The importance of oil to recent economic performance in North Dakota is well-documented. As the biennial legislative session gets underway the price declines of the last several months are likely on everyone’s mind, and rightly so. This Wall Street Journal article details the difficult decisions facing oil companies in the relatively near future as far as capital spending, dividends, and other expenditures are concerned. This New York Times article discusses the scaling back in rigs across the country due to lower oil prices.
Well, it is the season for many things, but right now it seems it is the season for complaints regarding Christmas shopping and the fact that many stores now open on Thanksgiving. Full disclosure, I do not go shopping at “Black Friday” sales, and I have no plans to shop on Thursday either, but that is a family choice, others may have reasons to make other choices.
Trained as an economic historian one would obviously think I would endorse a strong role for economic history. Well, I do. However, Simon Ville made a similar argument in a fantastic essay at the World Economic Forum Forum blog (link). I frequently tell people that economic history is context, the background to the economic processes covered in the theory classes. In general, economic history provides perspective. When situations break down, whether due to political institutions, preference changes, or other major events, economic history, or at least economists with an appreciation for history, tend to understand the unfolding of events better. If the recent crisis breathes further life into economic history I think it would be a boon for economic as a whole.
While there is no specific mention of North Dakota, this article from Bloomberg.com mentions the idling of rigs due to oil price drops. The price drop is one thing, the duration of the drop is another. The longer price declines last, the more likely marginal plays will be idled as the article mentions. What does this mean for North Dakota? The core oil counties accounted for significant shares of the employment increase in the last year, so it could impact the performance of the state economy. There are many other questions to be answered first, but it is obviously something worth watching.
So yesterday I looked at how the oil patch core counties (Dunn, McKenzie, Mountrail, Williams) are responsible for over 50% of the employment increase in North Dakota in the last year (posting). I thought I would look at those particular counties again and compare to the state overall. I looked at the percentage change of employment from year ago levels. This should remove a majority of the seasonal effects in the data though we can never be sure. For September the state was up 2.88% from year ago levels. Williams county was up 6.82% from a year ago, Mountrail county was up 11.54%, Mckenzie county was up 21.62% and Dunn county was up 19.04%. For comparison, the percentage changes for Burleigh, Cass, and Grand Forks counties over the same time period were 1.44%, 1.14%, and -0.99%, respectively. For McKenzie county the average percentage change from a year ago level over the last 12 months was above 20%.