Top States For Business 2013

Underground economy: How shale is ‘fracking’ the old order

An Alpha Oil & Gas crew building a 10-inch gas pipeline near Watford City, N.D.
Matthew Staver | Bloomberg | Getty Images

What a difference a few years make.

When we launched America's Top States for Business in 2007—before the housing market implosion and the financial crisis—our Top States were attracting not only businesses but people: families and home buyers.

Four of our Top Five that year were Southern states: Virginia followed by Texas, Utah, Georgia and North Carolina.

(Watch: Can Texas Stay on Top?)

But while we and everyone else were looking south, oil production in North Dakota's Bakken Shale tripled in 2007. Crude oil was trading at a mere $60 a barrel, though, so not many people noticed. The state finished a mere 13th.

By last year, however, Brent Crude oil was averaging around $111 a barrel, and North Dakota made its first appearance in our Top Five. The move was largely a result of the state's dizzying economic growth—"bigger than China's growth rate," Steven Landefeld, director of the federal Bureau of Economic Analysis, told CNBC in an interview. "It's been oil and gas [in North Dakota]."

Virginia, by contrast, slipped to No. 3 last year—its worst showing ever. And Georgia slipped all the way to ninth place.

Our rankings reflect what experts say has been a gradual change in recent years, with the core of economic expansion moving to the middle of the country.

(Read More: Categories & Criteria for CNBC's Top States for Business 2013)

"You look at Texas, Louisiana, North Dakota—all the way up the central corridor—you see high-single-digit, and double-digit growth," Meredith Whitney, CEO of Meredith Whitney Advisory Group, told CNBC in an interview. "Who would have thought we'd have so much prosperity, so much opportunity at home?"

Sophisticated drilling techniques—including the controversial method of hydraulic fracturing, or "fracking"—have unlocked enormous energy reserves previously inaccessible in shale formations in North Dakota and elsewhere, making U.S. energy independence a real possibility. U.S. shale oil production, which was 230,000 barrels a day in 2007, is forecast to top 2.3 million barrels this year—a 1,000 percent increase—according to the Department of Energy.

"This energy boom has literally transformed the financial landscape of the central corridor; creating jobs and rising incomes," Whitney wrote in her book "Fate of the States: The New Geography of American Prosperity" (Portfolio/Penguin, 2013). In late 2012, unemployment rates in North Dakota, Oklahoma, Wyoming and others were among the nation's lowest.

This prosperity echoes an earlier era, Whitney said.

"You want to think of where the great Sun Belt drove so much migration into these retirement communities of Florida, Arizona, Nevada, and so much subsequent home price appreciation," she said. "The same thing's going to happen to the central corridor."

In a truly seismic shift, she said, "businesses are moving first, and people are going to follow those businesses."