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.
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%.
What is the importance of the oil industry to employment in North Dakota? This is a really good question, and one that is not necessarily the easiest to answer. In the last year this same question generated all kinds of arguments about the relative importance of agriculture versus oil in the North Dakota economy. That debate is not the purpose of this post though.
The growth occurring in North Dakota as a whole, and in most of the sub regions within the states, is quite impressive as media stories no doubt impart. Being a dismal scientist I pointed out many times here and on the Jarrod Thomas Show (1310 KNOX AM, shameless plug I know) that the growth in the oil patch represented a potential constraint on growth in communities like Grand Forks. While many disagreed with me I offer up the following trends that should give people pause.
The big story for North Dakota is not just about oil in western North Dakota, it is about the adjustments to the underlying economic dynamics in the state. Consider the situation of labor markets in two North Dakota cities, Williston and Grand Forks. These data are for the Williston micropolitan area and the Grand Forks metropolitan area from 1997 to the end of 2013.