PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Energy & Entrepreneurs: North Dakota’s Economic Growth

By at 30 January, 2013, 9:18 am

by Raymond J. Keating-

North Dakota in recent years has become a major source of energy production in the U.S. And with that energy growth, there have been tremendous benefits for the state’s economy.

Consider that North Dakota oil production increased by 557 percent over the past six years (from 3,524 thousand barrels in October 2006 to 23,164 thousand barrels in October 2012, according to EIA data). Over the past three years, production rose by 301 percent.

Growth has been so impressive in recent years that North Dakota now ranks as the second among the states in terms of oil production, passing Alaska in early 2012.

Natural gas production also has expanded dramatically in North Dakota. Natural gas marketed production, for example, expanded by 214 percent from the end of 2008 to the end of 2011 (latest EIA data).

This vast expansion of energy production in North Dakota has come about due to technological innovation and advancement. As the EIA has pointed out: “Driving production gains is output from the Bakken formation in the Williston Basin… The Bakken now accounts for 90% of North Dakota’s total oil production. Production gains in the Bakken formation are the result of accelerated development activity, primarily horizontal drilling combined with hydraulic fracturing.”

As a result of this increased energy production, North Dakota’s economy has experienced tremendous benefits during a time, of course, of gross U.S. economic under-performance.

Consider real state GDP growth in North Dakota in recent years. In 2008 (according to the Bureau of Economic Analysis’ real GDP by state data), national economic growth came in at a dismal -0.7 percent, while growth registered 8.4 percent in North Dakota – highest among the states. In 2009, while national growth registered -3.8 percent, North Dakota’s economy expanded by 2.0 percent, which was third fastest among the states. In 2010, North Dakota’s 9.0 percent growth rate was second highest among the states, and nearly three times the 3.1 percent national rate. And finally, the latest state GDP data is for 2011, and North Dakota, at 7.6 percent, had the fastest growth rate among the states, and far outdistanced the 1.5 percent national rate.

With such growth has come a brighter jobs picture. In December 2012, North Dakota had the lowest unemployment rate among the states at 3.2 percent. That, of course, compared to national unemployment rate of 7.8 percent.

In terms of total employment, from November 2007 (the month before the recession started) to December 2012, North Dakota employment has increased by 6.7 percent, while national employment is down by 2.2 percent.

Finally, how has North Dakota fared in terms of growth in the number of businesses? Nationally, according to Census Bureau data, the number of employer firms between 2007 and 2010 actually declined by 5.2 percent. In North Dakota, however, the number of employer firms actually grew by 1.6 percent. No doubt, subsequent energy growth in North Dakota has gone hand-in-hand with further expansion in businesses.

In the end, expanded energy production in the U.S. is not only good for energy consumers, but is a big plus for economic growth, job creation and business expansion.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

Keating has written two new books titled Root of All Evil? A Pastor Stephen Grant Novel, and An Advent for Religious Liberty: A Pastor Stephen Grant Novel.

 

 

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