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Oil drillers in North Dakota pumped out 1.18 million barrels of oil per day (bpd) in September, setting another new monthly all-time record high for the state’s crude oil production (see blue line in top chart), according to oil production data released this afternoon by North Dakota’s Department of Mineral Resources. September marked the sixth straight month that daily oil production in the Peace Garden State exceeded one million barrels. Another important production milestone was reached in September, as average daily crude oil output from the state’s shale-rich Bakken oil fields topped one million bpd for the fourth straight month (see brown line in top chart), as the Bakken recently joined an elite group of only ten oil fields in world history whose daily output topped one million barrels at peak production. Oil production in the Bakken has increased more than 7X over the last 5 years, from only 158,000 bpd in September 2009 to 1.18 million bpd in September of this year, with accumulated Bakken production reaching the one billion barrel milestone in August of this year.
Here are some other highlights of North Dakota’s record-setting oil output in September:
1) The state’s average daily oil production increased in September by 27% (29% for Bakken oil) compared to a year ago. Remarkably, in less than three years, oil production in North Dakota has more than doubled from 547,326 bpd in January 2012 to 1.18 million bpd in September.
2) Due to improvement in drilling technologies, the daily oil produced from each well in North Dakota averaged 104 barrels in September (132 barrels per well in the Bakken), setting a new record state high. In 2009, the daily oil per well in North Dakota was only 52 barrels, so the productivity of oil extraction in the state has doubled in only five years.
3) For the 3rd consecutive month, North Dakota’s oil production in September represented more than 13% of all US crude oil, another new milestone for the Peace Garden State. Five years ago in August of 2009, North Dakota produced only 4.3% of total US crude oil output, and the state’s oil production was about half of oil production in both California and Alaska. Due to the phenomenal growth of oil output in the shale-rich Bakken oil fields, North Dakota surpassed California and Alaska in 2012 to become the country’s No. 2 largest oil-producing state and now produced 13.5% of all US crude oil in September.
4) In dollar terms, the oil produced in North Dakota in September had a daily market value of $110 million at the average oil price during the month of $93.21 per barrel for West Texas Intermediate (WTI). For the entire month of September, that would put the market value of North Dakota oil at $3.3 billion, slightly below the $3.6 billion all-time monthly record high for the dollar value of the state’s oil output set in July.
5) The Bakken oil fields in western North Dakota produced more than one million bpd in September for the fourth straight month (see brown line in chart), setting a new all-time monthly output record, which also represented a new record high 94.5% of the state’s monthly oil production. In contrast, the Bakken region produced less than 9% of the state’s oil output at the beginning of 2007, before breakthrough drilling techniques (hydraulic fracturing and horizontal drilling) were able to tap into a bonanza of unconventional oil in the shale-rich areas of western North Dakota. As mentioned above, the Bakken now joins an elite group of only ten super-giant oil fields worldwide to ever produce more than a million barrels of oil per day at peak production, and just surpassed one billion barrels of accumulated total production.
Bottom Line: September was another stellar month in “Saudi Dakota,” with average daily oil production surpassing one million barrels for the fifth straight month, and establishing yet another new record high for the state’s oil output at 1.18 million bpd. The state’s shale-rich Bakken oil field reached an important energy milestone by producing more than a million barrels a day in September for the fourth consecutive month.
The shale boom continues to make the Peace Garden State America’s most economically successful state – with growth in employment and personal income that lead the nation, the lowest state jobless rate in the country for the last 69 months starting in January 2009 (2.9% in September), an enviable state budget surplus of more than $1 billion, the highest state GDP growth in 2013 of 9.7%, strong housing and construction markets (state permits for single-family homes are on track to set a new record this year of more than 7,000, which is double the number of permits issued two years ago in 2012), thousands of landowners who have become millionaires from oil and gas royalties (estimated oil royalty payments of $16.5 million every day in September, at 15% of the approximately $110 million in market value calculated above), jobless rates in 17 of the state’s 53 counties at or below 2.0% in September (with Williams and Dunn counties at only 0.8%, the lowest county jobless rate in America), and starting hourly wages at the Williston, ND Walmart of $17.20 — 2.4 times the state’s minimum wage of $7.25.
