If you haven't heard about the "North Dakota phenomenon" yet,
you will soon.
The state is quickly becoming known as a modern-day version of
California during the gold rush. People are flocking to the state,
seeking their fortune (or at least a decent-paying job), and
formerly sleepy farming towns are now booming.
And like the California Gold Rush in the 1850s, it isn't just the
"prospectors" that are looking to make a buck. The boom has become
so huge that prices for just about everything are on the rise.
Demand for housing is so robust, they literally can't build fast
enough to put roofs over people's heads. Companies and city
officials are practically begging able-bodied workers to move to
the state, claiming that a skilled worker can land a job within a
week, sometimes within a day.
So what's causing this modern day boom? Well, unlike in the case of
California, it isn't being caused by gold.
This time, it's oil.
As it turns out, there is an ocean of oil stretching down from
Canada into North Dakota and Montana. It's called the Bakken Shale
field, and scientists estimate there could be well over four
billion barrels of oil in the region. That would put it just behind
the oilfields of Alaska as America's second-largest oil find.
Oil? Aren't we supposed to be running out of the stuff?
Yes, but it turns out we're able to get a lot more out of the
ground than ever before.
You see, we didn't just stumble onto oil in North Dakota. In fact,
scientists have known about it for years. We just haven't had the
technology -- or incentive -- to take it out of the ground. But now
The specifics can get complicated and full of industry jargon, but
suffice it to say these are sophisticated techniques that take
oilfields previously considered difficult and expensive to develop
and make them economically viable. When this technology made shale
oil profitable, companies made a beeline for large shale deposits
like that in North Dakota.
This drilling renaissance has helped the United States go from
importing two-thirds of its oil less than two years ago to
importing about half now. If current production trends continue,
then the United States could be one of the world's biggest oil
producers within six years, accordign to
Goldman Sachs' (
And as you can probably guess, this technology has produced a lot
of oil- and gas-related jobs. North Dakota's
is a staggeringly low 3.5%.
The town of Williston gives a pretty good picture of the situation.
According to a recent story by National Public Radio, Mayor Ward
Koeser estimates the town's unemployment rate is less than 2%. He
also estimates the town has grown from 12,000 to 20,000 in the past
Due to the massive influx of workers in Williston, the local
housing industry can't keep up with demand, causing prices to
skyrocket. Apartments sometimes go for as much as $1,500 a month.
Parking spaces for RVs and trailers are in short supply.
Many exploration companies have built or leased acres of temporary
housing, known as "man camps," where workers live in dorm-style
housing, complete with beds, showers and food service. [To see what
a "man camp" is like,
watch this video
If you're not interested in oil, then that's OK, because there are
plenty of other jobs in the state. "We actually have probably
between 2,000 and 3,000 job openings in Williston right now,"
The picture is similar in other towns across the state. There have
been reports of fast-food jobs paying $15 an hour, restaurant wait
staff making $25 an hour (after tips), truck drivers averaging
$80,000 a year -- even strippers making up to $2,000 a night.
How long can the boom last? Opinions differ on this matter. Some
say five years, others say 40. More important, the question that
should be asked is, "What can we learn from this?"
First, we've learned that the pioneer spirit is alive and well in
the United States. And don't let anyone tell you otherwise.
It takes guts and determination to pack up and venture hundreds of
miles into the unknown, taking a gamble that the "rumors are true"
and that there's still opportunity for those willing to work hard
enough to make the "American dream" a reality.
The second, and more important lesson, is that technology can
propel the American machine. The technology being used to extract
oil from places like the Bakken Shale formation is incredibly
sophisticated. (One article compares techniques used in places such
as North Dakota and the Gulf of Mexico to those used by NASA.) And
it's exactly this type of innovation that can create jobs and
secure our energy future.
Action to Take -->
Innovation and exploration can lead the U.S.
back to greatness. Thanks to technology advances and oil finds like
the Bakken Shale, we've been given a "get out of jail free" card.
The simple truth is we are running out of oil. It's just a matter
of "when," not "if." And because we have to use increasingly costly
techniques to get oil out of the ground, we are simultaneously
establishing a floor for oil prices and helping alternatives become
more economically viable.
Putting a floor on oil prices means companies such as
General Electric (
First Solar (Nasdaq: FSLR)
have time to develop ways to lower costs for alternatives like wind
and solar. As StreetAuthority's David Sterman pointed out in
a recent article about First Solar
, "After cutting its manufacturing costs by 30% in the past three
years, [First Solar] says it is just 19% away from being truly
competitive with more traditional electricity sources such as coal
and gas-fired power plants -- without subsidies."
Technological innovation can be a second chance for the U.S.
economy. It can bring us out of this economic malaise, get people
back to work, get our military out of places that don't like us
very much and solve our long-term energy problems. My guess is that
these are goals almost every American can get behind.
-- Brad Briggs
Disclosure: Neither Brad Briggs nor StreetAuthority, LLC hold
positions in any securities mentioned in this article.
© Copyright 2001-2010 StreetAuthority, LLC. All Rights Reserved.