Wednesday, October 14, 2015 -- Part II; North Dakota Poised To Thrive -- Forbes

Forbes: North Dakota is still poised to thrive. 

Perhaps no state benefited more from the energy boom than North Dakota. Long known more for its harsh weather, low population and featureless expanses than for anything positive, the massive deposits on the Bakken formation turned the state into the No. 2 energy producer in the country, trailing only Texas. The prairie state gained 45,000 energy jobs between 2007 and 2014. Now the decline in oil prices promises to eliminate quite a few of them.

But few North Dakotans seem to believe that the energy bust will turn the state once again into a poster child for stagnation. For one thing, North Dakota’s job base has also expanded well beyond oil, with a net growth of 155,000 jobs jobs from 2007 to 2014 — no small beer in a state with a population of 739,000. This growth started well before the oil boom, with employment surging by 50,000 jobs between 2000 and 2007. 

Transportation, logistics, wholesale trade and construction are among the industries that have added jobs, and the state’s technology industry has surged, doubling employment since 2009. The state’s engineer count has expanded 41% since 2009, almost seven times the national increase. Fargo, the state’s largest city but hundreds of miles from the Bakken, has thrived in large part due to the expansion in tech and business services. Overall Fargo has 38% more jobs than in 2000.

Transportation, logistics, wholesale trade and construction are among the industries that have added jobs, and the state’s technology industry has surged, doubling employment since 2009. The state’s engineer count has expanded 41% since 2009, almost seven times the national increase. Fargo, the state’s largest city but hundreds of miles from the Bakken, has thrived in large part due to the expansion in tech and business services. Overall Fargo has 38% more jobs than in 2000.

In the coming years, other industries may help pick up the slack from energy. One prime candidate is aerospace, where North Dakota is touting itself as the “Silicon Valley of drones,” an outgrowth of the conversion of the Grand Forks Airforce Base from launching bombers and tankers to drones. The country’s first drone-only business park is being built on an unused portion of the base. Other industries on the upswing include biomedicine and wind turbine parts.

By the way, did you all notice that the article in Forbes mentioned the Poppers and the "buffalo commons? I've talked about the Poppers and the "buffalo commons" many times on the blog. It's hard to believe the Forbes reference was coincidental. Hoo-ah!

Crude oil prices for 2016, Fitch Ratings report:

States like Texas and Oklahoma that rely on oil and gas development to boost their revenues could struggle to grow their economies in 2016 as crude prices have remained stubbornly weak, according to a Fitch Ratings report released Tuesday.
Fitch said most of these state budgets include price forecasts for crude in 2016 that aren’t supported by a much-watched federal government projection for next year.
In its most recent Short-Term Energy Outlook, the U.S. Energy Information Adminsitration said it expected WTI to average just $53.57 per barrel, an almost 25 percent reduction from its forecast in January 2015 of $71.

In its Biennial Revenue Estimate, the Texas state comptroller’s office said it anticipates crude prices in 2016 to average $64.52, nearly $11 more than the EIA forecast. Oklahoma’s state budget assumes oil prices around $57. And Alaska and Colorado have the least conservative forecasts at about $65 and $68, respectively.

Feds order probe into soaring electricity prices in downstate Illinois. Crain's is reporting:

Federal energy regulators smell a rat in downstate Illinois. The Federal Energy Regulatory Commission has taken the unusual step of ordering a formal investigation into the results of a power auction last spring that caused the energy price paid by Ameren Illinois customers to jump 31 percent beginning in June. After several months of informal probing, FERC, which oversees the functioning of wholesale power markets, gave its enforcement staff subpoena authority on Oct. 1.

The order says FERC investigators will probe any potential evidence of market manipulation or other rules violations.

The officials to be put under oath may well include executives with Houston-based Dynegy, which dominates the power generating market downstate and has acknowledged that a bid by one of its Illinois plants set the “capacity” price that caused downstate electric bills to surge.

At issue is the auction held in April by regional grid operator MISO Energy to determine the price consumers pay power plants for their promise to deliver during high-demand periods when they're most needed. Those capacity costs are embedded in the overall electricity price households and businesses pay.

In that auction, the cost of capacity in downstate Illinois in the year beginning June 1 spiked nearly 9 times to $150 per megawatt-day, from $16.75 the 12-month period before. That will cause the average Ameren Illinois household to pay more than $130 more for electricity this year.

After the price spike, Illinois Attorney General Lisa Madigan asked FERC to overturn the result and conduct a formal investigation. FERC said no to reversing the outcome, but yes to the probe.