North Dakota has an unemployment rate consistently under 4%. California, on the other hand, consistently has one of the highest unemployment rates in the nation, ranking in the double-digits.
Why is that happening? Part of the reason is that North Dakota allows a relatively free market in energy production, and California doesn’t:
How did North Dakota pull it off? Oil production has driven the recent boom. Drilling restrictions in Alaska, the Gulf of Mexico, and even Canada have given North Dakota an opportunity to expand its oil industry substantially. North Dakota now accounts for 6 percent of U.S. domestic oil production and already ranks fourth in the nation behind Texas, Alaska, and, yes, California. Unlike California, however, North Dakota is a fairly new player in the oil-production market. The state imposes no energy-efficiency resource standard for electricity or natural gas, and it has no mandatory statewide residential or commercial energy code. North Dakota lawmakers have let market demand dictate coal and oil production. According to North Dakota state senator John Hoeven, the state government’s approach to energy is to “develop all of our energy resources, both traditional and renewable . . . in a way where we incentivize new technologies to create more energy more dependably and more cost-effectively with good environmental stewardship.”
While California is rich in both conventional and renewable energy, gridlock in the state legislature has hampered development of these resources. Unlike North Dakota’s officials, who welcome the economic growth and new revenues, California lawmakers seem intent on reducing the state’s role in domestic oil production. Legislators have imposed laws much stricter than federal standards and worked aggressively to subsidize alternative energy sources and mandate their use. California’s Global Warming Solutions Act of 2006 and subsequent legislation—requiring that the state obtain at least one-third of its energy from renewable sources such as wind, solar, and geothermal—will impose onerous costs not only on businesses, but on every ratepayer and consumer in the state. Estimates vary, but at least one study projected that the law would cost the state economy $183 billion—a staggering burden for Californians already struggling under the highest energy prices in the nation.
I’m often very critical of North Dakota’s Republican leadership. I don’t like how they’ve expanded government on the back of oil production revenues. That being said, one thing North Dakota generally gets right is energy policy, and that policy is basically just letting energy companies do their jobs with the government stepping in only to enforce certain common sense regulations.