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.
North Dakota Oil Prices & Production
I have not looked at oil production time series for North Dakota in a while so I thought it time to take a look. Oil production, in fact most commodity production, and certainly extractive production, has an interesting cost structure. There are significant fixed cost elements to coverĀ in order to generateĀ profit. Notice in the graph below that while price starts rising around 2000, it was not until around 2005 that production started to rise. As the price continues to rise we see production continue to increase too.