Posted 12/27/16 (Tue)
By Neal A. Shipman
As we say good-bye to 2016, there will be many in North Dakota and McKenzie County who won’t be too sad to see the year come to an end when it comes to our economy. While 2016 wasn’t the worst of economic times for the state or the county, it surely tested our state, county and city officials who were trying to manage their budgets as tax revenues took a huge nosedive, as oil and agriculture commodity prices plummeted.
But government wasn’t the only ones that have had to deal with the slowdown in the economy. At the worst, many oilfield and non-oilfield workers saw their jobs disappear. And at best, if they were able to retain their jobs, their salaries and benefits were reduced. Likewise, retail businesses were trying their best to tighten their belts in order to keep their doors open.
Without a doubt, 2016 was a tough time economically for McKenzie County and the state as taxable sales are compared to the previous two years when oil prices ranged from $80 to over $100 per barrel and were driving the economy.
The OPEC-induced crash in oil prices definitely hurt the economy of the state and oil-producing counties, like McKenzie County.
But with OPEC’s recent decision to reduce their oil production in order to increase oil prices, there are already positive signs on the horizon that will bode well for North Dakota and McKenzie County in the future. With oil prices now seemingly holding firm above the $50 per barrel range, oil companies are beginning to complete some of the over 1,000 uncompleted wells in the state, while more drilling rigs are scheduled to go back to work in 2017.
Coupling the increase in oil prices with the anticipated completion of the Dakota Access Pipeline, which would increase the net price of North Dakota crude oil that enters the pipeline anywhere from $5 to $10 per barrel, would provide a very significant boost to the state and local economy.
Granted, $50 to $60 per barrel oil isn’t going to result in returning state or local revenues back to “boom-era” levels, but prices at those levels will certainly help to stabilize the economy and provide a solid basis by which our state and local governments can effectively budget, energy companies can formulate solid drilling and completion plans, and businesses can move forward.
After watching our local economy, based on taxable sales collections, fall back to 2013 levels, there is a lot of room for being optimistic that better times are coming for Watford City and McKenzie County. Being in the core of the Bakken Oil Formation means that any well completions or the drilling of new oil wells is probably going to happen here first.
Plus Watford City and McKenzie County are not the same places that they were six years ago. The city has seen its population grow from 1,744 to an estimated 7,000 and the county’s population is well over the 10,000 mark. Today, we have more homes, apartments, and more businesses than we had six years. We have more companies that now call Watford City and McKenzie County home. The city, in particular, has invested millions of dollars in making infrastructure improvements to its water, sewer and road systems, while the county likewise invested millions of dollars in improving its road system and other infrastructure.
These investments, as well as the new high school, event center, and soon-to-be completed new replacement healthcare facility, were necessary to meet today’s population and the projected population.
Will oil prices recover in 2017? We are led to believe so, but that is a question that only time will answer.