Is the Bakken Oil Boom an Example of the Economic Development We Are After?

Nov 4, 2013

Is the Bakken Oil Boom an Example of the Economic Development We Are After?

          The oil boom in the Bakken area of Montana and North Dakota has led to the influx of large numbers of workers attracted by the relatively high-wage jobs associated with oil exploration and development: rough-necks, truck drivers, pipe-fitters, material handlers, railroad workers, etc. Workers are traveling hundreds of miles from their homes and families to take these jobs,  some of them temporarily living in the Bakken area and commuting back home on weekends and other breaks.

          During the very slow recovery from the Great Recession, these high-paying jobs have certainly been a godsend to many workers and their families. The revenues generated for state governments have also helped keep the states’ budgets balanced without deep cuts in services.

          Whether this is a good model for economic development, however, may be another question. Oil and gas companies, understandably, want to suggest that it is. After all, if their private interests in that development can be wrapped in the public interest, merging the two, then oil companies are in a better position to lobby for special privileges for themselves such as reduced taxes and relaxed environmental regulations.

          Law enforcement officials and social welfare agencies, however, seem to be telling a different story about the impact of the boom on the livability of the Bakken communities being impacted.

          The cost of living in the region has skyrocketed, primarily because of the shortage of housing and rapid rise in housing costs. This has put pressure on existing residents who were renting and are being squeezed out by the population crush. Inequality, not surprisingly, is on the rise.

          That population boom is overwhelmingly male. Many of the new workers are being put up in hastily constructed “man-camps.” The crowding of young males with money to spend into rural towns has had familiar consequences.

          A recent study from North Dakota State University looked at the impact of the Bakken oil boom on crime and policing. It found that the calls to police for assistance had skyrocketed. In Watford City, in the middle of the North Dakota Bakken, with its exploding population, police service calls increased over a hundred-fold between 2008 and 2011, from 25 calls per year to 3,900. For the police forces in other counties and towns in the Bakken, the increases have not been this extreme, but they have put law enforcement on the defensive. The Williston police department, for instance, saw calls rise from 5,500 to 16,000 in that same four-year period.[1]

          The increased volume of calls for police services was associated with alcohol-related crimes such as bar fights, disorderly conduct, and drunk driving. Drug problems rose dramatically, especially those associated with meth. Domestic violence was the cause of many of the increased number of calls to the police: Aggravated assault, assault with weapons, etc.  Theft and burglary calls are up.  Traffic accidents had increased dramatically. Prostitution skyrocketed as local hotels, motels, and bars became centers for ongoing prostitution rings.

          This rapid expansion of crime in the Bakken has caught the attention of federal law enforcement agents who have been reinforcing their presence there. Federal agents see the Bakken crime boom as similar to earlier regional crime waves: the cocaine cowboys of south Florida in the 1970s and 1980s and the heyday of street gangs in Washington, DC, and Los Angeles in the early 1990s.[2]

          It seems unlikely that many of us would consider this an ideal economy and community in which to live and raise a family even if the amount of money circulating in the local economy increased dramatically. One has to be careful about judging well-being by average income. That can be quite misleading.

          For instance, back in the 1880s, Montana had the second highest per capita income of all of America’s states and territories. Recently, Montana has been among the poorest quarter of the states by that measure.  The Mountain West as a whole had per capita incomes that were 70 percent above the national average in the 1880s. Now the Mountain West is the second poorest region in the nation according to that statistic, beat out only by the Deep South. 

          The primary reason that per capita incomes were so high in Montana in 1880 was that almost all of the residents worked and there were very few dependents that had to be supported by the income that was earned. There were eight men for every three women. The men, in general were young adults.  That combination assured that there were not many children and certainly few elderly folks.  The income earned by these young, single, males did not have to support wives, children, or grandparents. So the residents appeared to be “rich.” 

          It seems unlikely, however, that many people would find this peculiar demographic situation to be, in any sense, “ideal” or something that public policy should attempt to create. Early Montana was one large mining camp. The Bakken is vying for that status now and being plagued by many of the same problems.

          Although it is possible to see these mining camps as exciting places that are “wide open” and free of many of the stifling constraints of conventional morality, something that may be the dream of many a young man, few others would suggest that mining camps are models of social organization and the good life.  Yet that is what the oil and gas industry is trying to sell us.


[1] “Policing the Patch”: An examination of the Impact of the Oi8l Boom on Small Town Policing and Crime in Western North Dakota,  Carol A. Archbold, Department of Criminal Justice & Political Science,North Dakota State University, August 2013, Table 1.

[2] Dave Kolpack, Associated Press, Fargo, ND, October 26, 2013.