Oil Blessings and Busts

October 30, 2012 09:22 PM

A brain drain problem has long plagued rural areas of the hard-scrabble Great Plains. Young, educated people flee, taking high tax revenues and economic potential for rural communities with them. To regain such valuable assets, states have tried solutions that range from granting financial incentives to creating jobs and improving the quality of life for young people with more green space and shopping malls.

The problem for many of these windswept states was that there was no one great solution. That is, until black gold started bubbling up from far beneath the surface. Now the Plains are in the midst of an oil boom. After years of watching the next generation run from the prairie, rural Dakotans find themselves above the largest contiguous oil deposit in the lower 48 states. An estimated 4.3 billion barrels of recoverable oil resides in a deposit under the Dakotas, Montana and Canada—about half what the U.S. uses in a year.

In Mountrail County, the center point of the North Dakota oil boom, average income has roughly doubled in five years to $52,027 per person in 2010, ranking it in the richest 100 U.S. counties on that basis, according to a recent Reuters news article. It’s possible the oil boom could be creating up to 2,000 millionaires a year in North Dakota alone, says Bruce Gjovig, founder of the Center for Innovation at the University of North Dakota.

It’s like striking gold for some landowners. For others, it’s bittersweet. When the government gave away land at the turn of the last century, most deeds included land above and below the surface. Some farmers needing cash in the Dust Bowl sold mineral rights for 50¢ an acre. Such rights now are worth up to $1,500 an acre (read more on page 34).

The Dark Side of Oil. There is a socioeconomic downside to the oil boom, however. Aggravated assault reports rose 55% last year in the oil-producing counties of North Dakota, according to state figures. Elementary schools are busting at the seams, and there is congestion on rural roads.
Land values are shifting where oil is flowing, and farmers are facing newfound headaches. Market analyst Ashley Gulke Leavitt, who farms with her husband near Mohall, N.D., says wells put in by the oil companies are leaching salt into their land and affecting crop production.

Still, 35,000 people work in the oil fields in North Dakota, and employers are begging for more. An estimated 4,000 job openings exist. In addition, the service industry that supports the new oil jobs (think Wal-Mart) is desperate for workers. There is finally employment in the rural Plains again. The question is, at what price to agriculture and the fabric of rural communities?

Learn more about rural America’s oil boom from Farm Journal Media’s special coverage at www.FarmJournal.com/energy_boom.

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