West Virginia

By Nick Cunningham - DeSmog, February 11, 2021

The decade-long fracking boom in Appalachia has not led to significant job growth, and despite the region’s extraordinary levels of natural gas production, the industry’s promise of prosperity has “turned into almost nothing,” according to a new report. 

The fracking boom has received broad support from politicians across the aisle in Appalachia due to dreams of enormous job creation, but a report released on February 10 from Pennsylvania-based economic and sustainability think tank, the Ohio River Valley Institute (ORVI), sheds new light on the reality of this hype.

The report looked at how 22 counties across West Virginia, Pennsylvania, and Ohio — accounting for 90 percent of the region’s natural gas production — fared during the fracking boom. It found that counties that saw the most drilling ended up with weaker job growth and declining populations compared to other parts of Appalachia and the nation as a whole.

Shale gas production from Appalachia exploded from minimal levels a little over a decade ago, to more than 32 billion cubic feet per day (Bcf/d) in 2019, or roughly 40 percent of the nation’s total output. During this time, between 2008 and 2019, GDP across these 22 counties grew three times faster than that of the nation as a whole. However, based on a variety of metrics for actual economic prosperity — such as job growth, population growth, and the region’s share of national income — the region fell further behind than the rest of the country. 

Between 2008 and 2019, the number of jobs across the U.S. expanded by 10 percent, according to the ORVI report, but in Ohio, Pennsylvania, and West Virginia, job growth only grew by 4 percent. More glaringly, the 22 gas-producing counties in those three states — ground-zero for the drilling boom — only experienced 1.7 percent job growth.

“What’s really disturbing is that these disappointing results came about at a time when the region’s natural gas industry was operating at full capacity. So it’s hard to imagine a scenario in which the results would be better,” said Sean O’Leary, the report’s author.

The report cited Belmont County, Ohio, as a particularly shocking case. Belmont County has received more than a third of all natural gas investment in the state, and accounts for more than a third of the state’s gas production. The industry also accounts for about 60 percent of the county’s economy. Because of the boom, the county’s GDP grew five times faster than the national rate. And yet, the county saw a 7 percent decline in jobs and a 2 percent decline in population over the past decade.

“This report documents that many Marcellus and Utica region fracking gas counties typically have lost both population and jobs from 2008 to 2019,” said John Hanger, former Pennsylvania secretary of Environmental Protection, commenting on the report. “This report explodes in a fireball of numbers the claims that the gas industry would bring prosperity to Pennsylvania, Ohio, or West Virginia. These are stubborn facts that indicate gas drilling has done the opposite in most of the top drilling counties.”

A Boom Without Job Growth

This lack of job growth was not what the industry promised. A 2010 study from the American Petroleum Institute predicted that Pennsylvania would see more than 211,000 jobs created by 2020 due to the fracking boom, while West Virginia would see an additional 43,000 jobs. Studies like these were widely cited by politicians as proof that the fracking boom was an economic imperative and must be supported.

But the Ohio River Valley Institute report reveals the disconnect between a drilling boom and rising GDP on the one hand, and worse local employment outcomes on the other. There are likely many reasons for this disconnect related to the long list of negative externalities associated with fracking: The boom-and-bust nature of extractive industries creates risks for other business sectors, such as extreme economic volatility, deterring new businesses or expansions of existing ones; meanwhile air, water, and noise pollution negatively impact the health and environment of residents living nearby.

“There can be no mistake that the closer people live to shale gas development, the higher their risk for poor health outcomes,” Alison Steele, Executive Director of the Southwest Pennsylvania Environmental Health Project, told DeSmog. “More than two dozen peer-reviewed epidemiological studies show a correlation between living near shale gas development and a host of health issues, such as worsening asthmas, heart failure hospitalizations, premature births, and babies born with low birth weights and birth defects.”

Moreover, oil and gas drilling is capital-intensive, not job-intensive. As the example of Belmont County shows, only about 12 percent of income generated by the gas industry can be attributable to wages and employment, while in other sectors, on average, more than half of income goes to workers.

