Thursday, November 17, 2005

Boom and Bust—Not Those Bumper Stickers, Again!

I was in oil boomtowns on consecutive days last week, in Enid, OK and Sidney, MT. In my talks, I challenged the local residents to make something better of the windfall from this current boom. I asked how many people remembered the bust of the mid 80s when virtually every pickup truck in town had a bumper sticker that said, “Lord, Give Us One More Boom, We Promise Not to piss it Away This Time!” Lot’s of hands went up and heads nodded.

It was a painful time for many people. The populations of the two counties fell by over 10% from the 1980 to 1990 census. There were numerous foreclosures, bankruptcies and the splitting up of families. People were shell-shocked. Some lost everything.

In driving to each town, I passed numerous tanker trucks, oil service vehicles and new pickups. Every oil service lot was bustling with activity. Enid, which has a much more diversified economy, was not as dramatic as what I saw in Sidney, so let me concentrate on Sidney.

Leslie Messer, head of the Richland County EDC showed me around the community. She told me, “We’ve got 21 drilling rigs going 24/7. We’re pumping over 500,000 barrels/day. This is up from about 250 or 300,000 barrels/day five years ago, when we only had about 10 drilling rigs going.”

I asked her about how this oil boom differed from that of the 1970s. “We are getting a much higher quality of worker in the oil fields today. They are all drug tested and have to have a clean record. We’re having trouble finding enough workers even though the base pay is $22 to $25/hour, plus a $75/day stipend and a sign-on bonus. The typical shift is four days on and three days off. It isn’t a bad gig.”

The technology of oil drilling has also advanced greatly in the past 20 years. Today the drilling rig punches a hole in the middle of the field and from that hole four horizontal bores are made, allowing one hole to cover an entire section of land (640 acres).

I learned at the annual meeting in Sidney that the state is trying to take a larger portion of the resource tax on oil, coal and other mined products. Currently, the state gets 55% and the local taxing bodies 45%. With the increase in oil prices and production, Richland County taxing bodies are bringing in $1 million/month into public coffers.

Both the local state rep and state senator were at the meeting urging local citizens to find innovative, long-term uses for these funds and not to allow the state government to siphon off these funds. I would agree and urged them in my talk to think of how they are not only going to invest these public funds but also some of the extra profits both for landowners and service providers to the oil industry in the community.

If I were developing a plan for them, I would concentrate on the development of entrepreneurs and infrastructure for the region. I would want to develop both a nurturing environment for these entrepreneurs but also a high quality of life and sense of place to attract them from larger cities. It is going to be tough to recruit in a new industry, trying to compete with the wages of the oil boom. I hope that Sidney and Richland County don’t blow this chance to position their community for the future for the good of their children and grandchildren. I do not want to return to see those blasted bumper stickers again.

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