The Great Fracking Slowdown and Its Aftermath

North Dakota’s oil boom transformed the state. Then the money stopped flowing. What happens now?

Ethan Epstein
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Ethan Epstein
April 17, 2015, 1:01 a.m.

Five years ago, Darick Fran­zen began to hear amaz­ing tales of lim­it­less op­por­tun­it­ies in west­ern North Dakota. A big man with a boom­ing voice, a friendly smile, and a pen­chant for salty lan­guage (“Sorry,” he says after one out­burst, “I’m a little blunt be­cause I’ve been in con­struc­tion all my life”), the fath­er of two was liv­ing with his fam­ily in the Chica­go sub­urbs, work­ing for a road-build­ing com­pany. Busi­ness was chron­ic­ally slow, thanks to Illinois’ an­em­ic eco­nomy. “We had sev­er­al busi­ness part­ners,” he re­calls, “that were say­ing, ‘Hey, you need to get out [to North Dakota]. You need to get out there.‘“Š”

North Dakota had just be­gun to emerge as a ver­it­able Saudi Ar­a­bia of the Great Plains. Hy­draul­ic-frac­tur­ing tech­no­logy—bet­ter known as “frack­ing”—had opened up ex­ploit­a­tion of the vast Bakken (rhymes with “talkin‘“Š”) Shale form­a­tion, a 200,000-square-mile rock form­a­tion, filled with oil, that spans parts of Montana, Saskat­chewan, Man­itoba, and west­ern North Dakota. Soon the state would sur­pass Alaska to be­come the na­tion’s num­ber-two oil pro­du­cer, trail­ing only Texas. (If it were a coun­try, North Dakota would now be 19th world­wide in oil pro­duc­tion, tied with Colom­bia.) It helped that, un­like the sludgy stuff pro­duced in oth­er parts of the coun­try, Bakken oil is pure li­quid, re­quir­ing less re­fine­ment. One North Dakotan com­pares its con­sist­ency to di­luted Coca-Cola. It has a dis­tinctly sweet odor. “We say it smells like money,” says Ron Ness, pres­id­ent of the North Dakota Pet­ro­leum Coun­cil.

North Dakota’s em­brace of frack­ing spurred a re­mark­able eco­nom­ic and demo­graph­ic re­sur­gence, es­pe­cially for a state whose pop­u­la­tion had been aging and de­clin­ing since the 1930s. “We spent dec­ades try­ing to fig­ure out what we were go­ing to do to sur­vive,” Ness says, hold­ing up a piece of Bakken Shale. “We found that in this rock.” With oil prices sky high from 2009 to 2014, North Dakota had the coun­try’s fast­est rates of pop­u­la­tion and GDP growth, and, ul­ti­mately, its low­est un­em­ploy­ment rate. Na­tion­al me­dia touted giddy stor­ies of blue-col­lar oil work­ers without high school dip­lo­mas bring­ing in north of $100,000 a year, and of North Dakota Wal­marts of­fer­ing start­ing wages of $17 an hour. The latest Amer­ic­an gold rush was on.

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In early 2011, Fran­zen heeded the call. Leav­ing his fam­ily be­hind, he wound up in what looked like the middle of nowhere: re­mote, windswept Wat­ford City, some 135 miles north­w­est of Bis­mar­ck. His­tor­ic­ally an ag­ri­cul­tur­al com­munity, cul­tiv­at­ing wheat and cattle, Wat­ford City’s pop­u­la­tion had peaked at around 2,100 in 1980; since then, it had been slowly, stead­ily shrink­ing. Now, thanks to its stra­tegic loc­a­tion at the heart of the Bakken’s oil re­serves, it was not just the fast­est-grow­ing city in North Dakota. Ac­cord­ing to the gov­ernor’s of­fice, it had be­come the fast­est-grow­ing mu­ni­cip­al­ity in the world.

“It was crazy here,” Fran­zen says. Nobody knows for sure how many people had found their way to Wat­ford City—es­tim­ates are in the 15,000 range—but the formerly sleepy little town was strain­ing at the seams when Fran­zen ar­rived. There wer­en’t enough gro­cery stores to meet de­mand; there wasn’t enough of any­thing, really, ex­cept for oil. “People, hous­ing, equip­ment parts: You name it, we couldn’t get it,” Fran­zen says. “Milk!” He still re­mem­bers when, two years ago, he was plan­ning to grill out and real­ized: “Shit, my pro­pane bottle is empty.” He drove in­to Wat­ford City, and: “There was no pro­pane. Are you freak­ing kid­ding me? I just want to grill a bur­ger!”

