When it comes to creating jobs, North Dakota has found the right formula. The state has the largest percentage increase in employment over the past year and was the fastest of all 50 to recover from the recession.

The reason is simple: energy production.

“North Dakota has been the poster child for what can happen when we unleash free enterprise and allow states to develop and commercialize their resources,” Heritage’s Nick Loris wrote recently on The Foundry. “North Dakota is drilling at record pace.”

The state’s unemployment rate is 3.4 percent, the lowest in the country. The U.S. Bureau of Labor Statistics reported this week that North Dakota added 17,300 new jobs over the past year, which represented a 4.5 percent increase — the largest in the United States.

North Dakota’s embrace of hydraulic fracturing and drilling have turned towns into popular destinations for new businesses and people seeking jobs. Loris pointed to Williston, N.D., as one example of a community transformed as a result of energy production.

Bloomberg reported this week that oil production has nearly quadrupled and employment in the energy sector is up by 185 percent. Those figures are based on an economic forecast from IHS Global Insight that showed North Dakota was the fastest state to return to “peak employment.”

It’s not the only state to benefit from energy production. The IHS Global Insight forecast listed energy-rich Alaska and Texas as other beneficiaries. Alaska has already returned to peak employment and Texas is expected to do so in the first quarter of 2012. Nebraska and South Dakota will also return to pre-recession levels next year.

“If the goal is to promote rapid job creation — and that’s what most policymakers tell us — then the obvious solution is to remove government obstacles to the rapid development of such domestic resources,” Robert Murphy, a senior fellow at the Institute for Energy Research, wrote in the Washington Examiner.

The map below from IHS Global Insight shows when states are expected to return to peak employment.