The developers of hotels, motels and apartments in North Dakota’s once-booming oil country find themselves in a free-market vice of their own making. Having determined they would invest millions in hotel rooms to accommodate the influx of Bakken oil workers, they now find their new buildings struggling to keep the doors open as occupancy rates plunge to unsustainable lows, sometimes as low as 40 percent – from highs that were routinely at 100 percent.
During the good times, companies specializing in so-called man camps threw up dozens of facilities across oil country to house the thousands of workers who flocked to western North Dakota, and could not find traditional housing. During that period, room rental rates at new (and old) hotels and apartments went sky high, fairly described as “gouging.”
Not so, said developers and owners. It was the market at work. The supply-and-demand equation was working in the free market; rates reflected that reality.
If it was true then, it’s true now. The “free market” the hotel and apartment folks loved to use as the excuse for exorbitant prices is still at work. But now it’s reflecting a new and bleak reality for the hotel operators and landlords.
If they worshiped the free market when times were good, they should not throw their religion under the bus when times are bad. But that’s what they are trying to do by getting government – in the most high-profile case, Williston city government – to force man camps to close in order to shore up sagging hotel, apartment and housing sectors. In other words, the free-market capitalists who resist government intervention in their businesses at nearly every turn, now want Williston’s government to pick winners and losers. They want local elected officials to shut down reasonably priced (as the market now dictates) man camps for oil workers, thus eliminating competition with the overbuilt hotel/motel/apartment sectors – a situation that would grant those folks a free hand to fill their rooms and raise their rates.
So much for the free market. So much for the free-market imperatives that are supposed to correct economic mistakes – such as overbuilding and price gouging.
Williston leaders can do what they think is best for the city. They might conclude man camps – which were enthusiastically invited to town when the boom was booming – should go in favor of “protecting” the city’s hotels and apartments. But let’s not sugarcoat it: It would be a rescue mission that scuttles the free-market principles that conservative business people say they believe in. It would be a not-so-subtle exercise in hypocrisy.
Editorials represent the opinion of Forum management and the newspaper’s Editorial Board.