Published May 22 2012
Forum editorial: ND must invest in its futureNorth Dakota’s rapid rise in oil production has been nothing less than remarkable. Last week, it became known that the Flickertail State surpassed Alaska in March to become the No. 2 oil-producing state, trailing Texas. The boom in the Williston Basin’s Bakken Formation has enabled North Dakota to surge from its spot as ninth-leading oil state in 2006. In just the past five years, the state’s oil production has quadrupled.
North Dakota is prospering as a result of the boom. Per-capita personal income has soared almost 80 percent over the past decade. Wage increases are widespread across the state, and unemployment is the lowest in the nation at 3.1 percent – so low that economists caution businesses could hesitate in coming to North Dakota because of the scarcity of workers.
That’s a problem most states would find enviable. But North Dakota cannot risk becoming complacent about its petroleum wealth. The state’s formations of oil and gas are vast, but they are not inexhaustible. North Dakotans, who are well aware of that fact, are not simply waiting for the wells to run dry. They voted in 2010 to create the Legacy Fund, which sets aside 30 percent of state revenues from oil and gas production.
The Legacy Fund already has accumulated $352 million in oil and gas tax collections. Its investment earnings so far have been meager, bringing the fund total to $353.1 million, reflecting its investments in short-term U.S. bonds. We aren’t second-guessing the conservative investment strategy, but the fund as it’s currently structured illustrates the crucial difference between saving and investment.
North Dakota leaders, who pride themselves at being stewards of the budgetary bottom line, have been good at saving, as reflected in the healthy surplus, on track to reach $600 million. But now, when coffers are healthy, is the time for North Dakota to think strategically about its economic future. In short, we shouldn’t fall into the trap of relying too much on raw natural resources.
The state has made impressive strides in strengthening and diversifying its economy, beginning 22 years ago with the Vision 2000 initiative. But it wasn’t that long ago that North Dakota, with years of stagnant population growth, was mourning the exodus of so many of its best and brightest young people for greener economic pastures in other states.
That’s a painful reminder of the need for the state’s leaders to think strategically about a path to sustainable prosperity and a future that will create ample jobs and opportunities for professionals, not just truck drivers and roustabouts. One important component will be to ensure a top-notch university system. We should never forget that North Dakota’s most precious natural resource is its human capital.
Forum editorials represent the opinion of Forum management and the newspaper’s Editorial Board
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