North Dakota’s economic success, job creation, housing construction boom, and energy-based prosperity is being driven by the development of the state’s vast energy resources, especially the vast oceans of shale oil in the state’s Bakken region which have become accessible recently with the twin technologies of fracking and horizontal drilling. The Peace Garden State, along with Texas, are the shining stars of The Great American Energy Boom, which continues to be the strongest sector of the US economy and gives us the best reason to be optimistic about the future of the US economy. Carpe oleum.
Minneapolis Public Schools’ solution to racial disparities in student suspensions? Impose racial quotas
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In a more sane world, what would be the appropriate response by public school administrators when a minority group of students is disproportionately suspended for disruptive behavior that frequently compromises and jeopardizes the learning experience for the majority of students? Investigate why that group is so disproportionately disruptive and disorderly? Increase the severity of the consequences for disruptive behavior? Impose greater standards of discipline with a lower tolerance for bad behavior? All of these seemingly logical responses are being overlooked by the Minneapolis Public School system in favor a completely different approach — eliminate the racial “disproportionality” of disruptive behavior by “administrative fiat” with racial quotas as outlined in this press release last week:
Minneapolis Public Schools (MPS) Superintendent Bernadeia Johnson announced her intent to eliminate the nonviolent [racial] suspension gap by 2018. To achieve this, MPS must aggressively reduce the disproportionality between black and brown students and their white peers every year for the next four years. This will begin with a 25% reduction in [racial] disproportionality by the end of this school year; 50% by 2016; 75% by 2017; and 100% by 2018.
Moving forward, every suspension of a black or brown [but not white or Asian] student will be reviewed by the superintendent’s leadership team. The school district aims to more deeply understand the circumstances of suspensions with the goal of providing greater supports to the school, student or family in need. This team could choose to bring in additional resources for the student, family and school.
Here’s how the Star Tribune reported it:
Minneapolis public school officials are making dramatic changes to their discipline practices by requiring the superintendent’s office to review all suspensions of students of color. The change comes amid intensifying scrutiny of the way Minneapolis public schools treat minority students and in the wake of new data showing black students are 10 times more likely to be sent home than white students.
Superintendent Bernadeia Johnson said she wants to “disrupt that in any way that I can.” “The only way I can think of doing that is to take those suspensions back to the individuals and try and probe and ask questions,” Johnson said Friday. “Changing the trajectory for our students of color is a moral and ethical imperative, and our actions must be drastically different to achieve our goal of closing the achievement gap by 2020,” Johnson said.
In other words, the strategy is “shoot the messenger,” impose racial quotas, define deviancy down, promote the soft bigotry of low expectations and victimology, play the race card, increase tolerance and understanding of disruptive behavior, and probably bring Reverends Al Sharpton and Jesse Jackson to town for a march or demonstration.
In a post at National Review (“Racial Double Standard for Minneapolis School Discipline“) Roger Clegg made this important point:
This sort of racial discrimination is blatantly illegal. What’s more, the children who will be hurt the most when badly behaving students are not disciplined will be their classmates — who are themselves likely to be “black or brown.”
In response to that post, Hans Bader, senior attorney at the Competitive Enterprise Institute, left this comment:
Racial quotas in school discipline are based on the false assumption that student misconduct is evenly distributed across all racial categories. But the murder rate is ten times higher among black teens than among white teens, and the homicide rate is six times higher among the African-American population than among the white population.
The chart above illustrates why there might be a “disproportionality” of black student suspensions in the Minneapolis Public Schools – black youth tend to disproportionately engage in disorderly and criminal behavior in relation to their share of the youth population based on the most recent FBI crime data for 2013. While blacks represent 13.2% of the US population, black teens under 18 are responsible for a significantly disproportionately greater share of teen criminal offenses – 35.5% of all reported teen crimes (2.7 times greater than the black share of the population), 57.3% of all teen murders (4.3 times the black share of the population), almost 72% of all teen robberies (5.5 times the black share of the population), and more than 44% of all teen aggravated assaults and disorderly conduct offenses (3.4 times the black share of the population). In contrast, the white, Hispanic and Asian under-18 year teen shares of criminal offenses last year were lower than their shares of the general population.
