North Dakota Economy: Oil, Agriculture, and the Bakken

North Dakota is one of the smaller state economies, usually ranked in the bottom third of U.S. states by GDP — the dollar value of everything a place makes and sells in a year. The North Dakota economy is built on oil and gas, agriculture, and energy infrastructure, with the Bakken shale formation in the west reshaping the state's industry mix over the past decade.

This is a plain-English tour. For the national picture, see The State of the U.S. Economy and the Economy hub.

How big is the North Dakota economy?

For example, recent state GDP for North Dakota has run around $75 billion, according to the Bureau of Economic Analysis. Population is roughly 0.8 million, per the U.S. Census Bureau. Fargo and Bismarck anchor the eastern half of the state; Williston and Dickinson anchor the Bakken oil patch in the west.

The biggest industries

North Dakota's industry mix is unusually concentrated in energy and agriculture. The main pillars are:

• Oil and gas — North Dakota became the second-largest U.S. oil producer after the Bakken shale boom of the 2010s, behind only Texas. Production swings up and down with global oil prices.
• Agriculture — North Dakota is the top U.S. producer of spring wheat, durum, canola, flaxseed, and dry edible beans. It is also a major corn, soybean, and sugar beet state.
• Food processing and ag manufacturing — sugar refineries, soybean crushers, ethanol plants, and pasta and flour mills tie the farm economy to a deep processing base.
• Energy services and manufacturing — pipeline construction, drilling services, equipment manufacturing, and rail-based crude oil shipping all support the oil patch.
• Healthcare — Sanford Health and Essentia Health are two of the largest employers in Fargo and across the eastern half of the state.
• Higher education and government — the North Dakota University System (anchored by NDSU in Fargo and UND in Grand Forks) and a large state and federal government footprint round out the major employer categories.

Jobs and wages

North Dakota labor data is published by Job Service North Dakota, with national-level numbers from the Bureau of Labor Statistics. For example, the North Dakota unemployment rate is consistently among the lowest in the country, often well below the national average, with the Bakken counties especially tight in oil booms.

The North Dakota minimum wage is tied to the federal floor of $7.25 per hour. Many large employers — oil services, healthcare, and manufacturing — pay well above that on their own, especially during oil booms when wages in the Bakken can run very high.

Taxes in North Dakota

North Dakota has a graduated state income tax with relatively low top rates compared with most other states.

The state sales tax rate is 5%, with local add-ons that push the combined rate to about 7–8% in most cities. State tax forms and rules live at the North Dakota Office of State Tax Commissioner. You can read more about how sales tax works in our glossary.

Cost of living

Cost of living in North Dakota is below the national average across most of the state. Bakken boomtowns like Williston have at times seen housing costs spike sharply during oil booms before easing again. The federal government tracks region-specific Consumer Price Index data through the BLS Midwest region, and HUD publishes Fair Market Rents for every county at HUD User.

The Bakken and the oil cycle

The Bakken shale formation in western North Dakota turned the state into a major oil producer almost overnight in the early 2010s. Production peaked, fell with the 2014–2016 price crash, recovered, then dropped again during the 2020 pandemic before rebounding. Oil revenue funds large transfers into the state's Legacy Fund — a sovereign-wealth-style reserve — and has reshaped state finances. The boom has also strained housing, schools, and roads in small western towns and made the state budget unusually exposed to global oil prices.

Agriculture and the eastern half

The Red River Valley along the eastern border with Minnesota is some of the most productive farmland in North America, growing sugar beets, soybeans, corn, and wheat. American Crystal Sugar — a farmer-owned cooperative — runs major refineries in Hillsboro, Drayton, and other small towns. The central and western parts of the state shift to spring wheat, durum, canola, and cattle.

Fargo and the tech base

Fargo is the largest metro in the state and home to a quietly significant tech base. Microsoft's Fargo campus is one of its largest U.S. sites outside the Pacific Northwest, and the metro hosts a deep cluster of agricultural technology, software, and back-office firms.

How does the North Dakota economy fit into the national picture?

North Dakota is one of the most energy- and agriculture-dependent state economies in the country. The Bakken transformed the state's industry mix and finances, but the underlying farm economy and a steady tech and healthcare base in Fargo provide important stability across oil-price cycles.

A note on the numbers

Numbers in this article change every quarter — always check the latest from BEA, BLS, and the North Dakota Office of State Tax Commissioner for the most current data.