I bet that caught your attention? It’s an amazing world that we live in where decisions in Saudi Arabia affect our Midwest home building company. As a builder in Western North Dakota for several years, it’s impossible to minimize the impact of the Bakken oil boom on the economy. North Dakota’s population had been declining for over 50 years and only recently surpassed it’s 1950’s peak—this is because of oil. Globally, oil prices have been declining rapidly due to an increase in supply (partly due to the Bakken) and reduced demand. While we all agree this is great when at the gas pump, there is a point where it won’t be great for ND. It is significantly more expensive to extract oil through the fracking process than through traditional wells. Saudi Arabia has historically been the first to tighten oil production in trying to control the price of oil. Not so this time. Despite a 30% drop since June, Saudi Arabia has not made a decision yet on cutting production as it is speculated that they are enjoying their competitive cost advantage over shale fracking. So far the price drop hasn’t had a large impact on US production and drilling but prolonged prices at this level could certainly have a large effect on the economy and need for housing in North Dakota.
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