UND economist: Bakken expected to recover faster from price collapse than in 2015 bust
Monday, April 6, 2020

A University of North Dakota economist anticipates that it won't take as long for the Bakken to recover from the recent oil price collapse as it did following the 2015 slowdown. 

"The industry has gone through one boom-bust cycle," said David Flynn, who chairs the economics and finance department at the Nistler College of Business & Public Administration. "I think they better understand their own industry dynamics, specific to the state and specific to their labor force."

North Dakota's oil industry has "greater maturity" today than it did when prices fell from the sky-high levels seen in 2014, he said on a call with reporters Monday. He added that back then, more "marginal players" operated in the Bakken who could swing a profit only when prices were higher than $70 per barrel.

With prices below $70 for the most part in the years since, drillers ushered in efficiencies and technological improvements that allowed them to continue making profits.

But today with oil worth only $20 to $30 per barrel, drilling is not profitable. The price collapse is twofold: Demand for oil is down as the coronavirus pandemic halts travel, and Russia and Saudi Arabia launched a price war when their alliance to curb production fell apart last month.

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