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North Dakota and Minnesota in the Top 5 Fastest Growing Economies in the Nation
North Dakota’s economy posted a 13.4% growth rate in 2012, according to a report released Thursday by the Bureau of Economic Analysis. That’s nearly three times as fast as the number two state, Texas, and trounces the national average of 2.5%.
This is the third year in a row that North Dakota took the top spot in BEA’s state-by-state report on gross domestic product (GDP). The muscle behind the boom is a surge in oil production from the Bakken Shale, an underground rock formation in the northwestern part of the state.
Thanks to high oil prices and new drilling technology oil production in North Dakota is now six times higher than it was in 2007. In 2012, North Dakota surpassed Alaska and California to become the second largest oil-producing state in the nation behind Texas, according to the U.S. Energy Information Administration.
The boom has attracted workers from all over the country and rippled out to incorporate not only the oil and gas drilling sectors but also other industries that supply them, including wholesale goods and transportation.
“There’s nothing like an oil boom to get things rolling,” North Dakota Governor Jack Dalrymple told CNNMoney.
Unlike some other states, North Dakota has a tax specifically targeting oil and gas production. That tax has allowed the state government to cover 80% of the cost of public schools, greatly reducing property taxes on the local level, Dalrymple said. It also allowed for a reduction in state income taxes, and covered the cost of building roads and other infrastructure to accommodate the influx of workers.
There are still downsides to the rapid growth. Housing prices in parts of the state are as high as Manhattan, and some areas are having problems obtaining enough water. But the state’s unemployment rate is below 3%, and North Dakota is “hanging on to our college graduates like we never have before,” Dalrymple said.
Oregon, Washington, and Minnesota rounded out the five fastest-growing states. Oregon’s growth was dominated by computers and electronics, while tech and manufacturing fueled Washington’s growth. Minnesota’s growth was led by manufacturing and finance.