My posting has been light, well nonexistent, as I am switching to a different web host. That should be finished soon and posting will continue. However, I looked at some labor market data for North Dakota cities and had to put together a quick post.
The BLS data for Williston continue to tell an unfortunate story of the rapid rise in employment and, for the most part, an equally dramatic reversal. One of the most frequent questions asked about this is whether there will be a reversal of the latest trend when (if?) oil prices recover. I think the jury is out on that front.
Many times people asked me about the relative importance of the agriculture sector and the mining sector so I thought I would show some current data. Now the coal industry output remains almost the same over this time frame, so the oil sector is responsible for the growth. The data run from 2005Q1 to 2015Q3 and the lines display each sector as a share of total GDP (private and public sector).
I originally gave this post the title “My new favorite graph” but figured that was too vague and nondescript. Most of my readers, and anyone who listens to the Jarrod Thomas Show (KNOX 1310 AM, Grand Forks), know I look at lots of graphs and lots of data. It is actually what I do to unwind. Pair that with the attention oil gets in the media (local and national) and you get my new favorite graph.
I am often asked about the relative position of oil and other industries in the ND economy. Usually this is me being asked to settle a dispute between industries as to who is more important or some such nonsense. However, the issue of oil in the North Dakota economy is worth revisiting right now given the decline in oil price and the effects on the state revenue forecast.
The future is always uncertain, but it seems that labor markets in the core Bakken counties could be having their Mark Twain moment: “The report of my death was an exaggeration.” My central argument here is not that the markets are not correcting, and I am not suggesting declines in employment will not happen, though the extent of that decide is obviously debatable. At some level, you might expect people to welcome the pause in the employment growth occurring now. It could reduce pressures in the other related areas such as housing. Regardless of any decline, the data show that employment is still more than twice the level from just 5 years ago (see figure below).
The old saying goes that a picture is worth a thousand words. Clearly the idea is that one good image could relay information better than a lengthy description. There are two issues with that: 1) it needs to be the right graph, and 2) the graph may need at least some explanation. I think this is true of the North Dakota oil story right now. Those who watch these things will not find anything new or exciting in the following graph.
I am making a presentation to a group of retired UND faculty this morning on the topic of oil and the North Dakota economy. It is more of a free-flowing discussion than a chalk-and-talk format so I will add interesting comments later after I hear them. Oil is clearly a transformative event in the North Dakota economy. We can have an argument about the relative importance of different sectors all we want, but the emergence of the energy economy was an enormous factor in the early 2000s. Looking at the graph below I make the following observation: we are at the end of the first boom-bust cycle in the oil industry in North Dakota. That’s all this is. We have not run out of oil and it is not, at least yet, an industry regulated out of existence.
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.