Posted on 08/20/2012 3:21:07 AM PDT by Son House
On Thursday, members of the Federal Reserve Bank of Minneapolis took a tour of the Bakken area. The trips was planned so that Bank President Narayana Kocherlakota and his staff could gather more information on what is currently happening in the region from an economic standpoint.
“Obviously, what’s happening here in the Bakken —we took a tour today between Minot and Williston—is quite special,” said Kocherlakota in meeting with the press after the tour. “Just the level of economic vitality is quite different her relative to anywhere else.”
With all the struggles in the national economy, western North Dakota is seen as a beacon of light. Kocherlakota said he felt it was important for his bank, and the nation as a whole, to know that not everyone is going through the same things economically.
“I think it helps convey the important notion that there’s a lot of differences across regions and districts in the United States,” said Kocherlakota. “Very often when we’re making policy, and appropriately so, we really focus a lot on the numbers for the country as a whole, but beneath that is masking a lot of differences across regions, and I think it’s important for us to keep that in mind.”
The oil boom has brought a shock to the labor market in the area, and many things are still trying to catch up.
Kocherlakota said the Bakken is an interesting example of something most people only know through economics classes, and that can help when the Federal Reserve makes policy.
“It’s hard to get labor markets to function as they might in an economics textbook,” said Kocherlakota. “I think being on the ground level here, for me to go back to Washington and talk about what I’ve seen, helps bring that point forward.”
The Federal Reserve Bank of Minneapolis oversees the Ninth Federal Reserve District, which includes North Dakota, South Dakota, Montana, Minnesota, Northwestern Wisconsin and the upper peninsula of Michigan. While the Bakken Region is booming, its overall effect on the district, and the US as a whole, is not as big as it seems, Kocherlakota said.
“When you do the calculations, if you’re thinking about the Ninth district as a whole, there’s just a limited amount that what’s going on here can influence that entire economny,” said Kocherlakota. “The population of the Ninth District is about 9 million people, the population of North Dakota is about 600,000, and then we get into western North Dakota, and it’s an even smaller slice than that. So I think what’s going on the Bakken is extremely important for western North Dakota, it’s very important for North Dakota.”
Despite the small impact the boom has had on the national economy Mary Brainerd, President and CEO of the Class C directors at the Federal Reserve, did see some positives that could help the US.
“I think it’s fair to say that some of what we were hearing about today about technology and new approaches, it sounds like there’s hope that that would have a broader implication than just the Bakken region,” said Brainerd. “That was clearly one of the highlights from my perspective.”
With a boom, there usually comes a bust, and despite all the prosperity, Kocherlakota said people should be aware that it won’t last forever, and to use some of the changes in the area to keep things going.
“I think people should think about this as a windfall,” said Kocherlakota. “I think we should take the viewpoint that it’s not going to last for ever, but what do you do when you have a windfall that isn’t going to last forever, you should invest it, and I think the right way to be thinking about this is how do we want Williston and Western North Dakota to look like in 20 years, and how can we take the resources, as a society, and make Williston what we want it to be.”
The oil boom has brought a shock to the labor market in the area, and many things are still trying to catch up.
Kocherlakota said the Bakken is an interesting example of something most people only know through economics classes, and that can help when the Federal Reserve makes policy.
“It’s hard to get labor markets to function as they might in an economics textbook,”
October 04, 2011
Dems Block McConnell Bid to Call Vote on Obama Jobs Bill
http://www.freerepublic.com/focus/f-news/2787870/posts
Senate Republican Leader Mitch McConnell, in an attempt to pluck an arrow out of President Obama’s rhetorical quiver, tried to get the Senate to vote on the president’s $447 billion jobs bill Tuesday — presumably to test whether Democrats have the votes to pass it.
But while Obama repeatedly has called on Congress to pass the bill right away, Democratic Leader Harry Reid shot down the effort, accusing McConnell of pulling a political stunt.
December 09, 2011
Obama: Unemployment Benefits Will Create More Jobs Than Keystone Pipeline
http://www.rushlimbaugh.com/daily/2011/12/09/obama_unemployment_benefits_will_create_more_jobs_than_keystone_pipeline
RUSH: From TheHill.com: “A pending legislative package to extend the payroll tax credit and unemployment insurance will create more jobs than the approval of the Keystone pipeline, Obama said yesterday. ‘Here’s what I know,’ he said. ‘However many jobs might be generated by the pipeline, they’re going to be a lot fewer than the jobs created by extending the payroll tax cut and extending unemployment insurance.’” In fact, here’s the president saying that. This was this morning, actually, in Washington talking about this.
OBAMA: I know that, eh — the — the suggestion right now is that somehow, “Well, this Keystone issue, uh, will create jobs.” That’s being determined by the State Department right now, and there is a process. But here’s what I know. However many jobs might be generated by a Keystone pipeline, they’re gonna be a lot fewer than the jobs that are created by extending the payroll tax cut and extending unemployment insurance.
I live in Minot :-)
There are 7,352 active wells in North Dakota 35,000 wells that have yet to be drilled.
So we can expect the current exponential increases in Bakken oil output to continue in the future
Not any more. Heck, half of Idaho is over here working, and I've seen license plates from every state in the union.
Closer to 700,000 now.
