We Need To Stop Using the Term "Oil Boom"
The Grand Forks Herald today has an excellent editorial about why we need to lift America’s archaic and ill-advised ban on exporting oil.
“Trade constraints twist the market in ways that leave the population worse off,” writes opinion editor Tom Dennis on behalf of the Herald. “Easing constraints untangles the twists, encourages investment and lets producers meet demands more efficiently. That’s how it works with cars, corn, computers and cell phones, as Americans know. And that’s how it works with oil, too.”
Indeed. But if I may quibble with one aspect of Dennis’ editorial, it’s that he refers to a lift of the export ban as something that would create “a longer and stronger boom” in oil production in the state.
That’s become part of North Dakota’s lexicon over the past several years, and for obvious reasons. There’s no other way to describe what has happened to oil production in the state since about 2008, and the resulting impact of that production on our economy, tax revenues, communities, and population.
But there’s a problem with continuing to refer to oil production in the state as a “boom.” The boom is over, as production numbers from the last several months prove:
To be sure, oil production remains very strong in the state. And when oil prices inevitably recover, we may even see strong growth again. But that won’t be a new boom or even a continued boom.
It will simply be resumed growth in North Dakota’s oil industry.
I don’t like the term “boom” because it’s not a very accurate description of what’s going on in the state now. Also, a “boom” implies a bust, and I don’t think that’s in the cards for North Dakota. What we have now is stable and robust energy development that is, most assuredly, in the thrall of market variations but very much here to stay.
The boom era of the Bakken oil fields is over, as I wrote back in December. What comes next is an era of much more moderate energy development and economic growth.
And that’s a good thing. Booms have a lot of benefits, but a lot of drawbacks too as we’ve seen over the last few years. We can all be happy that the boom happened, and equally happy that it’s over now replaced by something better.
The new normal.