Des­pite the in­con­veni­ences, it was a ter­rif­ic place for Fran­zen to make some money, thanks to the res­id­en­tial and com­mer­cial build­ings that were go­ing up as fast as they could be built. He signed on with a res­id­en­tial-de­vel­op­ment com­pany and, after the ini­tial cul­ture shock, began to take to Wat­ford City and its “won­der­ful people.” He’s now pres­id­ent of the loc­al Cham­ber of Com­merce. The sep­ar­a­tion from his fam­ily hasn’t been easy. “My wife comes out every oth­er month,” he says. “I try to get home every three to four weeks.” But then again, he says with a laugh, “I’m 51 and my son is 24. My daugh­ter is 21. They’re kind of the age that they don’t really care where I am.”

Al­most overnight, Wat­ford City be­came the world’s fast­est-grow­ing mu­ni­cip­al­ity. (AP Photo/Martha Irvine)

Fran­zen now lives in a tidy ranch house in a new de­vel­op­ment—so new, in fact, that I al­most couldn’t find it when I went to in­ter­view him. When I in­put Fran­zen’s ad­dress in­to my smart­phone to call up dir­ec­tions, it claimed that no such ad­dress ex­is­ted. It turns out, the en­tire neigh­bor­hood didn’t ex­ist two years ago, and the map apps haven’t caught up. “I could drag you around for hours and show you things that wer­en’t here six months ago, one year ago, and two years ago,” Fran­zen told me after I’d tracked him down. “It’s amaz­ing.”

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But en­ergy booms don’t last forever. Last sum­mer, those high oil prices began to drop—and just kept drop­ping. A con­flu­ence of factors was to blame, in­clud­ing slow­ing Chinese de­mand and heavy pro­duc­tion in the real Saudi Ar­a­bia. By this spring, the cost of a bar­rel of oil had plummeted by 60 per­cent. Pro­duc­tion in North Dakota had fallen apace, leav­ing both long­time res­id­ents and the new­comers who moved here to make a quick buck in a kind of limbo—wait­ing to see wheth­er, and when, prices will rise again. It’s been a hard les­son in the eco­nom­ic real­it­ies of a nat­ur­al-re­source eco­nomy, show­ing just how be­hold­en North Dakota—like oth­er re­gions of the coun­try that have em­braced frack­ing, such as west­ern Pennsylvania and Texas—has be­come to glob­al geo­pol­it­ic­al cur­rents that it can’t con­trol.

Like too many of our polit­ic­al de­bates, the ar­gu­ment over frack­ing has been de­press­ingly simplist­ic and re­duct­ive. On the one hand, we are told, the tech­no­logy her­alds an un­al­loyed eco­nom­ic boon: It showers riches on the com­munit­ies where vast en­ergy de­pos­its have long lain un­tapped, and it helps to re­duce Amer­ica’s de­pend­ence on for­eign oil. Op­pos­i­tion to frack­ing, mean­while, has ten­ded to fo­cus ex­clus­ively on en­vir­on­ment­al ar­gu­ments: It may be prof­it­able, but it’s not worth the eco­lo­gic­al costs, such as pol­luted ground­wa­ter from the meth­ane gas that’s re­leased in the drilling pro­cess.

But the story un­fold­ing in west­ern North Dakota shows that weigh­ing costs and be­ne­fits is far more com­plic­ated than that. While the short-term eco­nom­ic up­side of frack­ing is un­deni­able, there are so­cial costs that aren’t of­ten dis­cussed, even for the com­munit­ies that stand to be­ne­fit the most. And per­haps no place in Amer­ica em­bod­ies both the prom­ise and per­il of the frack­ing eco­nomy more than Darick Fran­zen’s ad­op­ted ho­met­own.

