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10 Ways the U.S. Shale Oil Boom has Made North Dakota an "Economic Miracle"

By , Contributing Writer, Money Morning •

Thanks to the U.S. shale oil boom, some parts of the country are experiencing growth comparable to emerging markets.

The best example of this high-powered economic surge is in North Dakota.

North Dakota is the epicenter of the Bakken shale oil boom. Since 2009, it has had the fastest growth in personal income, tax revenues, jobs and home prices of all the 50 states. The state also has enjoyed both a population surge and the lowest unemployment rate in the country.

According to July 2012 figures from the U.S. Census Bureau, the state's population rose by 4% in just two years - compared to 1.7% for the nation as a whole. The western part of the state, where the Bakken is located, may see its population jump 50% over the next two decades, according to a North Dakota state survey.

For North Dakota as a whole, at the end of 2012 the unemployment rate was only 3.2%. In the 12-county Bakken region of the state, unemployment stood at a mere 1.8%. In Williams County, which is at the heart of the Bakken shale oil boom, unemployment was at a miniscule 0.9%

This is why some have called North Dakota an "economic miracle."

10 Facts on the Economic Power of the U.S. Shale Oil Boom

Here are 10 ways the shale oil boom has helped North Dakota's economy outshine the rest of the United States:

  1. Booming economic numbers: In 2012, North Dakota's Gross Regional Product was $39.5 billion. This is enormous since its population is only about 690,000 people. Real per capita GDP in 2011 was just under $50,100, putting the state seventh in the nation.
  2. Unrivaled industry growth: Since 2005, North Dakota's oil and gas industries have grown by an astonishing 396.5%. That compares to 32.5% growth for United States' overall energy industry in the same time period.
  3. North Dakota is now the #2 oil producer in the nation: Oil production specifically grew more than 600% over the past few years. Production increased from 35.7 million barrels in 2005 to 237 million barrels last year. The state produces about 11% of the U.S. total oil production.
  4. Record-breaking well production: In February, a new monthly record of 779,032 barrels per day was set with 8,500 wells pumping crude. The state exceeded 20 million barrels of oil production for the eighth straight month.

  5. Each well in the state is a money-maker: It costs $10 million to drill a well, but it generates roughly $20 million net profit. Each well pays approximately $4.4 million in taxes to the state and pays out $7.6 million in royalties. Every well also generates about $1.6 million in wages.
  6. Oil and gas industry is spreading the wealth: The energy industry's effects are felt far and wide in North Dakota. Since the oil boom began in 2005, the average growth among companies in other industries, with at least 500 employees, is an incredible 20%. Certain companies are growing at an even faster rate.
  7. North Dakota has become one of the nation's hot spots for IT spending: Enterprise IT spending this year is expected to exceed 7% in the state, largely due to the energy industry. The number comes from the International Data Corporation (IDC) United States Blackbook 4Q12.
  8. Tourism is hopping: Since 2011, more than 40 new hotels opened in North Dakota. A similar number is scheduled to open before the end of the year and not just in the Bakken area. North Dakota Tourism says that more than 12 million people visited the state last year, adding $4.8 billion to the economy.
  9. More money means more banking: Small regional banks in North Dakota are enjoying some of the benefits of the oil boom. Part of the benefit is loans to new businesses, which have grown by nearly 50% in the Bakken shale oil region. In addition, deposits in the region jumped by 15% last year to $3.9 billion after climbing 27% in 2011. All of these numbers come from U.S. Federal Reserve data.
  10. The Bakken shale oil boom has also been good to women: Salaries for women working full-time (the service industries in the state can't find enough qualified employees) soared 22% in 2011 from 2006, according to U.S. Census data. This compares to a 14% rise across the rest of the U.S. The unemployment rate for women in North Dakota for 2011 was only 2.9%.

Money Morning Global Energy Strategist Dr. Kent Moors regularly tracks the best profit opportunities in the U.S. shale oil boom. His track record for energy-related investment winners includes a handful of double- and triple-digit winners. Just go here to learn his favorite new picks in shale oil.

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