Ralph Kingsbury's monthly look at the local economy
The monthly Grand Forks Herald column by Ralph Kingsbury, local economist and former member of the State Board of Higher Education, came out in today's paper. Each month, Kingsbury looks at various aspects of the local economy to try to get a picture of where we are as a community. He also looks at regional and national trends that could have an impact on the community. Take a look at the column. I know I look forward to his analysis each month.
Some interesting points:
•Again this month, Grand Forks building permits are another huge success story. Compared with June 2005, the permit values for June 2006 are up in excess of 83 percent. The significant factor is the increase is across all categories. There are not one or two huge projects that made the difference.
•Single-family dwellings and townhouses are real nice figures for the year. Both categories, as I have mentioned before, bode well for a growing population for Grand Forks.
•Looking at all the housing categories over the last several years, and knowing each organization's past history, I believe a census would come out with a population much closer to the Metropolitan Planning Organization's estimate of 53,000 than the State Data Center's 49,000.
•From what I understand, different areas of the Grand Forks economy are doing well. Motel vacancies are low, and restaurant business is good.
•We could see oil at $100 a barrel before winter. I don't know how much more the economy can absorb before it becomes serious trouble.
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4 comments:
On the $100 a barrel:
I firmly believe that North Dakota will benefit from the high oil prices, especially western North Dakota. With higher oil prices means more oil drilling and with more drilling means more employees and growth for the Williston Basin.
That population and the oil industry will be taxed, and our roads and our education system should see improvements, or the state will be able to provide tax breaks.
Whether these benefits will trickle into the Grand Forks and Fargo economies is a good question, but I have to think that regional growth is a good thing.
Glad to see that Grand Forks is finally starting to turn around after 10 years after the flood. The more you guys grow, the more people come down to Fargo to shop, travel, and relax...(a.k.a. it's good for us too).
The oil prices should help Western North Dakota, however, I believe it's a double-edged sword to rely on an industry that might not be around in 10 years (we could all be driving hydrogen, ethanol, solar, hybrids)...
Like Peder, I see high oil prices as being a good thing for the state of North Dakota.
Actually, there are two rather different reasons why I think high prices at the pump are going to encourage growth and a strong economy in this region.
First...
As everyone is probably aware, there is a new oil boom going on in western North Dakota. However, unlike fleeting booms in the past, I have heard plenty of people saying that this boom could last for literally decades. With increasing tensions overseas, I think we can be assured that the United States is going to look closely at its own resources of crude oil. That is a very good thing for oil-rich North Dakota. Because of this, I see the oil boom out west not only holding its own, but likely increasing greatly. The boom will certainly help western North Dakota and cities like Williston and Dickinson and probably also cities like Bismarck and Minot. However, I think the oil boom will have benefits that trickle throughout the state. North Dakota is already on pretty good financial footing and the oil boom will only make that footing stronger. Like Peder alluded to, a rich North Dakota will have more money to spend on infastructure, higher education, etc. That would ultimately help not just the western part of the state, but cities like Grand Forks and Fargo too.
Second...
Eventually, people will become increasingly fed up with high prices at the pump. That should bring about a whole new age in which gasoline becomes just one of many fuels with which we can power our cars. Hydrogen is a plausible successor to gasoline. Guess which city has a major hydrogen research facility/program? That would be Grand Forks. It doesn't stop there, though. Increased interest in fuels like ethanol would help the North Dakota economy too. We actually have the capability to become a leader in the production of many future energies.
So, essentially, high oil prices should help the state's oil boom and lead to growth throughout the state in the near future. However, the eventual replacement of oil could also lead to an economic boom in North Dakota.
Either way, I think high oil prices are good for the state of North Dakota (with the notable exception of our farmers).
I'm from the Williston area and have family/friends working in the oil field. I have heard from them that from the welding to construction, things are being built to last out there this time. In the early 80's boom, things were built up as quickly and cheaply as possible. Also, there are literally hundred of thousands more acres of mineral rights being leased this time around. The companies are planning on sticking around for awhile, and it will take many many years to suck all of the oil out of the Bakken Formation. Plus, 18 year olds can easily make $80-$100,000/year out there and that's GREAT for the economy, as they spend it all on new pick-ups, jet skis,beer, etc...
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