“CITY” IS A BIT of a mis­nomer when it comes to Wat­ford City—even after the boom, and even by North Dakota stand­ards. If you ig­nore the oil wells and bur­geon­ing hous­ing de­vel­op­ments on the out­skirts, the McK­en­zie County seat still re­sembles the quint­es­sen­tial Amer­ic­an small town: There’s a his­tor­ic four-block down­town with some ad­ja­cent single-fam­ily hous­ing, a smat­ter­ing of churches, and a gas sta­tion where old-timers gath­er each morn­ing to dis­cuss the news of the day. (When I vis­ited, there was much spec­u­la­tion as to the men­tal state of the mur­der­ous Ger­man­wings pi­lot.) People greet each oth­er by name as they shop for mo­tor oil and beef jerky, and the sta­tion serves as something of a proto-Craigslist. “Do you know any­body look­ing for a room­mate?” one man asked the cash­ier. (She didn’t.)

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Just south of down­town, a ma­jor new com­mer­cial strip opened in 2013, with a huge Cash Rite gro­cery store, a much-needed li­quor store, and a Mex­ic­an fast-food joint, among oth­er es­sen­tials. At noon on week­days, the sprawl­ing park­ing lot is filled with muddy pickups and semi trucks; my rent­al Toyota Co­rolla feels like a go-cart com­pared with the be­hemoths that dom­in­ate the roads around Wat­ford City. There’s even a Ja­pan­ese res­taur­ant in town now; at lunch­time, rough­necks with dirt caked on their clothes can be seen dig­ging in­to sashimi.

In the ini­tial boom peri­od, most new res­id­ents were housed in so-called “man camps”—rudi­ment­ary lodgings that of­ten lacked elec­tri­city and run­ning wa­ter. The man camps have mostly dis­ap­peared now, re­placed by apart­ment build­ings and sprawl­ing hous­ing de­vel­op­ments like Fran­zen’s. The new con­struc­tion is sprout­ing up away from the his­tor­ic core of the town, of­ten sep­ar­ated by bar­ren fields; the neigh­bor­hoods feel al­most ex­urb­an in char­ac­ter. By North Dakota stand­ards, liv­ing here is now shock­ingly ex­pens­ive: While you can rent a three-bed­room house in re­l­at­ively cos­mo­pol­it­an Bis­mar­ck for $675 a month, it’ll run you roughly $3,500 a month in Wat­ford City; one-bed­room apart­ments can com­mand $1,300 or so, an eye-pop­ping amount for nat­ives. “The most amaz­ing thing for those of us who live here and grew up here is to see land sell by the square foot in McK­en­zie County,” says Dale Pat­ten, a banker who moved to Wat­ford City in 1980. “I can re­mem­ber when I thought $500 per square acre was an ex­tra­vag­ant amount to pay for land.”

There wer­en’t enough gro­cery stores to meet de­mand; there wasn’t enough of any­thing, really, ex­cept for oil.

The in­flux of new­comers has changed the town for the bet­ter in some ways—busi­ness has been great, cer­tainly, and young people have star­ted re­turn­ing home after col­lege rather than light­ing out for Fargo or Min­neapol­is. But it’s had un­set­tling ef­fects on the so­cial fab­ric of a town that was long defined by its in­su­lar­ity. Gene Veed­er, a Wat­ford City nat­ive who’s now the county’s eco­nom­ic-de­vel­op­ment dir­ect­or, be­moans the ad­vent of a “crude cul­ture” in Wat­ford City—and by “crude,” he doesn’t mean oil. “When I’m out in a res­taur­ant eat­ing with my fam­ily, you hear guys throw­ing f-bombs around,” he says. “You would not have had that be­fore.” (In­deed, one day as I ate lunch in town, I over­heard two truck drivers hav­ing a re­mark­ably frank—and loud—dis­cus­sion about their ex­ploits with pros­ti­tutes, com­par­ing the vari­ous “ser­vices” on of­fer in North Dakota with those in Nevada.) The new people also have a propensity, Veed­er says, to “trash the town,” lit­er­ally. The at­ti­tude, he says, seems to be, “”Š’I’m here now, but I’m go­ing to be out of here, so I don’t care if I throw my trash out on the street.‘“Š” Loc­al folks have re­sor­ted to or­gan­iz­ing cleanup days.

