SCHMID: LOOKING BACK FROM THE LEFT COAST - DECEMBER 20, 2014
A NAKED BET Harold Hamm has far more invested in ND than any other individual. He is the CEO and 68 percent owner of Continental Resources, the biggest oil producer in ND’s Bakken. Hamm started Continental as a “wildcatter” and brought the company to its present prominence -- at a recent date, his stock was valued at $9.2 billion. He recently startled the investment community by “going naked,” that is, cashing in all of the hedges which protected Continental from falling oil prices. While the sale of the hedges netted over $400 million in cash, the Wall Street Journal estimates the company subsequently lost $127 million from declines in oil prices.
THE MEANING OF PRETTY QUICK Hamm believes oil prices are near the bottom and “we’ll see them recover pretty drastically, pretty quick.” He also believes OPEC has deliberately pushed down oil prices. “Pretty quick” takes a little explaining, Hamm says it may take as many as two years for his bet (to cancel the hedges) to pay off. He said, “You haven’t seen it play out.”
OIL PRICES HAVE NOSEDIVED -- if they fall further and remain low, ND stands to lose billions in revenue. Lt. Gov. Drew Wrigley explained to a business group that under state law, if oil prices fall below a certain threshold for five consecutive months, the oil extraction tax disappears entirely for up to two years. While State Tax Commissioner Ryan Rauschenberger considers this scenario unlikely, Wrigley said loss of the extraction tax would put a damper on the state’s economy, an important reason the state should focus on diversifying its economy. He said technology start-ups and manufacturers like Bobcat are good examples of desirable diversification.
RON OFFUTT is a recipient of the ND Rough Rider Award and was featured in a 2001 book as one of the “Visionary Entrepreneurs of Agriculture.” He founded R.D. Offutt Company, the largest potato grower in the U.S., and RDO Equipment Co., a Fargo-based heavy equipment company that has been the world’s largest John Deere dealer. The business school at Concordia is named for him. His daughter Christi will succeed him as chair of both companies. She is an attorney trained at Boston University and Harvard.
DON’T ROCK THE BOAT “Looking at the treatment we gave the only chancellor we've ever had — Hamid Shirvani — it is obvious that we don't have tolerance for a real chancellor.” -- Columnist Lloyd Omdahl doubting whether ND has the political will to appoint and support a strong chancellor for higher education. Hamid Shirvani is a former chancellor who proposed much needed reform for the university system and was rewarded by being run out of the state.
SHIRVANI GAVE IT HIS BEST SHOT "Those who strive for excellence must paddle against a strong tide of mediocrity, only to be marginalized as 'not understanding North Dakota culture.'" -- A quote from a letter from Bob Skarphol and Rosco Streyle published in the GF Herald and pursuing a theme similar to Omdahl's. They said, “We are expected to ignore high levels of remediation, many exposes involving the cost of presidential residences and the embarrassing degree and foundation scandals at Dickinson State University. These were the issues that former Chancellor Hamid Shirvani focused his efforts on changing.”
COMMUNITY ACTION OF MINNEAPOLIS closed after Minnesota auditors found CEO Bill Davis had abused state and federal programs for years and spent nearly a quarter million dollars on “unallowable” expenses for travel to the Bahamas, food, alcohol, spas, golf and pay bonuses. Community Action was supposed to use the money for services to low-income people. The corruption was a poorly kept secret, but the nonprofit was shielded by politically influential supporters. Minnesota Public Radio reported:
- Internal documents and interviews with people who worked with Davis detail how state officials for years ignored complaints about Community Action of Minneapolis and Davis while Davis used his Democratic political ties, a heavy handed managerial style and his standing in the African-American community to keep the taxpayer money flowing. When Commerce employees questioned Davis' spending, he accused them of racism.
MORE FRAUD Yasmin Abdulle Ali and her husband, Ahmed Aden Mohamed were among four people in St. Paul charged with a “massive” multimillion-dollar public benefits fraud. They ran child care centers and a home health business which defrauded state programs in Minnesota. The state’s extensive welfare programs are prime candidates for fraud.
ALL’S WELL THAT ENDS WELL Minnesota has more Norwegian Americans than any other state, while ND has the highest proportion. It was not surprising that Norwegian residents of both states were dismayed when the Obama administration nominated George Tsunis, a political supporter and fundraiser, for ambassador to Norway. Tsunis made a dismal showing in nomination hearings. Democratic senators from Minnesota, ND and SD joined Republicans in opposing the appointment and his nomination failed.
FUN IN THE SNOW Tim was driving a county snow plow; Chad was removing snow in a city dump truck -- they collided on a highway intersection in Madison, South Dakota. Tim is Chad’s father. Chad needed nine stitches; Tim wasn’t hurt. Madison is about 40 miles northwest of Sioux Falls.
DAKTOIDS: ND producers of peas, lentils, chickpeas and beans are salivating at the prospect of normalization of trade with Cuba. The state is a top producer of these commodities and Cuba is a top consumer . . . A three-fatality accident on Hwy 85 in Mckenzie County brought the year-to-date fatality total to 23 -- 20 percent of the statewide total -- Oil Country is dangerous.
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