The “Economic Miracle State” of North Dakota pumped another record amount of oil during the month of May at a rate of almost 640,000 barrels per day, which was an increase of 4.9% compared to oil production in April (see chart above). North Dakota’s record-setting oil output in May was noteworthy for several reasons:
1) The year-over-year increase in oil production of 75.5% in May was the largest annual gain in state history.
2) North Dakota produced 17% more oil than Alaska in May, marking the third consecutive month that North Dakota out-produced Alaska. The Peace Garden State surpassed Alaska’s oil production for the first time in March to become the country’s new No. 2 oil state, behind only Texas.
3) The number of producing oil wells in the state increased to a new record high of nearly 7,000, and more than 216 new wells were added in just the last month, which is the second highest monthly increase on record. As I reported earlier this week, each new oil well is the equivalent of adding a new $8-10 million business to the state economy, see recent CD post for more details.
4) The amount of oil produced per oil well in the state increased to a new record high of 92 barrels per day, an increase of 35% compared to a year ago, and a sign that the efficiency of shale oil production is increasing significantly. Both the increasing number of wells and the increasing output per well is contributing to record high production levels.
As a result of the ongoing oil boom in the Bakken area, North Dakota continues to lead the nation with the lowest state unemployment rate at a four-year low of 3.0% in May, and more than five percentage points below the national average of 8.2%. There were ten North Dakota counties with jobless rates below 2.0% in May, and Williams County, which is at the center of the Bakken oil boom, boasts the lowest county jobless rate in the country at just 0.7%. The exponential growth in North Dakota oil production has fueled exponential growth in the state’s “Natural Resources and Mining” employment, which has tripled in less than three years, and reached more than 22,000 in May.
Bottom Line: The ongoing record-setting oil production in North Dakota continues to make it the most economically successful state in the country, with record levels of employment and income growth, a labor shortage, increasing tax revenues, the lowest foreclosure rate in the country, a strong real estate market, and jobless rates in ten counties of the Bakken region below 2.0%. Call it the “Dakota Model” of job creation and economic prosperity that is based on developing America’s vast energy resources, which is an economic model that could easily be replicated elsewhere if more domestic energy resources were opened up to exploration and drilling.
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