) average hours worked in manufacturing, and d) wages and salaries.

The chart above displays the indexes for North Dakota and the United States over the last ten years, showing that the economic activity in North Dakota is completely "off the charts," along with the state's oil production, which is also showing explosive growth and driving economic growth in the "miracle state."  Even the "worst recession since the Great Depression" barely affected the shale oil-based economic activity in the Peace Garden State, and the February coincident index is 22% above the pre-recession level.  Meanwhile the coincident economic activity index for the overall U.S. economy fell about 10.5% during the Great Recession and is still about 2% below the peak in late 2007. Drill, drill, drill = shovel ready jobs, jobs, jobs.

19 Comments:

At 4/03/2012 11:14 PM, Blogger Benjamin said...

http://projects.propublica.org/recovery/

Only two states, South Dakota and Vermont, received more stimulus spending per capita than North Dakota. See above.

ND has been a heavy and long-term "pink" state, getting back about $1.50 for every dollar sent to DC.

Maybe it is shale; maybe it is also federal lard that is boosting ND.

 
At 4/04/2012 1:28 AM, Blogger Unknown said...

Yeah, don't give oil credit.. oil is bad! Can we get a link to the data that says ND gets 1.50 from the feds from every 1.00 they pay in?

 
At 4/04/2012 5:44 AM, Blogger Rufus II said...

Minot AF Base, plus the SAC installations in a state of 600,000 souls would explain that.

 
At 4/04/2012 5:51 AM, Blogger Rufus II said...

A lot of what's being written about ND, however, might well have been written about Carson City, Nv at one time, however.

Oh, and Chesapeake just drilled a couple of "dry holes" in Williston. Just sayin'.

 
At 4/04/2012 5:55 AM, Blogger rjs said...

where's pennsylvania?

 
At 4/04/2012 6:45 AM, Blogger marmico said...

Pennsylvania. They are saints compared to North Dakota, at least before the Bakken boom.

In the tradition of Carpe Diem, graphics galore.

 
At 4/04/2012 7:00 AM, Blogger Rufus II said...

We will probably (hopefully) look back in twenty years, and realize that THIS was the N.D. Energy Story of 2012

 
At 4/04/2012 10:07 AM, Blogger Buddy R Pacifico said...

North Dakota has just had a mild winter. This means much more drilling activity took place and less road destruction from severe weather.

Look for the FRED graph to have an even sharper upward slope, in the coming months for ND.

 
At 4/04/2012 10:55 AM, Blogger Benjamin said...

Unknown:

Go to the Tax Foundation, it is a well-publiczed fact that rural states are pink states, subsisting heavily on federal lard.

 
At 4/04/2012 11:25 AM, Blogger Paul said...

"Go to the Tax Foundation, it is a well-publiczed fact that rural states are pink states, subsisting heavily on federal lard."

The Tax Foundation also says the chief reason for the disparity between the states is the progressive tax system Benji's boyfriend champions.

 
At 4/04/2012 11:33 AM, Blogger Paul said...

"The most important factor determining whether a state is a net beneficiary is per capita income. States with wealthier residents pay higher federal taxes per capita thanks to the progressive structure of the income tax."


Here.

 
At 4/04/2012 1:30 PM, Blogger VangelV said...

A lot of what's being written about ND, however, might well have been written about Carson City, Nv at one time, however.

Oh, and Chesapeake just drilled a couple of "dry holes" in Williston. Just sayin'.


Reality will eventually intervene but as long as money is flowing into activities in ND we expect the people who live and work there to benefit. That is not the issue. The issue has to do with returns on investment activities in ND. If we get an economic contraction in the next few months I would expect most of the speculators who have tried to gain by betting on money losing production to start to get nervous and try to take some of their investments off the table. If that happens you will be looking at a rout that has a parallel in the NASDAQ and housing bubbles.

 
At 4/04/2012 5:50 PM, Blogger Breaker Morant said...

Rufus II>>Oh, and Chesapeake just drilled a couple of "dry holes" in Williston. Just sayin'.<<<

Have to love the nature of internet comment threads. There are more than 200 drill rigs currently working in North Dakota. Each drilling about a well a month (or better). Just about all of these are successful wells.

Chesapeake is a company that totally missed the Bakken. Its North Dakota acreage and activity(such as it is) is located in an area south of the Bakken and it is EXPLORING for other pay zones. 2 dry wells mean nothing in that context.

 
At 4/05/2012 6:25 AM, Blogger Rufus II said...

What it does mean is that N. Dakota is not the "bottomless milkshake" that some seem to think.

The growth to date has come from a honey hole in/near Williston, and should not be extrapolated out to all of the Bakken, not to mention "all shale."

 
At 4/05/2012 7:07 AM, Blogger VangelV said...

Have to love the nature of internet comment threads. There are more than 200 drill rigs currently working in North Dakota. Each drilling about a well a month (or better). Just about all of these are successful wells.

But that is the problem for the shale producers; most wells are not 'successful' because they cost too much to produce. This is why most producers in non core areas are cash flow negative and have to rely on continued financing of operations to remain in business.

Chesapeake is a company that totally missed the Bakken. Its North Dakota acreage and activity(such as it is) is located in an area south of the Bakken and it is EXPLORING for other pay zones. 2 dry wells mean nothing in that context.

How quickly they forget. Chesapeake was the original big player in the shale space. It was the biggest promoter of shale and did all it could to try to kill off the US coal industry by funding green groups that would pressure the government into using regulations to give natural gas the advantage in the marketplace. The problem was that the company was wrong about the economics. It needed $7.50 gas to break even and could not get anywhere near that price.

The fact that Chesapeake is trying to sell itself as a shale liquids player tells us a great deal more than the optimists are willing to admit. And the fact that they will be depending on Chesapeake to be a far better evaluator of the economics of shale tells us that the risks are much higher than most of them can imagine.

 
At 4/05/2012 11:36 AM, Blogger Breaker Morant said...

Vange-I think in some ways you have a limited time horizon for shale plays. You equate the current companies and their situation to the underlying geology. If Chesapeake were to fail (and they have spread themselves very thin and have gotten caught by low gas prices) that does not equate to a failure of the underlying geology.
You are so focused on the quarter to quarter stuff-but the geology will still be there in 5. 10,50 years if it is not exploited now.

 
At 4/05/2012 2:23 PM, Blogger VangelV said...

Vange-I think in some ways you have a limited time horizon for shale plays. You equate the current companies and their situation to the underlying geology. If Chesapeake were to fail (and they have spread themselves very thin and have gotten caught by low gas prices) that does not equate to a failure of the underlying geology.

But that is what means; the underlying geology is not providing us with economic energy. In the end that is exactly what this debate is about even if people like Mark like to ignore it. Chesapeake will not go bankrupt because it guessed wrong about the price of natural gas. It will go bankrupt because the return on energy invested is not sufficiently positive to make any economic sense.

You are so focused on the quarter to quarter stuff-but the geology will still be there in 5. 10,50 years if it is not exploited now.

That has never been the problem. We know that hydrocarbons are present in shale formations. The trouble is that the various schemes to extract those hydrocarbons at a profit have failed. The reason is obvious. The energy density of shale is too low and there is no way to concentrate the hydrocarbons profitably except in the core areas of the best formations.

 
At 4/08/2012 10:56 AM, Blogger Financial news said...

This comment has been removed by the author.

 
At 4/08/2012 11:03 AM, Blogger Financial news said...

I live in Minnesota and have friends who moved to ND for job opportunities. Currently there is not enough housing in ND to house the workers. Go to monetarilyspeaking.com they cover this topic in depth!

 

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