U.S. in midst of shale revolution
Thanks to shale, energy-producing states have been the strongest economic performers in the United States over the past decade, sharply improving their position compared with the energy-consuming states. Only 13 of the 50 states produced more energy than they consumed in 2010, the latest year for which comprehensive data is available, according to the U.S. Energy Information Administration (EIA).
The other 37 were all net energy consumers, relying on some combination of interstate commerce or imports to meet the shortfall.
The shale revolution and the renaissance in U.S. oil and gas production have resulted in a stark contrast between the fortunes of the two groups.
Eight of the 13 energy-producing states improved their relative positions between 2003 and 2013 when ranked by per capita gross domestic product (GDP). They accounted for almost half of the 18 states that rose in the rankings.
By contrast, energy-consuming states have fared poorly. None of the 10 states with the largest energy deficits has improved its relative economic position since 2003. Nine of them have fallen in the ranking, in some cases sharply.
Energy producers also dominate in terms of raising real output per capita over the past decade, accounting for six of the 10 states with the biggest increases.
But none of them can rival North Dakota. Thanks to shale, the Peace Garden State has been (by far) the biggest winner, with per capital GDP up by more than 67 percent since 2003, compared with a nationwide increase of just 7 percent.
Rapid income growth has catapulted North Dakota up the prosperity league. In 2003, state GDP per capita was ranked 33rd in the nation, at just $41,000. By 2013, per capita GDP had soared to almost $69,000, putting it second only to Alaska.
In 2011, North Dakota’s per capita GDP overtook California for the first time, and in 2013 it was more than $18,000 (29 percent) higher.
Other top-10 GDP gainers since 2003 include energy producers Wyoming (up 24 percent), Oklahoma (19 percent), Alaska (18 percent), Texas (17 percent) and Arkansas (16 percent).
Among the energy-producing states, only Colorado fell in the rankings, down seven places from 10th to 17th, with per capita GDP growing less than 5 percent since 2003.
And the energy revolution bypassed Kentucky and West Virginia. Their coal-based economies failed to lift them out of relative deprivation, leaving them ranked 43rd and 47th, respectively.
It would be wrong to imply that energy production has been the only cause of success and failure among the states. Some of the top performers are sparsely populated single-industry economies where rising prices and production of energy could easily lift GDP per capita. In that respect, the huge GDP gains in Texas are all the more remarkable.
By contrast, some of the worst performers, such as California and Florida, have yet to recover.
Net energy-consuming states tend to have far larger populations and more diversified economies that are less affected by the cyclical performance of any single industry.
And recent declines in energy prices will tend to shift the balance back from producing to consuming states to some extent.
But there is no denying that the shale revolution has lifted the economic fortunes of the main energy-producing states significantly, compared with the rest.
The energy boom has driven favorable shifts in employment, tax revenues and broader economic activity for the states concerned, and it is starting to show up in the political balance of power, too.
The Barack Obama administration and congressional Democrats have struggled to identify themselves with the success of the shale revolution, given the party’s reputation as anti-fossil fuels.
That is piling the pressure on the remaining elected Democrats in energy-producing states and leaving the party struggling elsewhere as voters question whether it is committed to local growth and job creation.
Shale has remade the world in the past decade, but it is also remaking the United States, reshaping the contours of the economy and politics.
More in Economy
Tapped out and hunkered down, Korea stares recession in the face
Property owners get big tax shock
Household debt keeps climbing despite gov't efforts
Career interruptions due to marriage and childbirth down 11 percent
Despite vaccine shot in the arm, credit risk remains in markets