Tuesday, June 28, 2016

The Bakken Is In Its Manufacturing Stage -- June 28, 2016; 1Q16 Taxable Sales/Purchases 50% Higher Than 1Q10

As with any manufacturer, there will be ups and downs, commensurate with the economy and the particular sector one is in.

In this case, North Dakota has a diversified economy with a major energy component. How has the Bakken affected North Dakota's diversified economy?

The 1Q16 taxable sales and purchases data has been released by the state and this note: "First quarter 2016 is nearly 50 percent greater than the same timeframe in 2010.”

For newbies, this is the timeframe:
  • 2000: the Bakken boom begins in Montana
  • 2007: the Bakken boom begins in North Dakota
  • 2012: the Bakken hits its stride
  • early 2014: the Bakken setting new records, almost every month
  • late 2014: the Saudi Surge
  • 2015: the Bakken re-trenches
  • 1Q16 taxable sales 50% greater than 1Q10
  • mid-2016: the Bakken bottoms out -- at least that is what the tea leaves suggest
Wow, think about that: the Bakken was starting to move in 2010, and now, when things appear so dire, 1Q16 taxable sales/purchases are still 50% higher. I find that quite remarkable. I hope I haven't misinterpreted the report but that was a direct quote from the state tax commissioner. 

The full report is here.

By county:
  • Cass (Fargo): $643,058,308
  • Burleigh (Bismarck): $362,191,851
  • Williams (Williston): $280,809,315
  • Grand Forks: $262,939,803
  • Ward (Minot): $238,532,521
  • Stark (Dickinson): $171,710,392
  • Morton (Mandan): $56,835,128
Perhaps the most amazing data point is how incredibly stable the Fargo area is. Year-over-year (1Q15 to 1Q16, Cass County's taxable sales and purchases declined less than 4%. The oil counties, like Williams, TSP declined as much as 60%. Williams' decline at 62% was barely better than Burke County's decline year-over-year of 66%.

But you know, when I see 1Q16 taxable sales 50% greater than 1Q10 for North Dakota, I can't get too concerned. A lot of infrastructure has been put in place. We are probably at the nadir of this particular cycle. Yes, it could get worse, but the tea leaves don't suggest that. 

A Note For The Granddaughters

Wow, this brings back memories: the magic of Britain's least-used train stations

We were stationed as a family in England from 1986 to 1989. I was then back to England multiple times between 2002 and 2004. While there alone, I hiked a lot and I took the train frequently. I visited some of those least-used train stations. 

The Brits (or, perhaps, better said, the English) love "the three P's": pets, plants, and planes. I would add "passenger trains" to continue the alliteration, but in fact the English love trains of all sorts, not just passenger trains. Perhaps one could add "the three T's": tea, trains, and taxes.

Wow, wow, wow! Such pleasant memories.

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