The Bakken formation in the heart of the Williston Basin—a major driver behind America’s industrious oil boom—lies within 200,000 square miles of land in North Dakota, parts of Montana, and Saskatchewan, Canada.
Overwhelming prosperity throughout the region has brought many changes. No region throughout the country is growing nearly as fast.
In 2008, as new technology in fracking made shale drilling possible, the entire oil industry began focusing on the long-elusive Bakken formation.
Suddenly, the impossible wasn’t impossible anymore.
North Dakota was the first state to use the new fracking technology, and the state instantly made the most of its abundance of oil. Today, North Dakota is the second largest producer of crude oil, right behind Texas and ahead of Alaska.
North Dakota has the lowest unemployment rate in the nation as a result of the boom. The Federal Reserve Bank of Minneapolis said in December that employment had increased over 60 percent in North Dakota’s Bakken area, and that unemployment was an astounding 1.8 percent, according to Fox Business. The state as a whole was only at 3.2 percent.
Naturally, the Bakken shale has become a land of opportunity. Where there is opportunity, people are sure to follow—and that’s exactly what they’ve done.
North Dakota has the highest rate of population growth. In a state that only saw a population increase of 265 people from the year 1940 to 2000, North Dakota’s population will supposedly bounce from 672,591 in 2010 to 841,820 by the year 2025—a 25 percent increase over the next 15 years, reported Bloomberg.
When things are moving as fast as they have been in the Bakken region, problems are bound to arise. Masses of people are flooding the region in hopes of employment—some to plant permanent roots and make lives for themselves.
But where will they all go?
Housing and construction efforts can’t possibly keep up with the influx of people. The demand for housing has pushed the cost of living through the roof—the rent for a one-bedroom apartment can be as high as $2,300 per month, Bloomberg reports—and many families are forced to stay in single hotel rooms for weeks at a time.
And this housing crisis has started to have an adverse effect, driving hard-working citizens away from good jobs.
In order for employers to retain their much needed employees, they are forced to rely on a business tactic that is unheard of in other parts of the country: They offer housing.
Bloomberg reports:
To house a commercial lender and a residential loan processor, McKenzie County Bank in Watford City purchased two, 1,800-square-feet townhouses for about $200,000 each, said [Dale] Patten, the bank’s president.
The bank in turn, rents to the employees for $800 a month—a steal, considering the market value would be between $2,000 and $3,000 a month.
Patten also adds, “It’s either we purchase these, or we didn’t have any employees to fill the holes.”
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And other companies are going beyond the call of duty.
Halliburton Co. (NYSE: HAL) has built 50 single-family homes in Williston and is completing 44 townhouses and 2 apartment buildings, reports Bloomberg.
An imbalance has been created; housing just can’t go up fast enough to support the growing number of people, making the cost of living too high and stunting employment growth normally associated with a thriving economy.
Even a McDonald’s was unable to open its doors because it was understaffed.
In time, the dust will settle and things will return to a sense of normalcy. And that’s when the region will see its full economic potential.
“It’s like remodeling a kitchen,” said Shawn Wenko, assistant director of Williston Economic Development in Williston, N.D., to Fox Business, adding, “You’re doing dishes in the bathtub and cooking on a hotplate. It’s not the most ideal situation, but when we’re done, we’re going to have a pretty nice kitchen.”
When that does happen and things do start to slow down, there will be plenty of new, modern development that will appeal to outsiders and residents alike. As people are already visiting the region for the very first time for employment, they will want to explore the area and discover the place where they could live.
That’s when the tourism industry will reap the benefits; hospitality, travel, and the entire Williston Basin will prosper.
