The oil and gas industry is one of the largest single basic-sector industries in the state, contributing more than $43 billion to North Dakota’s economy and supporting more than 81,000 jobs in 2013 according to a study conducted by North Dakota State University. This economic impact has permeated into nearly every industry in North Dakota, ranging from agriculture to professional and social services.
Economics at a Glance
- The oil and gas industry generated $17.7 billion in direct business activity and $25.3 billion in secondary business activity, for a total of $43 billion in economic impact for the state of North Dakota in 2013 alone. This impact virtually every sector in the state, including:
- $11.3 billion in retail trade;
- $9.3 billion to households (personal income)
- $4.5 billion to the finance, insurance and real estate industry;
- $4.4 billion to government revenues; and,
- $12.7 billion total to several other North Dakota industries.
- For every $1.00 spent in the state by the oil and gas industry, another $1.48 in additional business activity was generated.
- Each drilling rig resulted in $40 million in in-state expenditures, an additional $1.60 in additional secondary business for every $1 spent by the oil industry, $105 million in direct and secondary economic impact, $1.4 million in sales, use, and income taxes, and 177 direct and secondary jobs.
- Every producing well resulted in $860,000 in in-state expenditures, $1.7 million direct and secondary impact, $23,500 in sales, use and income taxes, $324,000 in severance taxes, and 2.4 direct and secondary jobs.
Since the oil and gas industry was revitalized by hydraulic fracturing and horizontal drilling in 2006, the state’s economy has grown by 110 percent and continues be the envy of the nation. The oil and gas industry accounts for 17.7 percent of the state’s entire gross domestic product, and the more than 81,000 jobs represents 20 percent of all jobs in the state.
Where the state once ranked among the bottom fifth in personal income, the per capita income has risen to become the second highest behind only Connecticut:
- Salaries and wages paid by the petroleum industry account for 30 percent of those paid in the private sector;
- The industry contributed $9.3 billion in economy-wide personal income, including $6.3 billion in salaries and wages, which represents 35% of all private sector wages paid in the state that year and 31% of public and private sector income;
- The industry also paid $1.43 billion in royalties and $300 million in lease bonuses.
As the state moves from an exploration phase to the development phase, more value-added projects, such as fertilizers and petrochemical facilities, are being proposed that will help diversify North Dakota’s economy and further maximize the dollars being spent by the oil industry.