Jane Nielson Blew It -- Or Her Timing Was Off -- She May Still Be Right Yet -- The Bakken, North Dakota, USA

I'm in the process of deciding whether to continue the "milliondollarway" when I return to my granddaughters in Boston later this week.

I started the blog for a couple of reasons: a) for my own benefit, to learn about the Bakken, to see if I could make sense of it; and, b) to counter the folks who thought the talk of the Bakken was just "hype."

This was a typical post from those who felt the Bakken was just hype.

There are many ways to gauge the Bakken; investing in Bakken drillers is just one method.

The linked site was posted June 25, 2010.

On that day you could have bought a share of each of the four companies for the price shown:

• KOG: $3.65
• BEXP: $16.94
• WLL: $42.37
• OAS: $14.75

Today, shares in those companies are trading for:

• KOG: $8.16
• BEXP: $36.42
• WLL: $88.00 (split-adjusted)
• OAS: $28.54 (Oasis has been as high as $35.76)

A "dumb" investor would have bought on June 25, 2010. A "smart" investor could have followed these companies for awhile and bought on a pullback. But even a "dumb" investor's return:

• KOG: 123% (remember, 100% is doubling your money)
• BEXP: 115%
• WLL: 108%
• OAS: 93%

(No one will believe me but I put those four companies up in random order; and I chose those four completely randomly of the many companies one could have invested in, in the Bakken. It is purely coincidental how the racking and stacking turned out. Quite interesting.)

If you bought before June 25, 2010, your returns are even bigger, and in some cases could be huge. One could have bought KOG for 60 cents at one time, I believe.  If so, $6,000 investment would now be worth $48,000. That's not a "Peter Lynch 10-bagger" but it's not bad. Folks playing the lottery have not come close.

It doesn't matter to an individual investor how big or small the Bakken is; to the individual investor, it is one's rate of return, or something along those lines.

On the other hand, a President Obama devotee would be down 60 percent year-to-date by having invested in a solar energy ETF.  According to SeekingAlpha.com, the best nuclear energy ETF (NUCL) has lost 23 percent to date. I'm curious if Jane invests in solar or nuclear or anything.

There is another way to measure the Bakken. The Bakken will soon move North Dakota from the seventh in the nation to second in the nation in oil production, assuming the EPA doesn't shut it down, a huge assumption (and one I'm not willing to bet on). 

Or you could measure the Bakken by the number of jobs it provides. North Dakota has the lowest unemployment rate in the nation; there are currently 20,000 unfilled jobs in North Dakota. A new McDonald's employee can earn $48,000/year in the heart of the Bakken (Williston, North Dakota).

Or you could measure the Bakken this way: North Dakota is about the only state with no budget crisis or any debt. In fact, North Dakotans will vote on whether to eliminate -- not just lower, but completely eliminate -- the property tax starting next year.

So, if you read Jane Nielson and listened to her advice, well, what can I say -- she blew it big time -- or her timing was off. She can honestly say the jury is still out: if the EPA shuts it down, the Bakken will have been a flash in the pan.

But back to the original conundrum.

I feel I understand the Bakken about as well as I ever will. The Bakken has entered its manufacturing stage and its future is in the hands of the EPA. When something moves from science to politics, I become anxious. Jane Nielson could still be right; if so, her timing was simply off; it happens to the best of us. The Bakken will have been all hype if the feds shut it down. But I digress. I have satisfied one of the two main reasons for blogging on the Bakken: to help me understand it.

The second reason was to counter postings like those of Jane Nielson. To her credit, she blogged using her name (I assume it's her real name). But she was wrong. The Bakken lived up to its "hype" in many more ways that she can even imagine.

So, having satisfied the two reasons I started the blog in the first place, I now have to decide whether to continue. The first step was eliminating comments. I need to make the decision on my own. Thank you for understanding.

At least she was right on one thing: fast tracking wind farms on western lands was a bad thing. She lost that fight, also. They're building wind farms as fast as Congress can pass tax incentives. And now that whooping crane killing is no longer frowned upon by the feds, it makes wind turbines all the more appealing.

Based on a quick reading of her site, it looks like she has the same energy policy as the EPA, except she also disses wind, as noted:
Nuclear --> oil --> natural gas --> wind --> wood --> buffalo chips.

How To Light Your Wood Burning Stove
Or, if that takes too long, or is too complicated, or there are no more trees in your neighbor's yard, consider the alternative, electricity from the Bakken:

How To Set Your Thermostat

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I'm getting a kick out of watching the faux-environmentalists cobble together an ad hoc energy policy to fill the Obama void. Saying "no" to everything pretty much brings us back to burning trees, and when those are gone, buffalo chips. I believe it is against the law (a felony) to remove buffalo chips from the Theodore Roosevelt National Park here in North Dakota -- and as far as I know that's about the only place we have any significant amount of buffalo chips.

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With regard to eliminating the property tax: North Dakota citizens vote in June; if passed, the property tax relief is retroactive to January 1, 2011. A while back I said eliminating the property tax was a dumb idea; with the likelihood that the EPA will shut down drilling in North Dakota, eliminating the property tax is a really dumb idea. Of course, by June, 2012, we will have a pretty good idea if the feds will shut down the ND oil patch. Lynn Helms thinks the oil patch could be shut down by January, 2012.