The natural gas boom in the Appalachians has turned out to be an economic collapse from which local and state officials can bounce back if they embrace the growing clean energy economy.
This is the result of two results-oriented reports released Tuesday by the nonprofit think tank Ohio River Valley Institute, which advocate for a move away from fossil fuels, especially the development of natural gas that does not failed to convert production into prosperity.
“We know that the natural gas boom in the Appalachians has not only failed to generate growth, jobs and prosperity so far. We now know he’s structurally incapable of doing it, ”Ohio River Valley Institute principal investigator Sean O’Leary said during a webinar on the reports Tuesday. “[That] means that many economic development strategies in the region need to be rethought.
The Ohio River Valley Institute’s analysis focuses on changes in income, jobs, population, and gross domestic product – the total market value of goods and services produced – across 22 counties in West Virginia, the Ohio and Pennsylvania from 2008 to 2019 which suggest an increase in natural gas production during this period did little to boost the economies of these counties.
A reports call these 22 counties – which include the counties of Doddridge, Harrison, Marshall, Ohio, Ritchie, Tyler and Wetzel in West Virginia – “Frackalachia” based on the slang term denoting the hydraulic fracturing of deep rock formations to extract natural gas or oil.
Jobs grew in the counties that make up “Frackalachia” by just 1.6% from 2008 to 2019, 2.3 percentage points behind all counties in West Virginia, Ohio and Pennsylvania and 8.3 percentage points percentage below the national average, the report notes.
The report concludes that a dramatic increase in gross domestic product in “Frackalachia” during the same period following the natural gas boom did not produce economic prosperity because the boom depended heavily on workers and gas suppliers. out-of-state services, reported less rental and royalty income for landowners than expected, and generated relatively little income for employee compensation.
The report finds that from 2008 to 2019, when 97% of the growth in gross domestic product nationwide was achieved through personal income, that figure was only 21% in the 22 counties of West Virginia, Ohio and Pennsylvania, which the study attributes to three-quarters. growth in these counties in mining, quarrying, oil and natural gas.
“We don’t see this from a pro-fracking or anti-fracking point of view or from a pro-industry or anti-industry point of view,” O’Leary said. “We are looking at the fact that counties are getting a bad deal economically. Whether you are pro-industry or anti-industry, pro-fracking or anti-fracking,… you look at the numbers, it’s bad business.
The report highlights a recent study researchers from Akron University and Ball State University have found that micropolitan area counties with better quality of life experience higher population growth and employment. The study found no “statistically significant relationship between the quality of the business environment and growth in micropolitan areas.”
“This finding should come as no surprise to policymakers in many micropolitan and rural regions and states who have established economic development strategies aimed at providing the best possible business environment – low taxes and minimal regulation – for the gas industry. natural be disappointed with the result, ”said the report by O’Leary, Ben Hunkler, staff member of the Ohio River Valley Institute and three researchers at the University of Washington.
“We have things like the natural resource curse,” said Amanda Weinstein, associate professor of economics at Akron University and co-author of the Micropolitan County study cited in the report. ‘Ohio River Valley Institute. “These areas that tend to extract their natural resources tend to do worse … What we have seen in the Appalachian region is that they have not invested in this quality of life, ensuring that by extracting those resources, they are doing something to maintain their environment and the physical capital, that kind of natural capital that they have in this region.
In August 2019, Governor Jim Justice created a task force to bring manufacturing opportunities to West Virginia ahead of a planned expansion of the petrochemical industry in Appalachia. The justice office said the expansion would bring billions of dollars in investment and more than 100,000 new jobs to the region.
O’Leary said this would never happen because the natural gas industry does not support a large enough workforce to produce its output, arguing that Appalachia should embrace the energy efficiency industry instead. more labor intensive.
“Energy efficiency is heating, ventilation and air conditioning and insulation, as well as replacing doors and windows, things that are done by local suppliers, even in relatively small towns,” O said. ‘Leary. “These are very labor-intensive businesses. They are delivered locally. These are businesses that are carried out by local entrepreneurs, so when you spend the money with them, the money stays in the local economy. They hire local workers, and that has a multiplier effect locally.
O’Leary noted that residential energy efficiency measures for low and moderate income residents, as well as clean energy technologies and worker recycling, were priorities for financing the economic transition in Centralia, in Washington State, where a $ 55 million factory owner-funded economic transition plan has been finalized. in 2011 to help this community cope with the closure of a mine and a coal plant.
The Ohio River Valley Institute other report released Tuesday highlights this transitional model, which O’Leary touted as a replicable example in areas like Marshall County, which faces the possible early shutdown of the controlled Mitchell coal-fired production facility. by American Electric Power, which serves as the economic engine for the county.
Federal infrastructure proposals progressively progressing through Congress and the savings American Electric Power would realize by shutting down the facility in 2028 instead of the end of its expected life in 2040 could fund such a transition plan for Marshall. and the surrounding counties.
“[T]he concept of economic transition really needs to take root in the region, ”said O’Leary.