Sorry for the lack of blogging but I was a speaker at the Minneapolis Fed Regional Economic Conditions Conference this Tuesday (link to presentations here). My slides are available from the Fed site as well. I thought I would highlight a few things that got the attention of the audience.
First, in this post I highlight oil production, which continues to be high in North Dakota.
It is pretty clear that we are down from the peak of oil production, though still at more than 1,000,000 barrels per day. My interpretation is that North Dakota’s Bakken producers enjoy their fringe role right now (fringe in a game theory sense). The Bakken is not the dominant producer, but each time the dominant producer (think OPEC) tries to increase price, the fringe player increases production to enjoy the revenue increase and prices get pushed back down. This is not a complicated situation. OPEC needs to understand that for all intents and purposes it cannot crush Bakken competition. The threat is not credible and nobody, including Saudi Arabia, seems to have the ability to endure the revenue losses that would necessitate. As a result there is a bit of a lid on the extent to which oil prices can increase.
There is more and I will blog about the entirety of the experience in a day or so.