Bright Outlook for ’08

By BRIAN KROSHUS

From Main Street to the oil patch, North Dakota enjoyed a banner year in 2007. It was hard to find fault with the time. And, if preliminary indications are accurate, 2008 will be bright for the Peace Garden State despite an economic slowdown in other parts of the country.

It was an exceptional year, where more segments of the economy than not performed impressively. That positive performance could be attributed to the right mix of resources, opportunities and entrepreneurial spirit. Our energy- and agriculture-rich state flourished under high commodity prices, which the business community capitalized upon. Retail trade grew for 18 consecutive quarters through September, an excellent indicator of the state’s overall health.

The agricultural community predictably enjoyed a significant rise in net farm income this past year, which spilled over into other segments. The west in particular rebounded nicely from a difficult year in 2006, when net farm income dropped to a meager $7,000, the result of a combination of extreme drought, lower cattle prices and inflated production costs.

But what a difference a year can make. Timely rains in 2007, along with record crop prices and a strong cattle market, created the right environment for the rebound of the state’s farming and ranching community. While input costs related to fuel, fertilizer and chemical continued to trend upward, it was still a banner year for the agricultural sector.

Land values also followed suit and rose. The latest report from the federal agriculture department indicates the value of North Dakota farm land increased for the eighth straight year, to an average of $650 per acre. That’s a jump of 13 percent over the previous year.

Oil field activity bristled as prices skyrocketed. Both coal and natural gas segments had gangbuster years as well. The western half of the state certainly benefited from the energy boom. That should continue in 2008 and beyond, as new estimates related to state’s oil potential continue to climb.

Latest projections on the Bakken oil reserve have now reached as high as 400 billion barrels. In the past, the formation’s true capacity was not clear and discounted to a degree due to technological limitations. That is changing, and prospects for substantial and effective recovery have increased with horizontal drilling techniques.

One downside of record crude in 2007 was a higher per gallon price at the pump. It impacted consumers and area businesses alike and caused an understandable degree of anxiety for those in the tourism industry.

At the same time, high oil prices accelerated the nationwide quest for alternative forms of energy, including ethanol production. Corn-based production in the state grew again with more gallons output than ever before. Wind energy also gained in popularity, and more turbines pop up each year. North Dakota wind farms generated 345 megawatts of electricity in 2007, up from 178 in the previous 12 months. Construction is currently underway for another 131 megawatts of production.

North Dakota’s vast reserves of lignite will undoubtedly continue to play a key role in fulfilling the needs of an energy-dependent world. Currently, there is a proposal for a coal gasification plant near South Heart if public questions are answered and final hurdles are cleared. Talk of possibly another gas refinery in the state is also being circulated by a number of entrepreneurial-minded individuals.

There also is a need to solve pipe and transmission lines issues related to moving the state’s excess energy capacity to market, and that type of forward thinking should serve the state well in the years ahead. Continued job creation, giving reason for the state’s younger generations to stay in North Dakota, bode well for the state’s future.

Despite subprime problems across the country, Bismarck was ranked as the No. 1 area in the country in percentage increase in the value of existing single-family homes in the last quarter of 2007. Adjacent communities experienced the same, the result of low interest rates, conservative lending values and a vibrant economy. While it remains to be seen exactly how the home market will perform in 2008, prospects are strong for another solid year.

State government enjoyed a revenue surplus of $540 million in 2007, the result of the state’s growing economy and increased energy values and production levels. The legislative session was festive as both parties sought out a piece of the surplus pie. You can bet that lawmakers in 2009 will be at it once again as revenues should continue to exceed expectations. They will be well served to keep North Dakota values in mind. The opportunity to plan for the future while being fiscally responsible has never been better.

But it doesn’t rest solely with elected officials either; even voters will be placed in a unique position in the upcoming November election. They will decide the fate of state income tax levels with a special measure on the ballot that proposes a 50 percent reduction. That critical issue and others will need to be carefully weighed out and will certainly generate much debate in the months ahead.

Last, but certainly not least, our community and state again enjoyed a number of impressive rankings that once again showed that it remains one of the top places in the country to live. Bismarck was ranked the No. 1 least stressful city and the third safest metro area in America. It even made Sports Illustrated magazine’s 50th anniversary sports towns list.

Those who live in Bismarck-Mandan and western North Dakota know that this is a great place to live, work and raise a family. Our state is well run. The Beacon Hills State Competitiveness Report ranked North Dakota as the fourth best in the United States in terms of government operation and efficiency.

The economic outlook for 2008 remains positive and favorable compared to the majority of the country. Actual results remain to be seen, but if this year is even close to the growth the state experienced in 2007, it should be another promising period for the state’s residents.

(c) 2008 Bismarck Tribune. Provided by ProQuest Information and Learning. All rights Reserved.