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Oil prices have been dropping since the industry’s boom in 2014, and with that decline comes economic uncertainty for oil towns like Dickinson, North Dakota. Over 180 rigs drilled at the nearby Bakken oil field two years ago; only 27 remain active today. The slowdown has taken its toll on all sectors of business, from the housing market to hotel occupancy. Inside Energy’s Emily Guerin reports.
But, first: a report on the Bakken oil fields in North Dakota, where employment and the economy are directly affected by the price of oil.
Oil prices have dropped since their peak in 2014, and drilling has slowed, idling rigs and sending the once booming economy into uncertainty.
Inside Energy's Emily Guerin takes us on a tour of Oil Bust Alley, a short stretch of highway where the boom and bust of the oil industry plays out.
I have spent two years reporting on the Bakken oil field in North Dakota. I have seen it when it was booming, back in 2014, and now, when it's busting.
There's one highway in the oil field town of Dickinson, Highway 22, where you can see the entire boom and bust story. So we're going on a road trip through Oil Bust Alley to see what we can learn in this five-mile stretch of road about how a community changes when the price of oil crashes.
Let's start with the obvious losers: businesses directly involved in the drilling and production of oil.
So, I'm standing in front a field of stacked drilling rigs. There's about 27 back there. We just counted. And that's actually about the same amount that are actively drilling for oil in North Dakota. Two years ago, when the price of oil was high, there were over 180. And it's really a sign of how much things have slowed down here in the oil field.
Every time a drilling rig gets idled, about 120 people lose their jobs, people like Kaley Haugen's husband, who worked on a drilling rig for over a decade before being laid off last year. Haugen has also seen a huge impact of the slowdown on her business, the Uniform Unit, which is right on Highway 22.
KALEY HAUGEN, Owner, Uniform Unit:
We do uniforms for a variety of industries. We do flame-resistant clothing for the oil and gas industry, as well as electrical. We do scrubs, medical uniforms, and then we also have brought in tactical for EMS management services.
The Uniform Unit just opened last spring, right as oil prices were tanking.
If we would've been operating two years ago, three years ago, I would bet 90 percent of our business would have been oil field. Now I would say we're pretty even within the different fields. I mean, I would say 30 percent oil fields, 30 percent tactical, 30 percent scrubs, so definitely different than I thought.
Hotels have also been hit hard by the slowdown. Over 1,000 new hotel rooms were built in Dickinson in the past 12 years.
Connie Hank and Bill Evans manage and do maintenance in three of those hotels just off Highway 22.
BILL EVANS, Hotel Maintenance Worker:
When I got here in March of '14, there were no vacancies. If somebody checked out, you already had somebody's name who was waiting on that room.
CONNIE HANK, Hotel Manager:
You would've been paying $80 a night for a single and almost — just about $100 for a double. That was cheap. And now you can get a room for $32 a night. That's a big change.
Now their three hotels are at less than 30 percent occupancy. They end up with a lot of time on their hands.
I'm sitting here waiting, praying that a car pulls into my parking lot. And that was the truth. We look like a bunch of vultures. The minute they walked in the door, it was like, hey, thank you for coming here, you know?
Just down the highway, there are signs that other parts of the housing market are also hurting.
So, coming up, there's a man camp graveyard. It's just a field full of trailers that are just like jumbled together, almost piled on top of each other, because people don't have a need to house these workers anymore because they have laid off so many of their employees.
The slowdown in the oil field hasn't been uniformly bad. Custom cabinet manufacturer TMI Systems had 25 percent growth last year. That means they need a lot of new workers.
General manager Tom Krank says a few years ago, the cost of living was high in Dickinson due to the housing shortage brought on by the influx of oil workers.
TOM KRANK, Senior Vice President, TMI Systems:
With the rents where they were at, it was tough to even attract people with that, because even though we had good wages, the rents beyond where they could justify moving out here to work for us.
But now there's no longer a labor shortage. There are far more applicants than job openings. And rental prices are dropping. So TMI Systems is having no trouble hiring.
As time went on, the oil field layoffs got deeper and deeper, and pretty soon we started seeing some of our former employees coming back.
Scott Weiand is one of them. He worked at TMI for 21 years before leaving in 2012 load crude oil onto rail cars.
SCOTT WEIAND, Installer, TMI Systems:
For me, I was looking for a challenge, possibly a little higher pay. Obviously, that's an attraction for people.
But with the slowdown in the oil business, I wanted to look for other opportunities. And one of the first things in mind for me was TMI.
The slowdown is also benefiting the local government. Dickinson City Administrator Shawn Kessel says hiring is easier and expenses are lower, because they no longer have to compete with higher oil field salaries. But on the downside, the oil bust has sent tax revenue tumbling.
SHAWN KESSEL, Dickinson City Manager:
We have lost about $1.5 million into our general fund. That's a big hit to the general fund. Our general fund is about $16 million. So to lose 1.5 out of that fund causes you to be creative.
Creative. If I have learned anything covering the oil field, it's that oil booms and busts force communities, individuals and businesses to be creative.
Take this Taco Bell right on Highway 22.
Take your order when you're ready.
Hi. Can I get an order of nachos, please?
They couldn't hire or retain workers during the boom because it was so easy to get a higher-paying job. So they decided to triage. For a while, only their drive-through was open. You couldn't go inside. Now they're fully staffed again.
As we headed out of town, we drove past the drilling rig graveyard one last time. For Kessel, those idled rigs are actually a sign that the oil industry hasn't given up on North Dakota.
What that means is, when they stack them like that, they can respond quickly when things change. When that price goes up, they can just simply move it from that rig yard to wherever that their is on the wells that they want to invest in next.
Like many people in Western North Dakota, Kessel wants the oil activity to come back, just not quite as crazy as last time.
For the "PBS NewsHour," I'm Emily Guerin, reporting from Highway 22 in Dickinson, North Dakota.
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