The Energy Link: Energy Producing States and Rising Incomes

On this blog we have previously written about an apparent link between energy producing states and improving unemployment rates.  Between 1995 and 2011, the four states that saw their unemployment rates improve at the greatest rate compared to the national average are significant energy producers: West Virginia, North Dakota, Alaska, and Louisiana.

Granted, economies are complex and a wide variety of factors likely influence unemployment rates.  Furthermore, correlations, while oftentimes helpful, do have their limitations.

Recently released data, however, may buttress the notion that energy production can lead to further economic gains and prosperity.

Earlier this week, the U.S. Census Bureau released a map (see below) showing changes in median household income by county from 2007 to 2012.  The map is unfortunately littered with counties shaded purple, suggesting a decrease in median household income from 2007 to 2012. But it is also difficult to avoid noticing the prevalence of green counties located in the Midwest and Southwest, representing areas where household incomes have increased.

Energy States

North Dakota, in particular, has seen income increases in well over half of its counties.  Counties in Texas, especially those near the Permian Basin and the Eagle Ford shale play, have seen some increases as have counties in Oklahoma.  Interestingly, a handful of counties in energy-rich West Virginia and Pennsylvania have also seen gains.

The release of this map and particularly the significant income gains in North Dakota has received a fair amount of attention in the press.  National Journal suggests that North Dakota’s oil boom is “indisputably a huge economic driver.”  Matthew Iglesias of Slate writes that a “natural-resource boom can do wonders for [an] economy.”  Business Insider and the American Enterprise Institute have also suggested that the increased energy production is responsible for these gains.

Of course, few states are as lucky as North Dakota when it comes to lying on top of vast energy reserves, but it appears that states would be smart to encourage responsible energy production within their borders as a way to stimulate economic gains.

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