January 10, 2018


By Neal A. Shipman
Farmer Editor

It should come as no surprise to anyone how important the oil industry is to the economy of oil patch communities and counties, as well as to North Dakota’s economy. As we have seen, when oil prices plummet and drilling activity grinds to a halt, the economy of the entire state suffers. And when oil prices are good and oil companies feel confident that they can increase drilling and well completion activity, economic numbers surge in those communities that serve that vital industry.
Most of us can remember what happened in places like Watford City and McKenzie County, as well as other parts of the oil patch, when oil prices soared above $100 a barrel. Our community was transformed almost overnight as our population grew five-fold and we faced massive housing shortages and a lack of infrastructure to meet the demands.
Likewise, we have seen what happened when oil prices dropped into the mid-$30 per barrel range shortly after and the oil patch ground to a virtual stop everywhere except within the core of the Bakken. The impacts of the slowdown were felt all across North Dakota.
And now, according to the taxable sales and purchases data from the first three quarters in 2017, the stability in oil prices and the steady growth in the oil industry is once again making an impact on our economy.
But what is somewhat different this time, is that with the exception of very few other communities in the state, the resurgence in sales so far in 2017 is limited to just a handful of communities in western North Dakota.
The good news is that locally, for the third straight quarter, Watford City and McKenzie County have seen double digit increases in their taxable sales and purchases. While the level of sales is nowhere near what was seen during 2014, the rebound is definitely good news.
But what is more interesting is when one looks at the breakdown of what is happening to taxable sales in the state’s top 50 cities, as well as to the total sales in North Dakota, in the third quarter of 2017.
Of the state’s largest 50 cities, only 21 saw an increase in sales in the third quarter of this year. Virtually all of the major cities in the state outside the oil patch, including Bismarck, Devils Lake, Fargo, Grand Forks, Jamestown, Mandan, Minot, Valley City and Wahpeton saw a decline of sales in the third quarter of 2017 compared to the same period in 2016.
Even with the decreases from the state’s major cities, North Dakota saw a $105.9 million growth in taxable sales and purchases in the third quarter of 2017.
So where did that growth occur?
If you guessed the state’s oil patch region, you would be correct. You would have been even more correct if you had narrowly defined that region of growth in the oil patch as being Watford City, Williston, Dickinson, Tioga, Stanley and New Town.
These six cities saw their combined taxable sales and purchases in the third quarter increase by $124,912,481, which accounted for more than the state’s total growth.
By all estimates, these six cities will continue to carry the state’s economic growth through 2017.
That trend needs to be remembered by our state’s elected leaders and legislators in the next legislative session when they look at where oil revenue dollars need to allocated to.