During the past week I read several newspaper articles and several business journal articles about the price of oil. Each of these articles explained that the price of oil could go down to $20 per barrel. It was explained that in the past four or five years, many oil companies took out large loans in order to grow and expand their companies, with the expectation that they would have high revenue in the coming years. In the past two years, the price of oil has fallen from over $100 per barrel, to $30 per barrel. The oil companies with large loan debt, are having to continue to pump oil in order to pay the interest on their large loans, even though the price of oil is low, which just continues to add to the oversupply of oil on the market, and keeps the price of oil low.
One article explained that there is about $100 billion in venture capital money, that is waiting to buy the assets of oil companies as they go bankrupt due to the low price of oil. Once the oil companies go bankrupt, and oil wells are purchased at prices that are well below the costs that went into drilling them, the venture capitalists will be able to sell oil at $20 per barrel, and make money doing it. When the venture capitalists do this, the price of oil will remain low. The point is, there are reasons why the price of oil will probably remain low for the next couple of years.
If the price of oil remains low, there will be no new drilling, and no new oil exploration in North Dakota. It is already known that there is a large reserve of oil in North Dakota in the Bakken formation and the Three Forks formation, but you have to drill about 8,000 feet deep to get it, drill horizontally, and then fracture it, which is costly. Because of the low price of oil, about 80% of the oil field jobs have gone away in North Dakota since late 2014.
Most of the out-of-state oil field workers went back home when they lost their oil field job. There were very few high hourly wage jobs with a lot of overtime, outside of the oil field in North Dakota. Rent was high, there was a shortage of women, it was cold for about seven months out of the year in North Dakota. Most of the out-of-state workers went home.
I made a joke in one of my past blog posts, that the only people who continued to come to North Dakota in 2015, were people who didn’t watch television news or read the newspaper. I thought this joke was funny, but it actually is happening. There are some really unintelligent, low functioning people showing up in Dickinson looking for work and for a place to stay. The church that I go to is trying to help some of these people that show up at church and ask for help. I have met these people, and they are really difficult to help, because they have never really understood what is going on where ever they lived. For instance, in Dickinson now, a cheap hotel costs about $350 per week. At the temporary labor companies, a worker can maybe get about $350 per week take home pay, if they really, really try, because there is not a lot of work right now. There is just no way an unskilled laborer who is single, is going to make enough money in Dickinson to afford food and housing. There is no homeless shelter in Dickinson, so the people that arrive in Dickinson who are poor, low skilled, low intelligence, have a very, very difficult time, especially because it is -15 degrees Fahrenheit right now. It is really not good when these people show up in Dickinson, because they are just a burden.
There is a second group of people who are moving to Dickinson. There are a lot of black people moving to Dickinson, and at first I could not understand why. If you go to fast food restaurants in Dickinson, like McDonalds, Burger King, Taco Bell, or Kentucky Fried Chicken, you will see many black workers, though the population in Dickinson is about 95% white. If you go to WalMart, you will see many black workers. What was happening was that people in Dickinson did not want to work in fast food restaurants or WalMart, and during the oil boom, the wages in these fast food restaurants and WalMart went up to $15 per hour more or less, in order to get people to take these jobs. To black people that had already been working in fast food and WalMart in other states, $15 per hour was nearly twice what they had been making. Over the past couple of years, word got out about the wages paid in fast food restaurants and WalMart in Dickinson.
I don’t want to work in McDonalds or Burger King, even if you can make $600 per week. But for black people from Minneapolis or St. Louis that had already been working in fast food for years, this is the same job for nearly twice the pay. Also, if these fast food workers have a spouse or a friend that they can split the rent with, they are actually better off financially than they were in Minneapolis or St. Louis.
There have been about 1,000 new apartment units that have been built in Dickinson in the past several years. Right now the occupancy rate for these new apartment units is at about 30%. The rent in Dickinson is still high right now. But because the occupancy rate in the new apartment units is so low, and the oil field workers are not coming back, the apartment unit price is going to drop down much lower, and there are many apartments available. For a time in the near future, the news spread by the black workers in Dickinson will be that there are very high paying jobs in fast food and WalMart, and there are many nice new apartments, with low rent. Many, many black workers will continue to move to Dickinson for the next year.
It will take about a year for the wages in fast food restaurants and WalMart in Dickinson to drop down to about $10 per hour, because of the large amount of available workers, and business being much slower. By that time, the black population in Dickinson will be much higher. I have written in several previous posts, that most of the women in western North Dakota are unattractive and overweight. Black men like unattractive white women who are overweight, and unattractive white women who are overweight like black men. If you don’t know this, try watching the Jerry Springer Show, Divorce Court, Paternity Court, or the People’s Court on television. After several days of watching, “Who that baby’s daddy?”, you will be convinced of this. The next boom in Dickinson, will be a baby boom. Who that baby’s daddy?