North Dakota, while small, has been one of the jewels of the U.S. economy. Its unemployment rate was the envy of the rest of America over the course of the recession. Its October unemployment rate was 2.8%. However, that was against a labor force of only 415,000 people, many of whom have benefited from the surge of fracking, which has set the state’s growth on fire.
The size of the labor force means not many people would have to lose jobs for unemployment to move above the national average of 5.8%, compared to how low that number is now. The elimination of less than 20,000 people would drive a 7% jobless rate.
There is no definitive count of how many people work in the fracking industry in North Dakota, concentrated in the Bakken field. The figure is certainly in the tens of thousands.
One primary driver of the profits from fracking has been oil prices that fluctuated between $80 and $100. That number has dropped quickly to $55.
According to a report in The Wall Street Journal published in early October:
Weakening oil prices could put a crimp in the U.S. energy boom. At $90 a barrel and below, many hydraulic-fracturing projects start to become uneconomic, according to a recent report by Goldman Sachs Group Inc. While fracking costs run the gamut, producers often break even around $80 to $85.
The market may not see $80 oil prices again, perhaps for months or even years. Some analysts believe crude will drop below $50 for a sustained period.
It has been a long time since a single state relied on one industry. This might have included gambling in Nevada and the car industry in Michigan. Unlike those states, only a few thousand jobs have to disappear in North Dakota to ruin its booming economy.