Certain oil and gas boosters want South Dakota to believe, against most evidence, that expanding oil exploration would bring us the milk and honey of the Bakken oil boom.
But oil exploration hasn’t made things sweet for most of the North Dakota local governments struggling to maintain infrastructure and enforce the law in and around the oil fields. Research from Duke University shows that Bakken oil development has been a net money loser for most local governments:
“The gap between revenues and needs is still fairly large,” Daryl Dukart, a Dunn County commissioner, said in an interview. “It will take many years to balance out.”
Dunn County is far from alone. Analysis from researchers at Duke University found that “most local governments in North Dakota and Montana’s Bakken region have experienced net negative fiscal effects” from the shale drilling boom.
“Because of the very rural nature of North Dakota and Eastern Montana, and the very large scale of the activity that’s been taking place, population growth has essentially outstripped local government’s ability to provide services,” said Daniel Raimi, research associate forDuke University’s Energy Initiative [Sean Cockerham, “Oil Boom a Loser for North Dakota Cities, Counties, Study Finds,” McClatchy, 2015.09.09].
The Bakken appears to be an exception: the Duke researchers found that shale oil drilling in other parts of the country have produced economic benefits. But in the Bakken, such swift and sizable exploration in a previously sparsely developed area much like South Dakota has harmed local government budgets. The swift deceleration of exploration brought about by the year-long oil price slump may give North Dakota’s local governments some breathing room, but it also means new residents leaving and underutilized infrastructure that still has to be paid for:
But the bust is leaving towns like Williston, North Dakota stretched extremely thin as it tries to deal with the aftermath. Williston is coping with $300 million in debt after having leveraged itself to buildup infrastructure to deal with the swelling of people and equipment heading for the oil patch. Roads, schools, housing, water-treatment plants and more all cost the city a lot of money, expected to be paid off with revenues from oil production that are suddenly not flowing into local and state coffers the way they once were [Nick Cunningham, “The Dark Side of the Shale Bust,” OilPrice.com, 2015.06.14].
South Dakota, don’t sweat not having the oil of the Bakken. Our local budgets, infrastructure, and communities are better off not getting drawn into that petro-boom-bust cycle and focusing our efforts on slow, steady development of renewable resources.
From personal experience ….. The oil patch knows no master except greed. The only move faster than when frackers come into an area is when they depart leaving small towns trashed and broke. e.g. Gillette, WY when I worked as a roughneck in the mid 70’s. We pumped more pollutants into the earth with little regulation than will be known for a hundred years.
Here in CO we’re fighting them tooth and nail ’cause this isn’t our first rodeo with these greedy cowboys.
I wonder if the state now sees what a boondoggle these oil pipelines are for the infrastructure of our state. They are net money losers that are to much of a gamble for the damage they will cause compared to the dribble of revenue that may or may not happen. I think they will ignore facts and only go for corruption.
A gentleman from the ND Census Office came and talked to one of my classes last year before oil prices dropped. I was pushing him pretty hard on why North Dakota wasn’t investing more in infrastructure with the oil boom. He brought up a good point that North Dakota has been burned twice with two oil booms which busted in the 50’s and 80’s. I thought he was crazy, but he seems to be more right on this one.
I think that is a general consensus within the ND state government, they are worried to invest heavily in the expansions of infrastructure because they were worried they would be burned again. Unfortunately, this boom may go bust and all ND will be left with is a ruined infrastructure and a large trust fund. Worse off, many of the counties rely on money which is given to them by the state, yet the state has been tight on releasing funds to impact counties, leading to even worse funding problems.
South Dakota doesn’t want to go down this route, the honey is nice, but the sting is bitter.
I write this as I am driving through Dickinson looking at all of the pumpjacks, rigs, and oil flares. A landscape turned upside down.
There are only two successful ways to deal with a “boom”: 1) adopt the Norwegian model – issue, er, ration a limited number of permits per year to even out the peaks and valleys of the boom and the nuts promoting it; or, 2) tax the living heck out it, then when they howl, tax them some more – to pay for the infrastructure and inevitable downside.
Unfortunately county commissioners, local (state) politicians, et. al have the backbone of a jellyfish so the counties’ treasury and resources will be ravished. Next in the region? Perhaps rare earth mineral development.
nuclear waste goes boom http://www.dailykos.com/story/2015/10/26/1439980/-Nuclear-Waste-Fire-Explodes-from-the-Ground-in-Nevada Just another reason to keep that crap away from South Dakota with the deep drill nonsense. Nothing is safe from that.