Economy

North Dakota: Works Hard, Pumps Oil, Rates 'AAA'

North DakotaThe state of North Dakota produced 972,000 barrels of oil a day in October and is on track to reach 1 million barrels a day in December. The state also struck oil of a different kind Friday morning when Standard & Poor’s raised the state’s issuer credit rating from ‘AA+’ to ‘AAA’ with a stable outlook, citing the North Dakota’s strong financial performance and position as reasons for the upgrade.

S&P particularly called out the state’s strong economic metrics “fueled in large part by petroleum extraction activities;” low levels debt and rapid repayment of debt; and low liability for postretirement benefits and improvements to the state’s funding of its pension obligations. But it’s the oil that makes the difference:

In our view, North Dakota’s stability throughout economic cycles has long been a positive credit factor, and performance through the recent recession was stronger than nearly all state peers. The state’s economic performance, spurred by oil drilling in the Bakken region in the western area of the state, has contributed to a structurally balanced budget in recent years and the expectation of surplus operations through the current biennium.

Unemployment in the state currently stands at 3%, less than half the national rate and the state’s general fund carries a balance of $2.91 billion, up $1.5 billion in the last year alone.

Last month we put North Dakota at the top of our list of best-run states, partly because the state’s GDP grew at a rate of more than 13% in 2012, nearly 3 times the rate of growth in runner-up Texas. The largest employers in the state healthcare providers and the public schools and universities.

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