But then, a bunch of his other statements indicate these folks are 7-10 years behind what has been going on here, and they ignore the effects the development here has elsewhere. Tools, tubular goods (casing, drill pipe, pipeline), vehicles, equipment, parts, even exported electricity all factor into economies outside their Federal Reserve District's purview, because they are produced outside it and shipped in.
There are waitresses in Iowa who might not have a job if it wasn't for the truck traffic headed to and from here.
Which indicates to me that they still don't get it.
....so the second largest producer of oil (after Texas) has a "small" impact on the US economy.......
unbelievable
I live in Ross. 35000 thousand wells to be drilled is a lot of drilling especially when Hess has cut back on the number of rigs they are employing.
I think that our success is also killing us. There is no where to go with the extra oil.
We need a new pipeline
Our president is an eco-ignoramus so our wealth continues ot flow overseas.
All in keeping with the meme that the free market and private enterprise are not the solution to the economic doldrums this country has sailed into.
They're just doing their part. In the meantime, Williams County ND has an unemployment rate of under 2%...and the state of ND has a huge surplus (But the State has a State Bank, too (Bank of North Dakota), and maybe the Fed folks don't want that getting out...)
(That is how Chesapeake got in a bind, imho, they invested more than the could recoup when Natural Gas prices slumped.)
This also puts some slack into the system, and opens the door to drilling cost reductions through rate cuts (because no drilling rig makes money when idle, in fact, from the day the derrick is laid over, it starts accumulating problems which will cost money later).
I've been in the oil patch for over 30 years, mostly here in ND, and this is familiar territory.
Wages in the oil industry tend to slump when prices do, unlike the public sector where wages tend to only increase or remain stable.
Every unnecessary expense the government imposes on the industry comes out of my pocket twice--up front in reduced compensation rates (though this is not always a given), and on the other side when I fill up. North Dakota has been good at working with the oil and gas industry, and maintaining the balance between necessary regulation and a business friendly environment.
OTOH, the Feds have been looking for any way to hurt the industry they can find.
Based on what I read in the article, Kocherlakota sounds like a sensible, intelligent person. I wonder if the Feds could learn anything from him. Or from just about any Freeper chosen at random. The Feds seem devoid of common sense.
I agree. The boom and the bust of the oil patch.
Please God, just one more boom and I promise not to waste my money this time
“So we can expect the current exponential increases in Bakken oil output to continue in the future”
Maybe it will continue, but if Heidi Nastykamp and Dumbass Taylor are elected, their agenda includes throttling back our oil production.
For those that do not know Heidi, she is an Ed Shultz grade democrat who adores obama and she is trying to get Kent Conrad’s (D - to retire) seat in the Senate.
Sounds like a socialist to me.
That needs it’s own thread.
The railroad is hauling crude oil to the tune of well over 30,000 bbl/day. That's money in other segments of the economy elsewhere.
The directional crew working with me is composed of people from Louisiana, Wyoming, Colorado, and elsewhere, those paychecks go there and stimulate the economy where they hang their hat.
The drilling engineer is from New Mexico, the crews are from all over--and their paychecks go there, more than not.
For the man to NOT see that there is a much broader economic impact than just here in ND has me gobsmacked.
Thousands of people are NOT losing their homes, are buying vehicles, are buying appliances, clothing, food better than they might be able to otherwise afford, and paying taxes instead of languishing on food stamps.
Locally, the western part of the state is awash with millionaires (not the obnoxious and ostentatious kind, but down to earth folks) who are sending kids and grandkids to college, buying six figure farm equipment (wheat farms here are measured in square miles AKA: "sections") and otherwise stimulating the economy with money from lease settlements and royalty checks.
While there is a boom in Williston, Dickinson, and Minot (and all the smaller towns in between), that spills over into Montana where the Elm Coulee Field preceded the action in North Dakota's part of the Bakken and where I worked my first Bakken lateral in 2000.
Beyond the impact locally, there is the immeasurable impact elsewhere, partly directly from operations here, but even more, from proving out the techniques which have led to even more exploration and production elsewhere, from the Marcellus to the Utica, to the Eagle Ford, and not just in the CONUS, but as far away as China and Poland.
Negligable impact? Hardly, but it betrays negligable knowledge of that impact.
Good point. I missed that.
Normally, when the economy is booming and there’s lots of jobs, the Federal Reserve does everything in its power to kill it.
Thanks, Smokin’ Joe, for the explanation.
People like you are exactly why I read FR. I learn a lot here.
Right on Joe.
I sit in NH. I sell a lumber distributor in Idaho. He sells factories in Idaho that are building Man Camp buildings. These buildings are being shipped into North Dakota and Alberta to house oil workers. I buy the lumber from sawmills in ID, MT, OR, WA, CA, BC, and AB.
There is a constant flow of trucks DAILY from Billings, MT going east towards the Balkan area. There is so much business over there right now the local companies can not keep up.
I sell a pallet company in WY. Their biggest customer makes drilling mud. All the mud they produce is going to ND
JD Irving in New Brunswick is bringing Balkan oil via the BNSF/CN railroad to their refinery in St. John New Brunswick. This refinery is located on the Atlantic Ocean so that it can receive ocean going supertankers. It is cheaper for them to buy US oil transported on a railcar than oil from Saudi Arabia transported on a supertanker.
All of these people/companies are thousands of miles away from the Balkan. However, we all are benefitting from the boom. This is the trickle down effect that the bankers have to realize.
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