The Williston Herald is reporting that the Bakken Club, a business which made national headlines by operating as an exclusive, members only club in a tiny western North Dakota town, has fallen on tough times. The club has been evicted by its landlord for allegedly failing to pay rent. The club’s owners, for their part, claim the landlord wasn’t keeping up the property they were renting.
Whatever the outcome, the struggles of the Bakken Club and its surreal business model - relying as it did on membership dues ranging as high as $25,000 per year - are fraught with symbolism portending the end of North Dakota’s oil boom.
It calls to mind all those sumptuous hotels and gambling halls built in the gold boom towns of another era only to close a few years later when the gold ran out and the people left.
The black gold rush in western North Dakota is mostly over.
What remains for North Dakotans is to find out what the new normal is in the after-boom era.
It’s not like we didn’t know this was coming. The state’s growth in tax revenues, while still up a robust 14 percent biennium to date (according to the latest OMB numbers), isn’t exactly the boom of the last biennium.
In December of 2012, the same point in the last biennium that we’re at in the current biennium, general fund revenues were up nearly 64 percent.
This trend is reflected in the state’s population growth as well. Although North Dakota made headlines as the “fastest growing state in the country,” yet again (still a heady thing given that North Dakota was still losing population just a few years ago), the rate of growth in population has also dropped off.
From 2012 to 2013 the growth in the state’s population was 3.9 percent. From 2013 to 2014 the growth was a much slower 2.2 percent.
Oil prices have been dropping of late, as anyone not living under a rock is aware of, and while some state leaders are still bullish, nobody quite knows where the floor is.
Oil companies have begun cutting back on activity in the state; most recently Harold Hamm’s Continental Resources which announced a cut in operating rigs from over 50 down to 34.
I’ll not prophesy doom, though maybe it sounds like I am. I don’t think the facts justify anyone predicting that North Dakota is on the edge of a bust (of course, they don’t rule it out either).
A few years ago I was interviewing some officials from Williston including former Mayor Ward Koeser who said that they disliked the term “oil boom” because a boom implies a bust.
They would later embrace the “boom” nomenclature in their community’s branding, though not for much longer I’d wager.
They made a good point at the time, but booms don’t have to be followed by busts. What North Dakota had was definitely a boom.
It’s over now.
That doesn’t mean the end of the world.
Oil prices will find a floor which, while not as high as boom-time prices, will still support a great deal of oil development in the state. That development will, in turn, continue to drive a great deal of prosperity and tax revenue for the state.
Western communities will continue to grow, hiring and construction will still be strong, but it’s all going to happen at a slower pace.
For some, weary of the break-neck pace of the last few years, that’s probably just fine.
The state does need to be cautious, though, especially heading into a new legislative session next month. We cannot go forward thinking the boom times are the new normal. The boom times aren’t even here any more. They weren’t the new normal.
We’re about to find out what normal is, and hopefully we’ll be ready for it.
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