WILLISTON, N.D. (AP) - Marcus Jundt moved to Williston from Minnesota almost four years ago and has opened four restaurants there since. Food isn't propelling his business, though. It's oil.
"Everything I've done in Williston is a derivative of oil," he says.
That oil has averaged $96 a barrel over the past four years, fueling more drilling, more hiring, and bigger appetites in North Dakota, Texas, Oklahoma and elsewhere. Now oil has hit a rough patch, plunging to $79 from $107 in June on fears of a global glut. Many expect these lower prices are to stick around for a while.
Lower oil prices, while good for the broader U.S. economy, are a threat to what has been a surprising and dramatic surge in oil production in the U.S., and to drilling communities that have come to depend on oil money.
"If the price gets low enough and stays there long enough I'm sure it will affect the number of people and the amount of money that will be spent in the greater community - and I have exposure to that," Jundt says.
U.S. oil production has gone up by 3.5 million barrels per day, or 70 percent, since 2008. High prices fueled the boom, providing oil companies the profits and investor cash to buy up land, pay for drilling rigs, and develop new technology. Places like Williston, a once-sleepy farming town, thrived with increased economic activity, well-paying jobs and rising tax revenue.
Prices would have to fall lower, and stay low for a while, to turn the U.S. oil boom into a bust. Wells that are already producing won't be shut off and enormous projects with long-time horizons will still be built. Many drillers have funded next year's drilling plans by selling oil in the futures market.
Still, a $20 drop in the price of oil means $170 million less in revenue every day for the U.S. oil industry.
Investors are less willing to take on the risk of funding new expansion without hopes for a big reward and oil companies big and small are left with less money to go and drill the next well.
BP, Chevron and Shell told investors last week they would reduce spending on new development because of lower prices.
Mike McDonald, co-owner of Triad Energy, which usually operates 1 or 2 rigs in Oklahoma, says that low prices have stung and now he's not planning to get another rig going after current projects are complete.
Drilling in fields that aren't very prolific will stop because it won't be profitable. For example, drillers in North Dakota's Burke County need $81 a barrel on average to break even, according to the Department of Mineral Resources, while the price is just $28 in McKenzie County, the state's top oil producing county.
North Dakota Department of Mineral Resources director Lynn Helms says companies are looking to cut costs on such things as electricity generation and water disposal. He says the average operating cost of a well has risen 36 percent in the past year to $15,000 a month, mirroring an industry-wide struggle with higher costs.