“The first wave of people that came here,” says a loc­al busi­ness lead­er who asked that I not use his name, “couldn’t hold a job back home. Prob­ably had al­co­hol or drug prob­lems. Di­vorced. Lazy. Bust-outs.” The oil fields be­came one of the few places where con­victed sex of­fend­ers could eas­ily find work; com­pan­ies were des­per­ate to hire any­body they could find. McK­en­zie County be­came more dan­ger­ous in a tan­gible way, too: It now has the highest road-fatal­ity rate in the state. “It used to be, if you hit ice, you spun out and drove in­to a ditch,” la­ments Neal Ship­man, a Wat­ford City nat­ive who ed­its the McK­en­zie County Farm­er. “Now you get hit by an on­com­ing truck.”

Of the thou­sands who have moved to Wat­ford City, Veed­er es­tim­ates that roughly 30 per­cent plan to stay; the rest will move on once they’ve made their money or the profits dry up. That means most of the folks who live here are any­thing but in­ves­ted in the well-be­ing and long-term fu­ture of the com­munity. An­drew Lom­bardi, for in­stance, is part of the 70 per­cent who see Wat­ford City as a tem­por­ary stop. Last year, the 29-year-old moved to Wat­ford City with his girl­friend from the hip­ster mecca of Mis­soula, Montana, tak­ing an un­usu­ally good-pay­ing job at the new SOKA Mat­tress store. The lack of cul­tur­al amen­it­ies has him pin­ing for Mis­soula. There, he would of­ten see live mu­sic; now Lom­bardi spends most of his non­work time play­ing video games. And even that can be a chal­lenge in Wat­ford City. “There’s no GameStop here!” Lom­bardi com­plains. “The closest one is in Wil­lis­ton.” That’s about an hour away.

Like thou­sands of oth­ers—who knows how many?—Lom­bardi plans to stay in North Dakota for no more than two to four years. “I have no in­ten­tion of mak­ing friends,” he says. “I’m here to make money and leave.”

THE TUR­BU­LENT ex­per­i­ence of the past few years has turned seem­ingly every North Dakota res­id­ent in­to an am­a­teur en­ergy-mar­ket ana­lyst. On rur­al ra­dio sta­tions, DJs re­cite the cost of crude along with the weath­er fore­cast (snow, by the way, in late March) at the top of the hour. At the Out­laws’ Bar and Grill in Wil­lis­ton, the up-to-date price of oil is writ­ten on a chalk­board along­side the drink spe­cials. At the state cap­it­ol in Bis­mar­ck, every­body’s tethered to their devices, says Gov. Jack Dalrymple: “In this cap­it­ol build­ing, all winter long, people are walk­ing around with their smart­phones check­ing the price of oil about once an hour.”

Darick Fran­zen joined the oil rush in 2011, leav­ing his fam­ily be­hind in Illinois. (The Bakken)

They have reas­on to. Last June, the price of a bar­rel of crude stood at around $115; since this winter, it’s been hov­er­ing at about $50. North Dakota oil goes for even less than that—about $38 a bar­rel—be­cause of the high costs as­so­ci­ated with mov­ing the stuff out of a geo­graph­ic­ally re­mote loc­ale. The plunging price of crude has sent shud­ders through the Bakken and Wat­ford City. The fu­ture now seems even more un­cer­tain than it did dur­ing the heady days of the ini­tial boom, and omin­ous signs are every­where. In the past year, the num­ber of act­ive drilling rigs in North Dakota—the ones that drill new wells—has fallen by more than half, from a peak of 218 to few­er than 100. To main­tain cur­rent pro­duc­tion levels, in­dustry of­fi­cials say, the state needs to have 115 drilling rigs act­ive. Pro­duc­tion has been drop­ping by the month, in­clud­ing a 3.3 per­cent plunge from Decem­ber to Janu­ary alone.

The scale-back was as sud­den and un­ex­pec­ted as the ini­tial drilling ex­plo­sion. As soon as the oil price began to tank, the drillers shif­ted in­to re­verse. “These oil com­pan­ies re­act way quick­er than man­u­fac­tur­ing or ag­ri­cul­ture,” says Veed­er, the eco­nom­ic-de­vel­op­ment guru. “They’re nimble.” That might be smart for the bot­tom line, but it out­rages people like Darick Fran­zen. “What’s sad to me is big oil came to North Dakota through tech­no­logy and be­cause there is an as­set here,” he says. “They begged for the state to do this, and they begged these com­munit­ies to do this, and they asked de­velopers to come here, build, please. We need hous­ing and we need people. Then, boom, the price of oil drops and they flipped the switch.”

