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The Downside of N. Dakota's Oil Boom

Wednesday, 1 Feb 2012 | 10:50 AM ET

In the summer of 2011, CNBC traveled to North Dakota to witness the jobs boom created by what can best be characterized as a modern-day oil rush.

In the rock underneath the surface, some say there is upwards of 24 billion barrels of oil. With the advent of horizontal drilling and fracking (also known as hydraulic fracturing), the oil in the Bakken Formation has begun to flow at a tremendous profit.

Everywhere we went, people talked about six-figure jobs, money and opportunity. People drove into places like Williston, North Dakota — widely considered the center and symbol of this oil boom — and before dinner, they found high-paying jobs.

Many said that it felt too good to be true — or lasting.

Flash forward to the winter of 2012, and more of that truth is emerging. The money is still flowing, but the problems surrounding it are growing.

"It's actually become more intense," said Williston Mayor Ward Koeser. "There's been more people coming. There are more companies coming. There's more building going on. And there are more issues coming up."

Since the story began with the oil business and jobs, let's start there. North Dakota still has the lowest unemployment rate of any state in the Union, but with a national media onslaught in the last six months, it's no longer a secret.

The supply-demand jobs equation has changed. No longer can someone simply get off a bus and get a job. In addition, even with a job, there's probably nowhere to sleep one night, let alone live.

"Coming to this town, I never pictured going into bar fights that involved a hundred-plus people." -Willinson Police Officer, Travis Martinson

Builders are feverishly trying to increase capacity, but right now, there is almost no vacancy. And prices reflect this.

In 2005, the average rent for a one-bedroom apartment in Willison, North Dakota?

Less than $500. Today? More than $2,000 ... if you can even find one.

People have seen the news stories of North Dakota as a job-seeker's oasis, and are so desperate for work, they pack up and come to N. Dakota — sometimes with a suitcase, a jacket ... and no plan.

If no job or place to live materializes, the N. Dakota winter becomes a major problem — a major health problem.

There's been a growing fear of people literally dying in their cars.

"Not only in their cars, just from freezing, but there are also a lot of campers," Koeser pointed out. "People are living in anything they can live in, and they're not designed for wintertime living."

Right now, places like Williston don't even have shelters.

It's not just housing and the cold that worries the mayor and the local population. With the billions of oil company investment dollars and thousands of new workers (mostly men), Williston is now dealing with stabbings, rape and even prostitution.

"I wouldn't say it's out of control," Mayor Koeser said. "But we're very close to that."

The police force is under-staffed and overwhelmed.

"Coming to this town, I never pictured going into bar fights that involved a hundred-plus people," said 23-year-old Travis Martinson, who came from Minnesota to join the local police force.

Here are some of the statistics:

From 2009 to 2010, calls into the police department have increased 250 percent.

America's Oil Rush: Boom or Bust
Billions of dollars worth of black gold buried deep underground changes a small town forever. CNBC's Brian Shactman takes you inside a modern day oil rush in Williston, North Dakota.

In 2008, the police wrote four truck violations. In 2011, it approached 300. Traffic accidents have nearly tripled in the last year.

"We've been getting assault calls throughout the day," Martinson said. "We've been getting DUIs on the day shift. That wasn't normal a year ago."

The entire area is trying to respond. The only local hospital is expanding. The police force is hiring. Developers are frantically securing permits and breaking ground.

Everyone involved hopes that some sense of community can survive the exponential growth, but one long-time resident — who asked not to be identified — summed up how the whole dynamic feels right now.

"It's like a city has come into a little town," she said.

Follow Brian Shactman on Twitter: @bshactman

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  • Shactman joined CNBC in 2007 as a general assignment reporter and fill-in anchor for CNBC's business day programming.