The oil and natural gas industry in North Dakota accounted for more than $40 billion in gross business volume, nearly 60,000 jobs, and over $3.8 billion in state and local tax revenues according to one of two recent studies that highlight the industry’s impact on North Dakota’s economy.
North Dakota has grown to become the second largest oil producing state in the U.S. This growth has changed the trajectory of our state’s economy and led to unprecedented population growth and economic opportunity for the people of our state.
North Dakota State University researchers, Dean Bangsund and Nancy Hodur, studied the economic contribution of oil and gas exploration, extraction, transportation, processing, and capital investments in 2019, the most recent data available. Their findings show North Dakota’s oil and gas industry directly employed nearly 24,000 people, while economic activity from the indirect and induced effects of the industry supported an additional 17,000 and 18,000 jobs, respectively, for a total of 59,100 jobs attributed to the industry. Employment payrolls, which includes wages, salaries, and employee benefits, was estimated at $4.5 billion. Total gross business volume, which includes direct sales in the oil and gas industry and business generated from indirect and induced economic activity throughout North Dakota, was estimated at $40.2 billion.
While the COVID-19 pandemic made 2020 a challenging year, the good news is that the oil and gas industry has become much more efficient in exploration and production and is expected to rebound quickly as it did from the last downturn. “What we've learned over the last decade is that the North Dakota oil and natural gas industry is incredibly resilient,” said Bangsund, research scientist in agribusiness and applied economics at NDSU. “Regardless of market conditions, it continues to be a major force in our state's economy.”
Another recent study, conducted by AE2S for the Western Dakota Energy Association and the North Dakota Petroleum Council, shows the economic impact of the oil and natural gas industry extends well beyond the oil fields. “People who live in North Dakota know we produce a lot of oil—more than 5 billion barrels since the first well began pumping in 1951,” said Geoff Simon, Executive Director of the Western Dakota Energy Association. “But most people probably don’t know the tax revenue it generates has delivered tremendous benefits to every corner of the state.”
From fiscal years 2008 to 2020, state tax revenues from the oil and natural gas industry in North Dakota totaled nearly $22 billion. From those revenues, the state distributed $8.2 billion for local communities and infrastructure, nearly $1.6 billion for K-12 education, over $1.2 billion for water and flood control projects, $879 million for local transportation projects, $440 million for property tax relief and $29 million for outdoor heritage projects across the state.
“From the $8 billion Legacy Fund to K-12 education and infrastructure funding, the industry’s impact will be felt across North Dakota for generations to come,” said Brent Bogar, senior consultant for engineering and consulting firm AE2S, who led the WDEA/NDPC study.
While the industry has been a significant factor in North Dakota’s economy, state leaders caution that its future success cannot be taken for granted. “These studies underscore the critical importance of the oil and gas industry to our state’s budget, economy and communities, as well as the need for state and federal policies that encourage responsible development of our abundant mineral resources,” Lt. Gov. Brent Sanford said.