Forum editorial: King Oil dethrones King Ag
For the first time in North Dakota’s history, agriculture is not the largest engine in the state’s economy. That’s what a statistical study by the U.S. Bureau of Economic Analysis found after examining economic trends in the state from 2011 through 2013. It’s a startling development in that it’s historic. But anyone who has been paying attention to the oil and gas boom in western counties knew the day was coming when mining (oil, natural gas and coal) would knock off King Ag. In that context, the shift is not startling at all.
The statistics can be parsed in ways that give agriculture the edge, although that is not the way the bureau crunches and reports the data. For example, if ag processing is included in the agriculture total (it’s officially counted in the manufacturing category), then ag remains on top. However, if manufacturing associated with oil development is included in the mining category at the same time ag counts ag processing, then mining (oil) stays on top. Add transportation associated with oil (transportation is a separate measure) and oil again is No. 1.
Spinmeisters in the farm sector might be a tad nonplussed by the changing economy, but they should not be. It’s not a contest. In fact, farming and ranching have enjoyed a string of very good years. Even with a downturn in some commodity prices, agriculture still is very strong, and will be an economic mainstay for as long as there is a North Dakota. Oil and natural gas production is expected to expand for several decades, and thus likely will remain (by accepted measures) the biggest economic sector in the state for some time.
It’s all very good news. But a cautionary note is in order. Agriculture and oil are subject to global economic forces over which North Dakotans have no control. All the back-slapping and high-fives about record crop production and oil revenues is feel-good stuff that tends to downplay economic fundamentals. It could collapse in a heartbeat, and no state-generated tax policy or business-friendly regulatory climate would make a whit of difference. That reality should hold the hubris in check.
Meanwhile, North Dakotans should celebrate, with appropriate restraint, their good fortune.
Forum editorials represent the opinion of Forum management and the newspaper’s Editorial Board.