What if US law enforcement agencies like the Minneapolis Police Department followed the approach of the Minneapolis Public Schools? It might look like this:
Minneapolis Police Department (MPD) Chief of Police Janeé Harteau announced her intent to eliminate the racial criminal arrest gap by 2018. To achieve this, MPD must aggressively reduce the disproportionality of arrests between black and brown criminal offenders and their white peers every year for the next four years. This will begin with a 25% reduction in the racial disproportionality of arrests by the end of this year; 50% by 2016; 75% by 2017; and 100% by 2018.
Moving forward, every arrest of a black or brown (but not white or Asian) citizen will be reviewed by the Police Chief’s leadership team. By 2018, the racial disproportionality gap for arrests in the city of Minneapolis will be eliminated and black, brown, white and Asian criminals will be arrested and convicted in exact proportion to their shares of the city’s population. Arrest rates that exceed any ethnic groups’ share of the Minneapolis population will be considered unacceptable – exact racial proportionately of criminal arrests will be strictly enforced and maintained.
If you correctly think that type of racial and social engineering approach wouldn’t work for a law enforcement agency like the Minneapolis Police Department, then it certainly won’t work either for the Minneapolis Public Schools in its approach to the racial disparity in student suspensions.
Update: Thomas Sowell had this to say in one of his recent columns:
The most cynical of these bogey man ploys is Attorney General Holder’s threats of legal action against schools that discipline a “disproportionate” number of black boys. Unless you believe that black boys cannot possibly be misbehaving more often than Asian American girls, what does this political numbers game accomplish?
It creates another racial grievance, allowing Democrats like Holder to pose as rescuers of blacks from racist dangers. The real danger is allowing disruptive students in ghetto schools to destroy the education of other black students — in a world where education is the only hope that most ghetto youngsters have for a better life. Sacrificing these young people’s futures, in hopes of gaining some additional black votes today, is as cynical and fraudulent as it gets.
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Below is an excerpt of my op-ed in today’s Investor’s Business Daily “No Energy Policy Has Been A Blessing For Shale Boom“:
The shale revolution happened not as a result of government mandates, regulatory pressure or taxpayer subsidies. Rather, it came about primarily due to innovation, entrepreneurial problem-solving and the marketplace, with some early government assistance in developing the technology for fracking and horizontal drilling.
The shale revolution is not only driving economic growth and putting millions of Americans to work but also providing elegant and efficient solutions to problems like foreign-oil dependence that policymakers couldn’t solve.
Since the oil crises of the 1970s, one U.S. president after another has lamented our energy insecurity and pledged to take action. And yet, our dependence on foreign fuel steadily grew and hit a peak in 2005 of 60.3% of U.S. petroleum products consumed that year. But the shale revolution changed all that. Surging oil production from the Bakken in North Dakota, the Eagle Ford and Permian Basin in Texas and other shale plays has reduced the nation’s dependence on foreign oil to below 28% this year — the lowest in almost 30 years (see chart above).
Clearly, no industry has done more to get America back on its feet in the wake of the Great Recession than the oil and gas industry. Shale-energy production, almost nonexistent a decade ago, now supports 2 million jobs and could support 3.3 million by 2020. And the benefits aren’t only economic. Abundant, low-cost natural gas is reshaping our electricity mix and driving a significant reduction in carbon emissions. As recently as 2005, coal generated 60% of the nation’s electricity. But today, that figure has fallen to just over 40% as utilities turn to gas. Because gas generates just half of coal’s carbon emissions when burned to generate electricity, emissions fell in 2012 to their lowest since 1994, before edging slightly higher last year.
Where bureaucracy has failed, where clumsy government action has often done more harm than good, market solutions and “Made in the USA” technologies like hydraulic fracturing that gave birth to the shale revolution have succeeded with flying colors.
Yet, the Obama administration continues to promote renewable energy sources while largely ignoring fossil fuels and nuclear power. It’s as if the administration can’t bear to acknowledge the lessons of the shale revolution, arguably one the most remarkable energy success stories in U.S. history.
We need less interference in the energy marketplace, not more. Government policy shouldn’t favor one technology or energy source over another. We don’t need federal policies to spur competition and innovation. Let’s learn some lessons from the Great American Shale Revolution and let entrepreneurs, not bureaucrats, get us there.
