The BLS just released the Regional and State Employment and Unemployment figures for May 2015, and the figures are looking pretty ugly for North Dakota. North Dakota had the second-worst job losses of any state in the country, losing 5,500 jobs last month. This is especially bad considering that North Dakota has such a small population to begin with. This amounts to a loss of 1.1% of the state’s jobs in a single month. The number of jobs created in the last 12 months in North Dakota currently stands at just +3,500, a middling figure when compared to the roughly 20,000 jobs the state has been creating each year since 2010.
With the price of WTI oil currently standing at $59.37 as of July 19, 2015, the modest recovery in prices since the low of $47/barrel in March has done little to ameliorate the pain felt in states that are more dependent on oil for its economic fortunes. Louisiana has been hit particularly hard – its unemployment rate has risen to 6.6% from 5.9% a year earlier. North Dakota’s unemployment has risen from 2.7% to a still-low 3.1%, although a further rise in unemployment has been partially stemmed due to a loss of 2,900 people in the state’s official labor force in the past two months.
Many industries in North Dakota depend on the ever-increasing bounty of oil and gas extracted from the Bakken formation to ensure their continued survival and expansion. Retail, transportation and warehousing, manufacturing, construction – these industries in particular owe their flourishing growth to the infusion of people and industry into the region. While $60/barrel is not going to completely kill off drilling and fracking activity in the region, it will certainly slow it down. According to the weekly Baker Hughes oil rig count, the brunt of the fall in oil prices is being borne in the Permian Basin in Texas, where the breakeven point for drilling oil is higher. It remains to be seen how ell North Dakota can handle the steep drop in oil prices going forward.
Author: Logan Arias