Wednesday, March 16, 2011

The economic bright spot. North Dakota

We keep hearing about cool cities and Richard Florida's creative class stuff about the future of the economy. That thinking has been wrong, is wrong, and always will be wrong outside of the engineers and trustafarians. Engineers are important, but the latter are frankly worthless to society.

What's key is jobs, and if there is an economic recovery right now going on, it is in what is considered one of the most "uncoolest" places in the US. North Dakota. North Dakota. Home of extreme temperature ranges, farmland, ranches, little "diversity" (German, Scandinavian, or Sioux mostly), and energy. All things that the Barack Obama/Rahm Emmanuel snob class doesn't like.

From New Geography
Already fourth in oil production behind Texas, Alaska and California, the state is positioned to advance on its competitors. Drilling in both Alaska and the Gulf, for example, is currently being restrained by Washington-imposed regulations. And progressives in California—which sits on its own prodigious oil supplies—abhor drilling, promising green jobs while suffering double-digit unemployment, higher utility rates and the prospect of mind-numbing new regulations that are designed to combat global warming and are all but certain to depress future growth. In North Dakota, by contrast, even the state's Democrats—such as Sen. Kent Conrad and former Sen. Byron Dorgan—tend to be pro-oil. The industry services the old-fashioned liberal goal of making middle-class constituents wealthier.

Oil also is the principal reason North Dakota enjoys arguably the best fiscal situation in all the states. With a severance tax on locally produced oil, there's a growing state surplus. Recent estimates put an extra $1 billion in the state's coffers this year, and that's based on a now-low price of $70 a barrel.

North Dakota, however, is no one-note Prairie sheikdom. The state enjoys prodigious coal supplies and has—yes—even moved heavily into wind-generated electricity, now ranking ninth in the country. Thanks to global demand, North Dakota's crop sales are strong, but they are no longer the dominant economic driver—agriculture employs only 7.2% of the state's work force.

Perhaps more surprising, North Dakota is also attracting high-tech. For years many of the state's talented graduates left home, but that brain drain is beginning to reverse. This has been critical to the success of many companies, such as Great Plains Software, which was founded in the 1980s and sold to Microsoft in 2001 for $1.1 billion. The firm has well over 1,000 employees.

That is an actual diversified economy, in the real sense - not abandoning it's primary historical industry (Agriculture). The energy is also diverse - coal, oil, wind, and natural gas.

I've long said that we need an all the above (minus the tyrannical and economic treason of cap and trade and anti-automobile CAFE increases) energy policy to promote energy independence from the Middle East. That includes oil, gas, coal, nuclear(not in subduction zones), wind, solar, non-food ethanol (Don't use corn), bio-diesel, and hydroelectrical. The dumbest argument I've ever seen is by those opposed to opening up ANWR because "it would take 10 years." I don't give a damn if it takes 20 years. Do we want to have our oil at worst in reserves, or do we want the Saudis to have us by the balls? Let's not forget the rapidly industrializing China and India with 2+ Billion people going to increase their consumption of oil/gas.

The gas prices in 2008 were IMO the straw that broke the camel's back when it came to the collapse. It wasn't budgeted for. It wasn't planned. It increased shipping costs for everything causing inflation. Wages wern't increasing. Now we see gas prices creeping towards $4 again. If Obama wants a recovery, this isn't helping.

Hopefully, Obama and his EPA doesn't put the hammer down on North Dakota. More states need to learn from North Dakota and put jobs and America first, regardless of what Hollywood and the self proclaimed elite think. When Al Gore, Robert Redford, James Cameron, and RFK Jr give up their 20,000 sq ft homes, jets, hummer's, and their carbon footprints, I'll maybe start thinking about considering what they have to say when they run their mouths.

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