How shale “shatters” the old order

What a difference a few years can make.

When we launched America’s Top States for Business in 2007, before the housing market collapsed and the financial crisis, our Top States attracted not only businesses, but people as well: families and homebuyers.

Four of our top five that year were from southern states: Virginia, followed by Texas, Utah, Georgia, and North Carolina.

(To concern: Can Texas stay on top?)

But as we and everyone else looked south, oil production in the Bakken Shale, North Dakota tripled in 2007. Crude oil was trading at just $ 60 a barrel, so not many people. have noticed it. The state only finished in 13th place.

Last year, however, Brent crude oil averaged around $ 111 a barrel, and North Dakota made its first appearance in our Top Five. The move was largely the result of the state’s skyrocketing economic growth, “higher than China’s growth rate,” Steven Landefeld, director of the Federal Bureau of Economic Analysis, told CNBC. “It’s oil and gas [in North Dakota]. ”

Virginie, on the other hand, slipped to No.3 last year, her worst performance ever. And Georgia slipped to ninth place.

Our rankings reflect what experts say has been a gradual shift in recent years, with the heart of economic expansion shifting to the center of the country.

(Read more: Categories and Criteria for CNBC’s Best Reports for Business 2013)

“You look at Texas, Louisiana, North Dakota – all the way down the central corridor – you see single-digit and double-digit growth,” Meredith Whitney, CEO of Meredith Whitney Advisory Group, told CNBC in a report. interview. “Who would have thought that we would have so much prosperity, so many opportunities at home? “

Sophisticated drilling techniques, including the controversial method of hydraulic fracturing, or “hydraulic fracturing,” have unlocked enormous previously inaccessible reserves of energy in the shale formations of North Dakota and elsewhere, causing oil to drop. energy independence of the United States a real possibility. US shale oil production, which was 230,000 barrels per day in 2007, is expected to exceed 2.3 million barrels this year, an increase of 1,000%, according to the Department of Energy.

“This energy boom has literally transformed the financial landscape of the central corridor; creating jobs and increasing income, ”Whitney wrote in her book“ Fate of the States: The New Geography of American Prosperity ”(Portfolio / Penguin, 2013). At the end of 2012, unemployment rates in North Dakota, Oklahoma, Wyoming and others were among the lowest in the country.

This prosperity echoes an earlier era, Whitney said.

“You want to think about where the great Sun Belt caused so much migration to these retiree communities in Florida, Arizona, Nevada, and so much subsequent appreciation in house prices,” he said. she declared. “The same will happen to the central hallway.”

In a truly seismic shift, she said, “companies move first, and people are going to follow those companies.”


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Shawn G. Randall

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