Oil Booms in North Dakota

[ScottM]

http://www.bloomberg.com/news/2012-01-25/north-dakota-oil-boom-brings-blight-with-growth-as-costs-soar.html

“It’s absolutely destroying our infrastructure,” said Hynek, a Mountrail County commissioner, as he sat in a pickup truck on the 1,400-acre farm where his family has grown wheat, flax and sunflowers for four generations.

“There were three rapes here last summer -- that’s in a town with one assault in its history,” said Cory Rice, who bought the restaurant from his grandparents. “It used to be a quiet community. Now it’s dangerous.”

State housing officials say escalating rents are forcing longtime residents to leave. They can’t find developers interested in building new affordable housing, they add.

LaFontaine, the Williston schools superintendent, said she needs about $87 million to build two elementary schools and one intermediate school and to hire new teachers. State lawmakers voted down a bill last year that would have provided some funding.

[Teeder11]

As far as I can gather, this reality show, ala "Ice Road Truckers," is still in the pilot stage, shopping for a network to show it. Whether it makes it to prime time or not, it's an interesting look at life in Williston these days.

http://www.fishingbuddy.com/boomtown_girls

[ScottM]

http://www.cnbc.com/id/46167125/

The TV show is currently airing.

[ScottM]

http://online.wsj.com/article/SB10001424052970203370604577265773038268282.html?mod=WSJ_Opinion_LEADTop

Nodak gets some love in The Wall Street Journal

[Fetch]

http://www.bakkenoil...m-visible-space

a lot of Hot air out west & in the Name thread

I knew it would make the winter warmer

[The Sicatoka]

http://www.bakkenoil...m-visible-space

a lot of Hot air out west ...

Aren't ... you ... out west?

[82SiouxGuy]

Aren't ... you ... out west?

He also spends a lot of time in the name thread. Is that a pattern?

[bisonh8er]

Found this article in the Minot Daily today about the growth out west and even a little bit about Grand Forks housing. Sounds like the the east side of the state is also picking up their fair share of people.

http://minotdailynews.com/page/content.detail/id/564896/Domicile-dash--Builders-get-early-start-on-2012-construction-season.html?nav=5010

Grand Forks-

"We have 10 apartment buildings that will be started this year," Collings said. "We have a desperate need for apartments here, and hotels." (Bev Collins)

"Grand Forks saw its busiest construction years from 2003 to 2005, but 2011 did pick up a bit. There were 326 housing units permitted in 2011, compared to 128 in 2010, thanks in good part to a boom in construction of multi-family housing."

Bismarck-

"Bismarck has issued 76 permits for single-family homes this year through March, compared to eight permits for the same period a year ago."

"Overall, I am projecting about another 10 to 15 percent growth in the residential market. Commercial could even be higher," (Ray Ziegler)

Minot-

"Minot wasn't far behind Williston in housing growth last year, with 1,132 housing units. That was up more than 80 percent from 2010."

"Several years ago, Minot wasn't adding more than 30 apartments units a year. Last year, the city permitted 631."

"Builders have suggested 4,000 to 5,000 more housing units are needed in Minot just to catch up."

"indications from the oil industry are that this area could see 3,000 to 4,000 people moving in each year."

".....commercial building permits shot up 157 percent to $81.5 million."

Williston-

"Williston is growing faster than Fargo, with 1,340 housing units permitted in 2011, up from 610 in 2010. For the first quarter of this year, building permits of $33 million compare to $7 million at the same time last year, said Kelly Aberle, office manager in the city building department. Commercial permits have almost tripled. Single-family permits are about the same as last year, while apartment unit numbers are up."

[Let'sGoHawks!]

Here is a question for you economist types out there:

Before the oil "boom", what are some of the reasons ND was in such good financial shape?

I am in an argument with a Twin Cities person who says ND will fall to crap whenever this boom is over. I tried telling them that ND was in excellent shape before oil, but couldn't cite exactly why. I mentioned agriculture and having the Bank of ND, but fell short after that.

Anyone....?

[UNDBIZ]

Here is a question for you economist types out there:

Before the oil "boom", what are some of the reasons ND was in such good financial shape?

I am in an argument with a Twin Cities person who says ND will fall to crap whenever this boom is over. I tried telling them that ND was in excellent shape before oil, but couldn't cite exactly why. I mentioned agriculture and having the Bank of ND, but fell short after that.

Anyone.... ?

One big thing is there was never a run-up in the price of housing in ND before the oil boom like there was in the rest of the country. However, the oil boom is causing the price of housing to increase dramatically now. If the oil boom were to go bust, many people (especially in the western half of the state starting with Bismarck and Minot) would see the value of their property decrease a lot. The state as a whole would go through some lean years as it adjusts back to pre-2008 (when the rest of the country was booming) spending levels. Although the state would've been fine without the oil boom, it is quickly becoming dependent on it now that it's here.

IMO, you're both right to an extent. ND was fine before the oil boom, but if it goes bust things could be difficult for a few years (again, especially for western ND). However, most economists and people on the ground don't see this oil boom going bust any time soon, but it's pretty rare for them to predict a bust when everyone is making so much money pushing the boom.

[ScottM]

However, most economists and people on the ground don't see this oil boom going bust any time soon, but it's pretty rare for them to predict a bust when everyone is making so much money pushing the boom.

That's what they said about real estate a few years ago too.

[UNDBIZ]

That's what they said about real estate a few years ago too.

Exactly.

[dakotadan]

I'm surprised this hasn't been posted in here yet.

