I’m always behind on my reading, so I missed calling attention yesterday to two items in the Wall Street Journal that prompt the following two-part quiz: Why are Australia and North Dakota alike? Second, which state produces more oil–California or Alaska? The second question sounds really dumb: of course oil-rich Alaska is going to produce more than green, anti-oil California, dude.
Actually, it is a very close call. Alaska is currently producing more oil per day than California, but just barely, and at least three times in recent years California briefly overtook Alaska to be the nation’s second-largest oil producing state. It’s not that California is increasing oil production–rather, Alaska’s oil production is declining at a faster rate than California’s. Which brings us to the front page story yesterday about how the famed Alaska pipeline is in danger of clogging up because we aren’t able to put enough oil into it any more. At its peak in 1988, Alaska produced 2 million barrels a day; now production is down to about 600,000 barrels per day, even though there is not shortage of oil in the ground in Alaska. If present trends continue, California will pass Alaska in oil production in about three more years.
The second notable story from the Journal yesterday concerned Australia, which is forecasting a return to a budget surplus over the next two years; moreover, Australia expects its labor shortage to be so serious that it will need to import skilled labor from Asia. The Journal supplies the obvious comment: “Canberra’s policy measures are in stark contrast with those of other developed economies, where high unemployment and surging debt levels are more typical.”
What “policy measures” in particular accounts for this happier economic outlook downunder? Why, those boorish Aussies are exploiting their natural resources! As the Journal explained:
Also key to the surplus plans is projected revenue in the mining sector, where demand from emerging Asian economies such as China means prices for commodities such as iron ore and coal are trading at historic highs. Investments in the mining sector alone in the fiscal year beginning July 1 are projected at A$70 billion.
Australia, which hasn’t experienced a technical recession in 20 years, is enjoying a mining boom “never before seen in its history,” which makes dealing with the labor shortage urgent, Treasurer Swan said. “We don’t have a single person to waste,” he said.
Think maybe the United States might take a hint from this? Well, have a look at North Dakota, which has the nation’s lowest unemployment rate (currently 3.6 percent) and a state budget surplus. How’d they do it? A massive increase in oil and gas drilling, nearly all of it on private or state lands. Like Australia, North Dakota has a labor shortage.