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Tuesday, December 11, 2012

Oil Boom - Housing Boom

7:04 AM
According to the International Energy Agency (IEA), the US will overtake Saudi Arabia as the world's biggest oil producer "by around 2020.” The IEA said the reason for this was the big growth and development in the US of extracting oil from shale rock. The US shale oil industry extracts oil from the ground using a method called fracking - pumping down a mixture of sand, water and chemicals at high pressure. This has enabled the US to gain significantly more extractable oil resources. As a result, the IEA predicts the US will become "all but self-sufficient" in its energy needs by around 2035. The industry says the method is safe, but critics say it could cause earthquakes and pollute water sources. More locally, economic impacts of hydraulic fracturing include payments to property owners, an increase in jobs, and an increase in business. The EPA states that it is unclear on a local level how and for how long hydraulic fracturing affects a community economically. It is hypothesized that hydraulic fracturing may not provide jobs to local communities due to the specialized nature of hydraulic fracturing tasks. Also, communities’ local resources could potentially be taxed due to the increase in industry traffic or if an accident occurs. But what specifically are the impacts of fracking on local real estate? Concerns have been raised regarding the terms and clarity of the leases energy companies are signing with landowners, as well as the manner in which they are sold and the tactics used by companies in implementing them. Another question has been the effect the leases can have on mortgages, with some lenders becoming reluctant to loan money "for a piece of land that ends up storing the equivalent of an Olympic-size swimming pool filled with toxic wastewater from drilling" or making mortgages conditional on not signing a drilling contract. Texas, Alaska, California, North Dakota, Oklahoma and New Mexico are the states with the largest crude oil production in the country. The states of North Dakota and Texas had the largest increases in oil production since September 2011, and have helped U.S. oil production increase by more than 900,000 barrels a day. The Eagle Ford Formation in West Dallas is the site of the largest shale oil formation in Texas, and one of the most actively drilled targets for oil and gas in the United States. It is no surprise that the hottest real estate markets in the country right now are those connected to the oil and gas industries. North Dakota, once a sleepy backwater of the petroleum industry, this year surpassed Alaska as the number two oil producer in the United States. The gush of North Dakota crude has helped push the US to its spot as the world's top energy producer within five years. The rich oil patch has turned some of North Dakota into a region that is swarming with armies of workers tapping once unreachable caches of crude. The skyrocketing cost of housing in Williston, ND has sent workers into temporary manufactured housing, and many of the older locals searching for new places to live. New home builders have been slow to respond, mainly because many local home builders went broke in the last oil boom when it went bust in the 1980s. More than 1,100 new homes are scheduled to be built in 2012 but that will hardly put a dent in the number of homes that are desperately needed to house new workers, some of whom have to drive up to 300 miles a day for a place to sleep. Temporary shelters include campers, tents, RVs and cars. Hotels and motels in the western edge of North Dakota’s rich oil patch are booked up for months, and home prices are rapidly rising, a major exception to most of the U.S. So if you are looking for an emerging real estate market in which to invest, look for oil, the new gold rush of the century....

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