North Dakota has never seen anything like this. Talk about how the economic boom will transform our state can be heard all over.

Experts used to call us the Saudi Arabia of wind. Now, they are saying we are a Saudi Arabia of oil, also. We also are considered a big part of the answer to the problem of a hungry world.

Some expect Minot to have a population north of 50,000 in as short a time as five years; that city’s population is currently under 40,000. The demand for housing and business services is probably even greater in Williston, N.D. Home values in some parts of state, even in some small towns such as Stanley, N.D., are increasing as fast as they are decreasing in California.

And splash ripples all the way to North Dakota’s eastern border, where we hear about Grand Forks benefiting from the energy boom because of LM Glasfiber in wind energy, the Energy and Environmental Research Center in all forms of energy, and private firms in alternative energy being established here because of UND.

Even Grafton will see a significant short-term energy benefit. The companies building the pipeline for the Canadian tar sands oil are using Grafton as a staging area for the northern half of the North Dakota portion of that contract. They are planning on having more than 300 employees bused from their Grafton headquarters to the work site. They want those workers living as close as possible to Grafton. With the right type of housing, some will bring their families.

Farm land is selling for record prices. Stories of land rent as high as $200 are common. Hard red spring wheat, which mostly is grown in North Dakota, is at a record low for stocks on hand.

The state can hardly keep up with counting the money pouring into the treasury. Many believe the state will have $1 billion in excess funds at the end of the current biennium. Even I have written of “the perfect storm.”

Why it won’t last

There is only one problem that bothers some, including me: the boom will not last forever.

In fact, it may not last for very long.

Oil, we are told, will have to maintain a value of around $60 a barrel in order to make it economically feasible to pump in North Dakota. People who write that do not understand economics. As technology changes, that figure will go down. However, while oil will be pumped at ever-decreasing prices, the flow of money into the state will be proportionally less.

As for the farm prices, we didn’t get into this situation in only two short years, and that is how quickly prices changed. That means these shortages will disappear in a relatively short period of time. Malthusian theory was wrong then, and it is wrong now. People love to be scared.

My best guess — and that is all any expensive, complicated theoretical review can offer — tells me that the longest we can expect this to last is five years, probably less.

Remember, all of the things that are happening in North Dakota are based on commodities, and commodities have always been cyclical. When prices increase, the suppliers of commodities increase the supply, and that leads to lower prices.

The market for commodities always seeks an equilibrium level that prohibits profits that are too high in relation to the costs. This means not only agricultural prices, but also all energy prices — including the price of oil, even if you think it is controlled by the big oil companies.

Those companies can affect prices and profits in the short run, but not the long run.

The last time there was an agricultural boom, farmers were told, “They won’t make any more land.” The farmers were advised to buy land now before the prices went even higher. So, those farmers paid too much, and some went broke.

During and immediately after World War I, land in the Red River Valley sold as high as $400 an acre. Following that crash, it took nearly 50 years before prices reached that level again.

During the more recent oil boom, Williston laid out enough housing lots to accommodate a huge increase in population. The city almost went bankrupt.

I don’t mean to sound like a curmudgeon.

The boom is great for the state in the short run, although these rapidly increasing energy and food costs do hurt most North Dakotans.

My concern for the long run is that we learn from the past. I hope we do not have to relearn the same lessons over and over again.

Kingsbury may be contacted at kae@invisimax.com or by phoning (701) 738-0028.