Waiting for ‘return’ of oil and gas makes little economic sense

It’s still common for the occasional Minot area resident to cite the “return” of the oil/gas boom as a motivator for an economic boom to return.

It seems an unlikely proposition.

In April, the state produced 1,391,188 barrels of oil a day, a drop of 572 barrels compared to March when the state produced 1,391,760 barrels of oil a day.

The all-time high was in January of this year when the state produced 1.403 million barrels of oil a day

Meanwhile production of gas reached a new all-time high of producing 2.862 MCF a day of natural gas in April.

Can an increase in production happen? Does it seem logical? Will an increase in the price of oil or natural gas require hiring, attract new resident/workers?

What seems more likely is that technology has simply supplanted labor as the primary instrument in extracting oil and gas. That technology enables fewer sites to produce more oil and gas with less labor. Several major technological developments that have led to this change and they represent the innovation for which the private sector is often lauded.

The result is that we haven’t really seen a drop-off in actual production. North Dakota’s all-time high of 1.4 million barrels of oil a day isn’t much more than April’s 1.39 barrels of oil a day in April.

Obviously the “problem” isn’t that wells aren’t producing. They are. It simply doesn’t require the same amount of labor, which then trickles down to fewer residents who then pay fewer taxes and don’t require the same degree of housing or services. It isn’t the industry’s blame, nor the government’s, nor anyone else’s. It is what it is because of new and improved technologies.

Why should the energy industry be different than any other industry? Self check-out lanes displaced workers and saved retail stores and restaurants money. Kiosks are becoming more popular in fast food restaurants. Online shopping has become a real challenge for brick and mortar stores. Technology fundamentally changes how an economy works. Some might decry this as machination replacing manpower, but that is short-sighted. It changes the nature of job. That kiosk from which you order your lunch has to be created, designed, constructed and maintained by people. It’s not so much that jobs go away as much as it is the jobs require a different type of worker.

Those still hoping that the Bakken will suddenly erupt in new activity and thus provide economic benefits to the region miss the point. Activity and production are just fine. This is what the advent of new and/or improved technologies looks like.

As a state and as a people, we need to look at the broader picture and expect our leaders to address economic issues based on the realities of today.


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