Tessa Sand­strom, com­mu­nic­a­tions dir­ect­or for the North Dakota Pet­ro­leum Coun­cil, says the com­pan­ies aren’t leav­ing west­ern North Dakota high and dry. “This is a 40-year play,” she says. “Com­pan­ies have their of­fices here and they plan on stay­ing here. We have a com­munity out­reach com­mit­tee that fo­cuses on cor­por­ate so­cial re­spons­ib­il­ity and giv­ing back to com­munit­ies.” At the same time, busi­ness is busi­ness. “Oil is just like dur­um, len­tils, corn, or any oth­er com­mod­ity, in that it’s sub­ject to sup­ply and de­mand,” she says. “We can’t sell the product if the mar­ket for it is down, which, at this point, it is.”

Ac­cord­ing to Gov. Dalrymple, the scal­ing back hasn’t yet res­ul­ted in mass lay­offs. “What, so far, we are see­ing is a sig­ni­fic­ant cut­back in hours for people who work in the oil and gas in­dustry,” he says. “A lot of people came up here to get 60 hours a week. Now they have been cut back to 40.” Ron Ness of the North Dakota Pet­ro­leum Coun­cil says that’s the usu­al pat­tern. “Oil com­pan­ies start by re­du­cing over­time,” he says, be­cause they “can’t af­ford to lose their work­force.” But if the price re­mains de­pressed, he says, “even­tu­ally they’ll have to.”

It’s not just the oil com­pan­ies that are scal­ing back. Jason Vedadi, a com­mer­cial and res­id­en­tial build­er who is de­vel­op­ing a ma­jor hous­ing pro­ject in Wat­ford City, says his sub­con­tract­ors have been bid­ding 20 to 25 per­cent less of late—a bad sign. Thanks to the pent-up de­mand for hous­ing, the hous­ing de­vel­op­ment he’s build­ing is still go­ing full-speed ahead. But Vedadi began it last year, when oil prices were high and the pop­u­la­tion was ex­pand­ing. He doesn’t know—nobody does—how much more hous­ing, if any, will need to be built in the fu­ture.

Po­lice chief Art Wal­gren drives past wells in McK­en­zie County, which now has North Dakota’s highest road-fatal­ity rate. (AP Photo/Eric Gay)

Com­mer­cial busi­nesses, after flour­ish­ing like crazy for so long, are feel­ing the pinch, too. “Right now, it’s a cost-cut­ting en­vir­on­ment,” says Gene Veed­er. “That trickles down. You know, the guy’s not mak­ing $20,000 in over­time. That $20,000 might have bought him a pickup. Or he might have went to the movies twice a week in­stead of once a week.”

Or, for that mat­ter, he might have gone out to a res­taur­ant. Aaron Pelton, co-own­er of Out­laws’ Bar and Grill, es­tim­ates that sales have dropped 10 per­cent since the oil price star­ted to fall. That might not sound like much, but it’s sig­ni­fic­ant in the low-mar­gin res­taur­ant busi­ness, and it’s a huge change from the go-go peri­od from 2009 to 2014, when sales went up month by month. Pelton, who grew up in Wat­ford City, re­turned home just be­fore the boom hit after liv­ing in Ari­zona for sev­er­al years. A gen­i­al mid-30s fel­low with two kids, he’s the kind of guy who seems to know every­body in town; as we chat for about an hour, in a room be­hind the main din­ing area, he iden­ti­fies by name just about every per­son we see walk by. (“That’s the may­or’s wife,” he in­ter­jects at one point.)

Pelton pro­fesses to take the long view of the slow­down. “Even if there are com­pan­ies pick­ing up and mov­ing out to­mor­row,” he says, “does that mean that the oil is not un­der­neath us?” Still, if he branches out and opens an­oth­er Out­laws’, Pelton says he’ll look for an area that isn’t tethered to the oil in­dustry.

