Talkin' the Bakken - Part 2

North Dakota winters only get colder as we get deeper into winter, go figure. I continue to spend time asking as many questions as possible so that I may learn as much as possible about the oil boom that has engulfed this region.
I am sitting at Mcdonald's right now, with a job interview for a well-site worker taking place at one table, a discussion about how this lady's friend is a doctor and is being forced to live in his car in a parking lot, and is now being forced to leave the parking lot at the other table next to me. The line for power outlets for PC use here is not pretty and is not for the passive and or faint of heart.
The truck stop in Stanley sells between 45,000 and 50,000 gallons of fuel per day, resulting in gross sales of between $200,000 and $225,000, respectively, per day. Fuel sales do not contribute much to the margin, but it certainly drives sales. This is alot of traffic for a small truck stop in tiny Stanley, ND. All trash is emptied 2-3 times per shift and this is never enough as bins are ALWAYS full.
The colder weather has created a demand for propane tanks and torches to thaw out fresh-water trailers. The "flowback" water that is also being hauled is mostly salt water and as such has not been freezing. The lucky ones are hauling flowback these days, but the work right now has been with fresh water. There is usually a line on the really cold days of drivers going truck to truck seeking out torches as they dont have their own. I thought about asking for some money one day as I was inundated with requests for mine. Im glad I didnt however, as I needed to borrow some couplers from one of those same drivers on a later load. I have learned quickly that what comes around, goes around. I asked the worker filling propane tanks how many he fills on his 3-9 pm shift. He couldn't tell me, but he did point to his stack of slips that was between 1"&2" thick of just new sales. I guesstimated the count at around 15- slips and at $80 for the tank, torch, and propane, there is another p$12,500 in profit being contributed.
I continue to be fascinated at the lack of trash haul off. I have asked many people and the answer is always the same. They simply cant get it hauled off, so they jsut have the bins removed. Additional haul-offs are a minimum of $800 and this cost simply makes it economically inefficient to provide trash recepticles. Needless to say, finding any room in a trash can to dispose of their waste is a prized find. This may sound humorous, but it is a real problem. I heard ads on the radio the other day looking for waste company drivers, with bonuses being paid to new signees.
I spoke with a Stanley, ND police officer recently who had some interesting facts to share. The town currently employs only 3 officers with no new hires planned. The county employes 7 officers, with 4 new hires in the works. He informed me that traffic has increased about 1100% and crime rate has quadrupled. I assumed that DUI's would be a large percentage of this number as several co-workers of mine have been arrested for DUI's recently. (Side Note: I was pulled over the other night in my personal vehicle, but wasnt cited becuase he was only looking for drunk drivers. I told him I had quite a few sodas in me, but that was about it. So they are on the prowl) He added that shootings, rapes, and robberies had also quadrupled. The strain on the departments were evident he concluded, but he still loved his job.
I have spoken with several local female residents who are so concerned with the high occurrence of rapes, that they rarely leave their house alone anymore. It would be safe to argue that this oil boom has not been a good thing for them. The bartender at the Applebees in nearby Williston told me she makes about $1100 in one night serving drinks at the local gentlemans club. She added that the dancers there are averaging around $2500 per night. This is just crazy to me. I made friends with a flight attendant who told me one of her regular passengers is the owner of the gentlemans clubs who flies in every two weeks from California. He told her that this oil boom has allowed him to be much more selective about who he hires, and doesnt hire. I have included some of these random facts as a reminder that not all growth is good growth.
I can not recall if I included this in my last post or not, but the flight attendant also told me that her airline has to regulary deboard passengers due to weight concerns. NO, not because the particular passenger may be too heavy, but because there are power lines that border the end of the runway and if the aricraft is too heavy, the pilots are unable to clear the power lines. Here is revenue for the city/county that is being lost because no one can or is willing to move the power lines. Unreal!
The table next to me has now turned into a group all concerned about where they are going to move their cars or trailers. I have not figured out who they guy is they are complaining to, as I know he is just a customer too. He has offered his property for a couple of them to park on for a night or two "to get by", but he is now reminding them to save their money and to not go around spending foolishly. We can learn everywhere we go, if only we listen.
The issue of where to sleep makes me sad as I have spent plenty of nights in my own vehicle here and it gets extremely cold. You turn your car own, turn the heat on high for a few minutes, turn the car off, and then rush to fall asleep before it cools off. And this "game" is repeated throughout the night many times.
Until Next Time.....


Dr. Tufte said...

-1 on Windwalker for multiple spelling problems.

This is all amazing. Thanks for sharing. I tried getting on Google Earth's Streetview for Stanley and Williston, but I couldn't identify much of value to me.

What gets me is that most of what is here is externalities, there are profit opportunities from internalizing externalities, and ... no one seems to be capitalizing on them.

Why isn't McDonald's charging people to use tables for interviews? Why hasn't someone set up a trailer to rent for interviews?

And what about power outlets?

Trash is a somewhat different issue. In this case, there is a cost to cleaning it up, that isn't usually covered by a revenue stream. Why hasn't the local government figured this out? Why isn't some of their tax revenue going towards paying people to collect trash?

Of course, what seems to be really short here is local government tax revenue. Oil tends to be a cash cow for tax hungry governments. In North Dakota, who's getting that cash?

The bartering system behind "what goes around comes around" is the Coase Theorem in action. Your text is light on Coase as ManEc texts go.

But ... the Coase Theorem can explain some of what we see with externalities here. One aspect of the theorem says that without well-defined property rights, market transactions don't function properly. Obviously, property rights to tables matter a whole lot more to a McDonald's in Stanley than they do to McDonald's in other locations.

Obviously, in all this, it would be easy to wave our hands and say that public services are being overwhelmed. But ... um ... the oil companies aren't being overwhelmed. They seem to "get" how to do business in this environment. The McDonald's and the truck stop certainly sound like they're busy, but they don't sound as if their management systems are breaking down. But ... it does seem like the management systems of the local governments are.

Thomas said...

An article in the New York Time has many examples of compansies and individuals internalizing externalities. However, as mentioned by Windwalker and commented by Dr. Tufte, the local government leaders are requesting "more time to figure things out" before allowing capitalism to match supply with the demand.

Dr. Tufte said...

-1 on Thomas for poor spelling.

I may be cynical, but I interpret "local leaders need more time" as "bribes aren't big enough to get their a**es moving just yet".