The recent drops and volatility in commodities markets, particularly oil, are well-known. One of the big ongoing questions for the state of North Dakota is the impact on the state economy of these new developments in oil. We have seen that oil and gas output is not necessarily suffering with the price decreases or volatility. So where are the effects? You might expect to see it in a graph of labor force, like this:
Recently I visited New York City and had occasion to talk with some people about the situation with oil in North Dakota. The question on their mind has to do with the continued high level of oil production despite the decreased price. Rather than total amount of oil produced, or barrels per day, let’s consider a different measurement, the amount of oil per rig.
So JT mentioned he would like to talk about gas prices, specifically them falling to around or under $2/gallon at some point this year. I assume it refers to something like this story. Consumer response to gas prices have been interesting. The traditional connection between oil prices and gas prices is one that most know. Individuals carpool, buy more fuel-efficient vehicles, use public transportation, or find other ways to avoid higher fuel prices in the long run.
Lately my thoughts turn to public finances in North Dakota. In particular I am thinking about the status of public pensions in North Dakota, both on their own terms and compared to other places. One of the things you need to consider when discussing an issue like pensions is the general financial context of the state and its expenditures. Detroit was only an issue when they were not able to pay for, well, anything and then needed to default. My home state of Illinois finds itself in a situation similar to this currently. The following graph compares the North Dakota and US shares of general expenditures in twelve different categories.