MP: As my former AEI colleague commented a few years ago, “One overlooked aspect of the current technology-driven fossil fuel energy boom going on in the U.S. right now is that if Washington had any premonition it was going to happen, they would surely have done something to stop it.”
And as Gregory Zuckerman pointed out in his excellent book The Frackers, “A group of frackers, relying on markets cures rather than government direction, achieved dramatic advances by focusing on fossil fuels of all things. It’s a stark reminder that breakthroughs in the business world usually are achieved through incremental advances, often in the face of deep skepticism, rather than government-inspired eureka moments.”
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Last December, President Obama called America’s “dangerous and growing” income inequality the “defining challenge of our time,” and he said he planned to put the topic of income inequality at the center of his agenda during the remainder of his second term. More recently the World Economic Forum cited income inequality as the top threat facing the world in 2015 based on a survey of about 1,800 leaders from academia, business, government, and non-profits.
The president and the World Economic Forum are not alone in their concerns about income inequality – there’s been a lot of discussion in recent years on the issue, especially concerns about “increasing income inequality.” That concern is demonstrated by more than 500,000 Google search results for the term “increasing income inequality.” However, there’s apparently not as much attention or concern about “explaining income inequality” (there are only 50,000 Google search results for that term), and that’s the topic that this post will attempt to address.
Most of the discussion on income inequality focuses on the relative differences over time between low-income and high-income American households, but it’s also informative to analyze the demographic differences among income groups at a given point in time to answer the question: How are high-income households different demographically from low-income households that would help us better understand income inequality?
The chart above shows some key demographic characteristics of U.S. households by income quintiles for 2013 (see click-able chart below for enlarging), using updated data from the Census Bureau (see my previous versions of this analysis for years 2009 and 2010 and 2011 and 2012).
Below is a summary of some of the key demographic differences between American households in different income quintiles in 2013:
1. Mean number of earners per household. On average, there are significantly more income earners per household in the top income quintile households (1.98) than earners per household in the lowest-income households (0.41). It can also be seen that the average number of earners increases for each higher income quintile, demonstrating that one of the main factors in explaining differences in income among U.S. households is the number of earners per household. Also, the unadjusted ratio of average income for the highest to lowest quintile of 15.9 times ($185,206 to $11,651), falls to a ratio of only 3.3 times when comparing “income per earner” of the two quintiles: $93,538 for the top fifth to $28,417 for the bottom fifth.
2. Share of households with no earners. Sixty-three percent of U.S. households in the bottom fifth of Americans by income had no earners for the entire year in 2013. In contrast, only 3.1% of the households in the top fifth had no earners in 2013, providing more evidence of the strong relationship between household income and income earners per household.
3. Marital status of householders. Married-couple households represent a much greater share of the top income quintile (76.8%) than for the bottom income quintile (16%), and single-parent or single households represented a much greater share of the bottom one-fifth of households (84.0%) than for the top 20% (23.2%). Like for the average number of earners per household, the share of married-couple households also increases for each higher income quintile, from 16% (lowest quintile) to 35% to 50% (middle quintile) to 64% to 77% (highest quintile).
4. Age of householders. More than 7 out of every 10 households (71.9%) in the top income quintile included individuals in their prime earning years between the ages of 35-64, compared to fewer than half (43.9%) of household members in the bottom fifth who were in that prime earning age group last year. The share of householders in the prime earning age group of 35-64 year olds increases with each higher income quintile.
Compared to members of the top income quintile of households by income, household members in the bottom income quintile were 1.4 times more likely (21.8% vs. 15.8%) to be in the youngest age group (under 35 years), and almost three times more likely (34.2% vs. 12.3%) to be in the oldest age group (65 years and over).
By average age, the highest income group is the youngest (48.8 years) and the lowest income group is the oldest (54.4 years).
5. Work status of householders. Almost five times as many top quintile households included at least one adult who was working full-time in 2013 (78.8%) compared to the bottom income quintile (only 16.1%), and more than five times as many households in the bottom quintile included adults who did not work at all (69.4%) compared to top quintile households whose family members did not work (12.4%). The share of householders working full-time increases at each higher income quintile (16.1% to 43.9% to 60.4% to 70.7% o 78.8%).