N.D. becomes No. 2 oil producing state, trailing only Texas

[dakotadan]

There is a big difference between predicting a non-tangible housing market and quantifying tangible petroleum. And there were actually plenty of people warning about the housing market taking a downturn.

[ScottM]

There is a big difference between predicting a non-tangible housing market and quantifying tangible petroleum. And there were actually plenty of people warning about the housing market taking a downturn.

Sure, and the guys talking about a housing bubble didn't make as much those who kept their mouths shut and shorted it.

Here you have a finite resource being tapped by a growing number of companies picking the "low hanging fruit" before the easy money is gone and the peak wanes, and fracking becomes a bigger political and a health issue. California and Alaska's peak production has fallen, as North Dakota's has increased so the leap was bound to happen. But don't break out the Bud Light yet.

At some point, the economics will, once again, tilt against North Dakota's oil boom. In a year or three the CDS spreads on bonds issued by the state and various local governments may be worth a play.

[yababy8]

I read in an earlier post that farmers in the area were being limited to three RV's being parked on their property. This makes me wonder what other growth restrictions/road blocks are currently happening. For example, if restaurants are experiencing perpetual 1 hr. waite times, are there restuarants being built quickly and easily or is it a zoning and permitt nightmare?

If a motel 6 is getting $130 per night, then how fast are new motels poping up?

If sports car sales are booming, how fast are car lots popping up?

And who is telling farmers how many RV's can be on property they own? Is zoning that powerfull in rural North Dakota or do farmers have HOA's?

[choyt3]

I don't think any restaurants are being built in Williston. They don't have anyone that wants to work in them. McDonalds is supposedly the busiest in the country and I believe they are DRIVE THROUGH ONLY after 6. Other eateries are allegedly closing at 4 daily because they don't have any help available.

[82SiouxGuy]

Two of the biggest problems are there is no housing available, and regular businesses can't afford to pay the wages needed to keep employees. A 1 bedroom apartment goes for at least $2,000 per month if you can find one. A sleeping room alone is at least $800. McDonald's is paying $17-20 per hour and has trouble keeping employees.

They are building housing, motels and other businesses as fast as they can. But they have trouble bringing in people to do the construction. They don't have a place for the construction people to live. It has become a vicious circle. Besides that, the sewer system, water system and highway system are all being pushed to the limits. They are trying to catch up on those also. They were overwhelmed and are going to have trouble catching up within the next couple of years.

[UNDBIZ]

I read in an earlier post that farmers in the area were being limited to three RV's being parked on their property. This makes me wonder what other growth restrictions/road blocks are currently happening. For example, if restaurants are experiencing perpetual 1 hr. waite times, are there restuarants being built quickly and easily or is it a zoning and permitt nightmare?

If a motel 6 is getting $130 per night, then how fast are new motels poping up?

If sports car sales are booming, how fast are car lots popping up?

And who is telling farmers how many RV's can be on property they own? Is zoning that powerfull in rural North Dakota or do farmers have HOA's?

Instead of building restaurants, people are just bringing in trailers/mobile food vendors. Not sure if this is due to cost, red tape, or fear of the bust. Cities are creating greater restrictions on the mobile food vendors because they aren't paying property taxes and other costs of doing business.

[yababy8]

Instead of building restaurants, people are just bringing in trailers/mobile food vendors. Not sure if this is due to cost, red tape, or fear of the bust. Cities are creating greater restrictions on the mobile food vendors because they aren't paying property taxes and other costs of doing business.

wonder what type of restrictions they are imposing there?

[UNDBIZ]

wonder what type of restrictions they are imposing there?

Here's what Watford City is doing anyways:

http://bismarcktribune.com/news/state-and-regional/food-trucks-get-days-to-move-out-of-watford-city/article_ab45c3d8-98c4-11e1-94e6-0019bb2963f4.html

[The Sicatoka]

Here's what Watford City is doing anyways:

http://bismarcktribu...19bb2963f4.html

Free "The Sloppy Jalopy"!!!

[UNDBIZ]

Free "The Sloppy Jalopy"!!!

Nice one, however, my feelings are mixed on this issue. $75 per day is a lot ($27K per year), but a restaurant that has an actual building and pays property taxes pays a lot too. It'd be nice to see more permanent buildings/restaurants and less of the restaurant trucks that will only be there for a couple years or so, but these restaurant trucks are serving an immediate need.

[ScottM]

Nice one, however, my feelings are mixed on this issue. $75 per day is a lot ($27K per year), but a restaurant that has an actual building and pays property taxes pays a lot too. It'd be nice to see more permanent buildings/restaurants and less of the restaurant trucks that will only be there for a couple years or so, but these restaurant trucks are serving an immediate need.

Part of the problem is, and will be, that the transients have little vested interest in the long-term prospects for these places. Therefore, they'll continue to trash and overuse local resources, and the long-term residents around the state will be left holding the bag. When somebody refers to this as a "gold rush", they may want to see what's resulted after the "gold" runs out from past rushes, and there's no economic diversity to support the bust.

[UNDBIZ]

Part of the problem is, and will be, that the transients have little vested interest in the long-term prospects for these places. Therefore, they'll continue to trash and overuse local resources, and the long-term residents around the state will be left holding the bag. When somebody refers to this as a "gold rush", they may want to see what's resulted after the "gold" runs out from past rushes, and there's no economic diversity to support the bust.

Agreed. Which is one of the reasons we voted for this:

http://bismarcktribune.com/news/state-and-regional/north-dakota-oil-tax-legacy-fund-tops-m-in-nine/article_20f2aaa6-a036-11e1-b067-0019bb2963f4.html

It should ease the pain (from a government services/taxes standpoint anyways) once this thing does go bust.