DARICK FRAN­ZEN ges­tures out his front win­dow to the smat­ter­ing of ranch houses, con­nec­ted by dirt roads, that dot the hill­side of his hous­ing de­vel­op­ment. “I’ve seen four fam­il­ies in the last month back their U-Haul to their gar­age door and pack up, go back to Idaho or Mis­souri, or wherever it was,” he says. Des­pite the of­fi­cial happy talk about re­duced hours rather than lay­offs, it’s plainly evid­ent that some folks have already aban­doned ship. Pas­tor Bob Lawson, who moved to Wat­ford City four years ago from near Buf­falo, New York, to lead a newly planted con­greg­a­tion, at­tests to it as well. “You see less traffic,” he tells me over gas-sta­tion cof­fee. (There’s still no Star­bucks in Wat­ford City.) “I know some people that have packed up and gone home. They went home at Christ­mas and didn’t come back.”

With hous­ing scarce and ex­pens­ive, port­able hous­ing was brought in for teach­ers and staff at Wat­ford City Ele­ment­ary School. (AP Photo/Eric Gay)

In March, North Dakota ceded its status as the state with the low­est un­em­ploy­ment rate to Neb­raska. At this early junc­ture, it’s im­possible to say how much the grow­ing un­em­ploy­ment, after such a long peri­od of job growth, has trans­lated in­to a re­versal of North Dakota’s his­tor­ic pop­u­la­tion surge. Keith Iver­son, the man­ager of the North Dakota Census Of­fice, feels sure that people are leav­ing—or, at least, not com­ing back. “North Dakota has had a large num­ber of non­res­id­ent work­ers spend­ing about half their time in the state—work­ing but main­tain­ing a res­id­ence else­where,” he says, put­ting the num­ber at 40,000 to 60,000. “My guess is that the size of this non­res­id­ent group “… is prob­ably shrink­ing now.” The im­prove­ment in the labor mar­ket na­tion­wide may be con­trib­ut­ing to the de­par­tures; un­like in 2009 or 2011, when so many flocked to North Dakota, there’s a pretty good chance that folks can find a job back where they came from. If the prices don’t bounce back—if pro­duc­tion doesn’t bounce back—there’s no pre­dict­ing how many will de­cide to move on.

But don’t tell Dale Pat­ten it’s time to pan­ic. “I don’t think the sky is fall­ing,” says Pat­ten, a lifelong North Dakotan who’s the pres­id­ent of Wat­ford City’s Corner­stone Bank, where the lobby is fes­tooned with a large, stuffed bison head and as­sor­ted an­im­al car­casses. “There are 60,000 wells to be drilled.” There is something, it seems, about the North Dakotan psyche—toughened up by dec­ades of eco­nom­ic hard­ship and by those pun­ish­ing win­ters—that keeps people groun­ded in good times and bad. Pat­ten epi­tom­izes that sobri­ety, down to his slow, meas­ured tone of voice and the fact that he wears blue jeans to work. The oil will make its way out of the ground, he says; the only ques­tion is how long it will take—and what that will mean for the eco­nomy. “They were talk­ing 12 to 15 years,” he says. “Maybe now it’s 25 to 30 years.” No mat­ter, he says: “The long-term looks good”—at least for “smart, care­ful, cau­tious people who are well-cap­it­al­ized.” They, he says, “are go­ing to come through, just like they nor­mally do.”

This san­guine view is far more pre­val­ent among long­time res­id­ents than new­comers. “We view this situ­ation as a clas­sic com­mod­ity shakeout,” says Gov. Dalrymple, who ought to know: He’s a Yale gradu­ate who re­turned home to work on the fam­ily wheat farm. “We are used to ag­ri­cul­tur­al com­mod­it­ies in North Dakota, and the people up here un­der­stand the cyc­lic­al­ity of com­mod­it­ies.”

But, as the gov­ernor knows, the im­pact of oil on the state eco­nomy adds up to con­sid­er­ably more than all its oth­er com­mod­it­ies com­bined. In fact, at first blush, North Dakota’s budget looks pos­it­ively Venezuelan. In 2014, ac­cord­ing to the North Dakota Pet­ro­leum Coun­cil, tax rev­en­ue from oil and gas ex­trac­tion totaled $3.25 bil­lion—a whop­ping 54 per­cent of all state taxes col­lec­ted. (By con­trast, Ca­ra­cas re­lies on oil rev­en­ue for 45 per­cent of its budget.) Even for an en­ergy state, North Dakota is an out­lier: Texas col­lects only about 5.5 per­cent of its tax rev­en­ue from oil and gas; in Louisi­ana, it’s about 14 per­cent.

