All of the data you see here have been published in previous posts is some format. In some cases the dates have been changed. For instance, in the first table on the left the Employment data was published recently, but it covered from May 2000 to May of 2014. This posting is May 2013 compared to May 2014, a shorter time. I did that because most of the other postings were of that time. That is, covering one year only.
I wanted to be able to show my readers a similar time comparison involving the same cities. I have-sort of. As best I can, here is what happened over the past year in the larger towns in North Dakota. Of course that has to include Fargo as the largest town in the state, and it needs to include the changes coming about because of the oil boom, especially Williston and Dickinson.
It also should show what the larger farm towns outside of the oil patch are doing. As I expected, places like Jamestown, Wahpeton, and even Carrington, Langdon and Grafton, while jumping around based on the farm economy of the year demonstrate those dramatic changes occurring in farm technology.
That is. sometimes the economy in those towns goes up when the ag economy is good, but the population and employment continues down as the technology shows people are being replaced by machines-huge machines with huge price tags.
Agriculture is in a boom time, but unlike oil successful ag means fewer people. Fewer farmers, fewer service people for those fewer farmers. Service people mean fewer bankers, now called financial experts, and fewer mechanics, now called technicians. There maybe is only half the machinery dealers, but they are huge5 What cost maybe $120000 less than a decade ago cost $400,000 today. Then a good day the machine covered 120 a day. Today it is 250 acres in a day. The first sprayer I used had a boom width of less than 50 feet. Today with 1500 plus gallon tank the boom width is about 140 feet. Eight and one half rounds to cover a quarter section and taking time to fill only once with that 1500 gallons. Push a couple buttons and take your hands off the steering wheel. Fewer people, fewer farms. You have to look two miles to see the closes neighbor. That is the only way to make it work. No more 400 to 800 people towns, and the 4000 population town is now 1875 people. And the ride is just starting. Hold on.
So, look at these figures. We will get more specific over time, but this is our future. Every acre will still be farmed, more intense. but you won’t recognize the farm. There might not be anyone in the machine. They will be back in the control center watching the screen and reading all the gauges. Of course they won’t adjust the settings, that will be done automatically.
Imagine what North Dakota would look like if Harold Hamm hadn’t developed fracking. Imagine the wealth that would just be sitting in the rocks at 10000 feet below the surface. Where would the money have come from.
A Minnesota paper carried an article about the railroad union agreeing with the railroad company to allow “freight trains” in the near future to run with only one person. I assume that person would be the engineer, but maybe not. What do you call that person? What does our life become as I watch a science program about scientist in South America looking for that fish that will feed the world. What a terrible world with no Red River Valley potatoes. What a boring life that will be.
I know some don’t like it and it is not over yet; the increase in jobs in North Dakota I mean. Who does like the increase in crime, broken pipelines and the other negatives the western part of the state has put up with. On the other hand, remember, before this started a decade ago we were a poor state. People like the Poppers said we shouldn’t have been. Magazines like National Geographic sent a photographer out here to find an old farmstead with the front door of the farm home blowing in the wind. The eastern elite wanted to turn us into their playground.
Following several years of declines in the number of jobs in North Dakota, and in the states population the oil boom has finally turned that around. Now the elite in North Dakota are in Fargo. Their press, printed and electronic, write pontificating stories about farming and about energy development. Even the oil patches own write absurdities. One daily blamed a police failure of a major crime investigated by both the local and state police on the oil boom. Said there was just too much to do.
Some think that other areas of economic growth at least contributed to the increase, but I don’t think that is true. It may be that the increase in manufacturing, particularly ag manufacturing, and in certain areas like Microsoft and less well known computer software and hardware firms slowed the decrease down, but I don’t think any were large enough to make up for the decrease in farming population and the secondary jobs farming brought to small towns.
I am talking about all the small town lumber yards, hardware stores, machinery dealers and car and pickup dealerships now gone. Go to Grafton, Carrington, Lamoure, any little town outside of the oil patch. It is sad. And it is the truth.
On the other hand, in a half dozen or so shopping center towns there was some growth. Look at the table above, in the classification of city, of MSA, of MiSa (micropolitan statistical area), it was only Jamestown and Wahpeton which lost jobs, and population.
Then we do take the positive like growth in manufacturing and add it to the oil boom and North Dakota over the past four to six years has had an increase, a large increase, in the number of jobs and in population.
I won’t repeat the data, but just say that without the oil boom our job numbers would be down substantially over this time. I will also say that when the oil boom is built if something else, possibly another energy development doesn’t happen we will drop from our peak. However, we will still be larger than we were in 2000.
In the meantime, ain’t this great, or so I think.
Probably only four comments to make concerning this months airline boardings:
First, Jamestown and Devils Lake are again getting airline service, and this is the first time that all of the eight commercial airports in North Dakota have jet service. Does that make a difference? Well, the destination may have something to do with it, but look at the numbers. For June 2014 compared to June 2013 Devils Lake increased nearly 22 percent, and Jamestown over 53 percent.
Second, the increase in the oil patch is still substantial. A lot of it may be secondary spending coming from the growth. Things like new retail coming in, or hotels, etc. Whatever, Dickinson, the hot spot in exploration, is up 153 percent for the year. Williston, the mature boomtown is only up 25 percent.
