NCPA - National Center for Policy Analysis

Oil Production Keeps Recession at Bay in North Dakota

January 19, 2012

Oil production in the Bakken shale formation is making unemployment virtually nonexistent in North Dakota.  With 200 rigs pumping 440,000 barrels of oil per day, the state's unemployment rate is holding at 3.5 percent.  Many of the jobs pay exceptionally well, with high school graduates making more than $100,000 per year, says the Heartland Institute.

  • Oil production in North Dakota now rivals that of OPEC member Ecuador, which produces 485,000 barrels per day.
  • The North Dakota legislature is using some of the state's oil revenue to fund $1.2 billion in infrastructure improvements, including building roads and schools to accommodate the many people bringing their families when they move to the state to work.

One of the primary beneficiaries of this oil boom has been public schools.

  • The state legislature has directed $340 million in oil-related revenues to public schools during the next two years.
  • Other oil revenues will be fund a disaster relief fund and enable a reduction in property taxes.

To preserve oil-related funds, the state legislature has directed 30 percent of the funds from the state's 6.5 percent oil extraction tax be sent to the state's Legacy Fund. 

  • The Legacy Fund cannot be touched until 2017, when accrued interest will become available for spending measures.
  • Principal can be spent only if two-thirds of the legislature agrees to do so, and no more than 15 percent of the principal can be spent in any biennium.

Most of the Bakken shale production is occurring on private land, but analysts and state legislators fear the federal the Environmental Protection Agency (EPA) may nevertheless seek to shut it down.  EPA is currently investigating hydraulic fracturing (fracking) production techniques, which are utilized in shale oil production.

Source: Kenneth Artz, "Oil Production Keeps Recession at Bay in North Dakota," Heartland Institute, December 20, 2011.

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