6. Education of householders. Family members of households in the top fifth by income were almost five times more likely to have a college degree (64.6%) than members of households in the bottom income quintile (only 13.5%). In contrast, householders in the lowest income quintile were 15 times more likely than those in the top income quintile to have less than a high school degree in 2013 (24.2 % vs. 1.6%). As expected, the Census data show that there is a significantly positive relationship between education and income.
Bottom Line: Household demographics, including the average number of earners per household and the marital status, age, and education of householders are all very highly correlated with household income. Specifically, high-income households have a greater average number of income-earners than households in lower-income quintiles, and individuals in high income households are far more likely than individuals in low-income households to be well-educated, married, working full-time, and in their prime earning years. In contrast, individuals in lower-income households are far more likely than their counterparts in higher-income households to be less-educated, working part-time, either very young (under 35 years) or very old (over 65 years), and living in single-parent households.
The good news is that the key demographic factors that explain differences in household income are not fixed over our lifetimes and are largely under our control (e.g. staying in school and graduating, getting and staying married, etc.), which means that individuals and households are not destined to remain in a single income quintile forever. Fortunately, studies that track people over time indicate that individuals and households move up and down the income quintiles over their lifetimes, as the key demographic variables highlighted above change, see CD posts here, here and here. And Thomas Sowell pointed out last year in his column “Income Mobility” that:
Most working Americans who were initially in the bottom 20% of income-earners, rise out of that bottom 20%. More of them end up in the top 20% than remain in the bottom 20%. People who were initially in the bottom 20% in income have had the highest rate of increase in their incomes, while those who were initially in the top 20% have had the lowest. This is the direct opposite of the pattern found when following income brackets over time, rather than following individual people.
It’s highly likely that most of today’s high-income, college-educated, married individuals who are now in their peak earning years were in a lower-income quintile in their prior, single younger years, before they acquired education and job experience. It’s also likely that individuals in today’s top income quintiles will move back down to a lower income quintile in the future during their retirement years, which is just part of the natural lifetime cycle of moving up and down the income quintiles for most Americans. So when we hear the President and the media talk about an “income inequality crisis” in America, we should keep in mind that basic household demographics go a long way towards explaining the differences in household income in the United States. And because the key income-determining demographic variables are largely under our control and change dynamically over our lifetimes, income mobility and the American dream are still “alive and well” in the US.
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Emily Badger has an article on the Washington Post’s Wonkblog that provides another important reason why Big Taxi is doomed: Uber has quickly become the favorite transportation choice for politicians and their staffs in Washington, D.C. and around the country, who are now using the ride-sharing service more than traditional taxis and limo services. From the article “Another reason why there’s no stopping Uber: Politicians and their staffs use it“:
In 2010, as Uber was just launching in San Francisco, the company doesn’t register a single ride among congressional campaign committee expenditures. By 2014? (See the chart above).
MP: Here’s my economic forecast for the transportation industry: Expect continued and very strong hurricane-strength Schumpeterian gales of creative destruction, with a high likelihood of market disruption for Big Taxi, accompanied by huge tsunami-level tidal waves of increased benefits and savings for consumers.
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The US Bank commercial above illustrates an important economic concept known as the “Coase theorem” which says that “if trade in an externality [a blocked view in this example] is possible and there are sufficiently low transaction costs [direct payment by smartphone in this example], bargaining will lead to an efficient outcome regardless of the initial allocation of property.” The direct transfer of payment by smart phone is also an example of “markets in everything”…..
HT: Jon Murphy
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…. is from p. 211 of Thomas Sowell’s book The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy:
Despite a voluminous and often fervent literature on “income distribution,” the cold fact is that most income is not distributed: It is earned. People paying each other for goods and services generate income. While many people’s entire income comes from a salary paid to them by a given employer, many others collect individual fees for everything from shoe shines to surgery, and it is the sum total of these innumerable fees which constitutes their income. . . .
To say that “wealth is so unfairly distributed in America” is grossly misleading when most wealth in the United States is not distributed at all. People create it, earn it, save it, and spend it.