Third, and most surprising, and probably disappointing, Grand Forks is down nearly 10 percent for the month, and that is enough to make them down slightly for the year to date comparison. I haven’t heard of any reason for it. Their building permits are heading towards another record. Their city sales taxes are still positive and a good increase. While Canadian crossings at Pembina are down for the year, the motel taxes and restaurant and lounge taxes are up suggesting good retail sales. Maybe there is a decrease in the UAV traffic, but it is hard to imagine that would be down a 1000 people in a month. 10 percent is a lot.
I hope someone is studying this. After so many disappointing years Grand Forks aviation was experiencing substantial growth. Is Fargo “buying” those seats? What caused that city’s substantial increase, especially compared to the Grand Forks traffic.
Finally, when ever I read about the oil boom it seems there is always something about state permits, or hearings. It has always made me wonder why Bismarck appears to grow so little, especially this year with all the activity in Dickinson.
First, be sure to look at the report below this one. It was also just posted and covers the city sales taxes for July as well as the First Quarter 2014 state sales taxes.
As for this report, it is the most recent report about North Dakota oil and gas production. Another million barrels a day report. Even a little better than when North Dakota finally broke through that milestone last month. With more and more wells being completed we can expect that figure to continue increasing. Of course as more and more wells move into that post twenty month age that will lead to a daily decline, but we should have enough wells by then to stay in that category for many years for now.
Now the next interesting thing is what will happen to the natural gas production. We should see that become a major business in the state.
At this point it is just watching the market maturing.
I am presenting a more extensive report of sales taxes this month then I have in the past. Not only do I have the Grand Forks data and other major cities in the state for the month of July, but I also am presenting the first quarter 2014 state sales tax collections. Of course the time is different so we have to be careful in the analysis here.
That is, the first (top) table is taxes received by the cities in July. You will recall, if the businesses are forwarding the sales taxes they have collected from the consumers it should be for sales that occurred in May. The business then forwards the receipts to the state in June, and the state treasurer then sends the city that money on the 15th of July. That means on average the money the city receives was paid by the consumer two months earlier. The business got to use the money for about two weeks, and the state used it, or made interest on it, for six weeks.
As for the state sales taxes, the business gets use of the consumers tax payments for two weeks and then forwards it to the state for their immediate use. Of course the business acts as a collector of taxes and does not get paid anything for those administrative costs for being the governments.
An analysis shows the continuing slow down in the North Dakota economy. It is a slowdown that should be expected. It comes from two places. First, it is the maturing of the oil boom. Not a bust by any means, but a maturing of the explorations and an increase in the technology of drilling and the pumping. The costs of the wildcatting is now under control. This oil patch has to be the best organized, most efficient exploration ever. It has a success rate of well into the 90 percent category, a figure unheard of before.
The drilling and placing of the wells will go on for at least two more decades and longer if new technology is developed. This will be a development unlike any ever before, and that is good for North Dakota and for all of its sub-divisions, especially for some. It has taken some subdivisions that were disappearing from North Dakota history and turned them into some of the wealthiest in the state.
The second slow down is in the agricultural sector. The interesting thing for economists is that the oil boom, this never before seen level of economic activity in this state, and the nation is taking place at the very time that the largest, most extensive agricultural boom is also occurring. There may have been times when adjusted for the value of the dollar that farmers received more for their products in the past six to ten years, but there never has been a time when this level of prices lasted for this long of a period.
Not only that, but it was happening when new technology was happening at a level not only never recorded, but not ever imagined. Tractor horsepower increased from moderate levels to unimagined amounts. Satellite technology became common place on the farm, in the field. It was used to steer the tractors and combines, to set the machinery, to till, plant and harvest in ways unimagined not a decade before.
While at this time the boom has not turned into a bust, but it has created a significant slow down in the returns to the farms, and that has “multiplied” itself all the way across the state. Machinery sales are down significantly. Money for the farmers to buy business investments and personal purchases have declined significantly. So too then has the money received by the businesses, the carpenters, the car dealers, etc.
Not a bust, but a major slow down. It is a good thing the state has all that savings from the extra income from oil and agriculture this past decade.
Now, that all being said, the state is in a slowdown, but if you recall the last report by the OMB North Dakota government collections for its major taxes, after significant reductions by the legislature, is not slowing down. In fact collections are significantly greater than projected by the firm the state hires to tell them what to expect. It will take a major economic slowdown for the state not to have significantly more money than anticipated at the end of this biennium.
Given that places like Williston, Tioga, and Watford City actually are collecting less sales taxes than last year, but Dickinson is collecting more, and Fargo, as far from the oil patch as you can get, is collecting a lot more. No, more than a lot more.
Both Dickinson and Fargo are up about 17 percent from last year (for the first 6 months of 2014), and Fargo is over four times as large as Dickinson in terms of collections.
Finally, to my Grand Forks readers, I keep hearing how Grand Forks isn’t growing. I don’t know who is looking at what data to come up with that conclusion. Yes, it is slow compared to Fargo, but it is consistently ahead of last year in total, and in fact in every area. Some things like sales taxes are only up a few percent, but when we realize how our Canadian traffic, an important segment of the Grand Forks market, has slowed down because of their dollar when we look at the building, the employment, and other factors we need to be happy with Grand Forks economy. Grand Forks needs to keep two three letter words in mind: UND and UAV. While AGR is slowing down those two are increasing.
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