With prices plum­met­ing since last sum­mer, the num­ber of act­ive drilling rigs has fallen by more than half. (AP Photo/Mat­thew Brown)

In mid-March, North Dakota re­vised its budget plans for 2015 to 2017, cut­ting pro­jec­ted rev­en­ue roughly in half. That shaved off a cool $4 bil­lion in pro­jec­ted tax rev­en­ue, which had been fore­cast to come in at $8.2 bil­lion. For the time be­ing, however, the state’s situ­ation is not as dire as it might sound. The frugal­ity of North Dakota’s Re­pub­lic­an-dom­in­ated le­gis­lature could end up look­ing like a sav­ing grace if oil prices don’t rock­et up again any­time soon. Rather than in­crease spend­ing dra­mat­ic­ally, the state has put the vast ma­jor­ity of oil-tax rev­en­ue in­to long-term trust funds. Only 6 per­cent of North Dakota’s two-year gen­er­al-fund budget is tied to oil rev­en­ue. “This le­gis­lature has been ex­tremely con­ser­vat­ive,” says Gov. Dalrymple, “and has planned well for this price tri­al, know­ing it would prob­ably oc­cur someday.”

Alas, the “price tri­al” may con­tin­ue—or worsen. In mid-March, Bloomberg re­por­ted that Cit­ig­roup ana­lysts pre­dict oil prices “will again nose­dive, po­ten­tially all the way to $20 a bar­rel.” That’s partly be­cause Saudi Ar­a­bia, where the re­serves are so massive and pro­duc­tion so cheap that its oil in­dustry can break even at $9 a bar­rel, has de­cided to main­tain high levels of pro­ductiv­ity—mainly to harm its com­pet­it­ors. (The eco­nom­ic lo­gic is as ruth­less as it is com­pel­ling: Saudi Ar­a­bia can still make huge profits off lower prices, and keep­ing its spig­ot flow­ing could drive smal­ler play­ers like North Dakota out of the mar­ket.) And if oil-re­lated sanc­tions are lif­ted on Ir­an, as ex­pec­ted, that coun­try could also flood the mar­ket, de­press­ing the price even fur­ther.

North Dakota has tried not to re­peat the mis­takes of oth­er states, like West Vir­gin­ia, which de­pended so heav­ily on re­source-ex­trac­tion—forest­ing and coal-min­ing, in this case—that it didn’t de­vel­op oth­er in­dus­tries, oth­er sources of wealth. Look­ing for­ward, though, North Dakota’s law­makers clearly have their con­cerns about wheth­er care­ful plan­ning will be enough to pull the state through. This winter, they de­cided to dabble in a rare bit of Keyne­sian­ism, passing a $1.1 bil­lion “surge” bill to fund massive con­struc­tion pro­jects—high­ways, mostly, to handle heavy trucks—throughout west­ern North Dakota. Pro­ponents say pop­u­la­tion growth ne­ces­sit­ates a buildup of in­fra­struc­ture, but they also hope that the spend­ing will help the state weath­er the oil bust by pump­ing money in­to loc­al com­munit­ies and cre­at­ing jobs for people who have lost oil-re­lated work. In one sense, though, the “surge” also doubles down on the oil eco­nomy; once the price re­bounds, the think­ing goes, there will be more in­fra­struc­ture in place that can grease the skids of an­oth­er boom.

When—if—that next boom ar­rives, Darick Fran­zen doesn’t know if he’ll still be around to rev­el in it. In mid-March, the con­struc­tion com­pany laid him off, and the Cham­ber of Com­merce chief joined the thou­sands of oth­ers won­der­ing wheth­er to gamble on oil prices to re­bound or to leave Wat­ford City while the get­ting’s good. Fran­zen would prefer to stay, but he says he’ll have to think about re­turn­ing to Illinois if he can’t find a good job soon. He doesn’t sound es­pe­cially op­tim­ist­ic. “I’ve in­ter­viewed with two groups in just the last three days,” he says, adding: “I don’t know. It’s a dif­fer­ent place now. It’s “… this re­gion is a dif­fer­ent place.”

COR­REC­TION: An earli­er ver­sion of this story said North Dakota had a pro­jec­ted tax rev­en­ue stream of $8.2 mil­lion. In fact, it was $8.2 bil­lion.

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