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Shale Oil Turned One Of America’s Poorest States Into An ‘Economic Miracle State’

Mark J. Perry, Carpe Diem

Due to shale oil, North Dakota has rise from being  America’s 11th poorest state in 2006 to become the nation’s 2nd most prosperous state in just seven years in what is one of the most phenomenal economic success stories in recent US history.


Following a post yesterday about North Dakota’s booming economy, the chart above of the state’s annual oil production vs. its annual ranking for per-capita personal income helps capture graphically the importance of shale oil to the Peace Garden State’s amazing economic turnaround in the last seven years or so. Consider the following:

1. In 1997, North Dakota was among the poorest US states, and ranked No. 45 in the country for per-capita personal income that year (see red line in chart above, BEA data here), with income per person ($20,854) that was almost 19% below the national average ($25,654). In that year, North Dakota was a relatively minor oil-producing state, ranking ninth among the states for oil production with fewer than 36 million barrels of annual production (see blue bars in chart, data here) and only about 1.5% of US total output

2. In 2006, North Dakota was still among the poorest one-fifth of US states, ranking No. 40 for per capita personal income, with income per resident ($32,851) that was almost 14% below the national average that year of $38,127. The Peace Garden State was still a relatively minor oil-producing state, ranking No. 8 in 2006 and producing a little more than 2% of the US total that year.

3. Starting around 2006, private oil drillers started successfully drilling for shale oil in North Dakota, thanks to advances in drilling and extraction technologies that allowed “petropreneurs” to finally tap into oceans of previously inaccessible unconventional oil in the Bakken oil fields in the western part of the state. Between 2006 and 2009, oil production in North Dakota doubled, and the state surpassed Wyoming, New Mexico, Oklahoma and Louisiana to become America’s fourth largest oil-producing state in 2009. The state’s shale oil boom boosted the state’s per-capita personal income above the national average in both 2008 and 2009, for the first time since the mid-1970s. In just two years, North Dakota moved up 21 places in the state rankings for per-capita income, from No. 40 in 2006 to No. 19 in 2008 (and 2009).

4. After doubling from 2006 to 2009, oil production in the Peace Garden State almost doubled again in the two-year period from 2009 to 2011 (from 79.7 million to 153 million barrels per day). During the next two years, daily oil output in the state more than doubled from 153 million to 313 million barrels, and producing more than 11.5% of all US crude oil last year. By 2012, North Dakota was producing so much shale oil in the Bakken, that it surpassed both Alaska and California to become the nation’s second-largest oil-producing state, behind only Texas.

5. From its No. 19 ranking in 2009 for per-capita income, North Dakota gained nine places to the No. 10 spot in 2010, gained one place the following year to No. 9 in 2011, and then gained five places to the No. 4 spot in 2012, before surpassing New Jersey and Massachusetts last year to take the No. 2 spot, behind only Connecticut. At $57,084 in personal income per resident last year, the Peace Garden State was more than 28% above the national average of $44,543 in 2013.

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