In other words, it costs a lot of money to drill, but it doesn’t employ a lot of people, and much of the income is siphoned off to shareholders. To top it off, equipment and people are imported from outside the region — many of the jobs created went to workers brought in from places such as Texas and Oklahoma.

Despite the huge increase in shale gas production over the past decade, the vast majority of the 22 counties experiencing the drilling boom also experienced “economic stagnation or outright decline and depopulation,” the report said.

The American Petroleum Institute did not respond to a request for comment.

“[W]e could see long ago that the job numbers published and pushed out by the industry years ago were based in bluster, not our economic realities,” Veronica Coptis, Executive Director of Coalfield Justice, a non-profit based in southwest Pennsylvania, told DeSmog, commenting on the report. “At industry’s behest and encouragement, Pennsylvania promoted shale gas development aggressively in rural areas for more than a decade. And yet, the southwestern counties at the epicenter of fracking do not show any obvious improvement in well-being.”

By Robert Pollin, Jeannette Wicks-Lim, Shouvik Chakraborty, and Gregor Semieniuk - Political Economy Research Institute, February 2021

The COVID-19 pandemic has generated severe public health and economic impacts in West Virginia, as with most everywhere else in the United States. This study develops a recovery program for West Virginia that is also capable of building a durable foundation for an economically viable and ecologically sustainable longer-term transition.

In our proposed clean energy investment project, West Virginia can achieve climate stabilization goals which are in alignment with those set out by the Intergovernmental Panel on Climate Change (IPCC) in 2018—that is, to reduce CO₂ emissions by 45 percent as of 2030 and to achieve net zero emissions by 2050. We show how these two goals can be accomplished in West Virginia through large-scale investments to dramatically raise energy efficiency standards in the state and to equally dramatically expand the supply of clean renewable energy, including solar, geothermal, small-scale hydro, wind, and low-emissions bioenergy power. We also show how this climate stabilization program for West Virginia can serve as a major new engine of job creation and economic well-being throughout the state. Scaled at about $3.6 billion per year in both private and public investments, the program will generate about 25,000 jobs per year in West Virginia. We also present investment programs for West Virginia in the areas of public infrastructure, manufacturing, land restoration and agriculture. We scaled this overall set of investments at $1.6 billion per year over 2021 – 2030, equal to about 2 percent of West Virginia’s 2019 GDP. We estimate that the full program would generate about 16,000 jobs per year in the state. Overall, the combination of investments in clean energy, manufacturing/infrastructure, and land restoration/agriculture will therefore create about 41,000 jobs in West Virginia, equal to roughly 5 percent of West Virginia’s current workforce.

The study also develops a just transition program for workers and communities that are currently dependent on West Virginia’s fossil fuel-based industries. It estimates that about 1,400 workers per year will be displaced in these industries between 2021 – 2030 while another roughly 650 will voluntarily retire each year. It is critical that all of these workers receive pension guarantees, re-employment guarantees, wage insurance, and retraining support, as needed. We estimate that generous levels of transition support for all workers will cost an average of about $140 million per year.

The study shows how all of these proposed measures can be fully financed within the framework of the Build Back Better infrastructure and clean energy investment program proposed by President Biden during his presidential campaign.

Read the text (PDF).

By Sanya Carley and David Konisky - Nature Energy, August 2020

The transition to lower-carbon sources of energy will inevitably produce and, in many cases, perpetuate pre-existing sets of winners and losers. The winners are those that will benefit from cleaner sources of energy, reduced emissions from the removal of fossil fuels, and the employment and innovation opportunities that accompany this transition. The losers are those that will bear the burdens, or lack access to the opportunities. Here we review the current state of understanding—based on a rapidly growing body of academic and policy literature—about the potential adverse consequences of the energy transition for specific communities and socio-economic groups on the frontlines of the transition. We review evidence about just transition policies and programmes, primarily from cases in the Global North, and draw conclusions about what insights are still needed to understand the justice and equity dimensions of the transition, and to ensure that no one is left behind.

Read the text (PDF).

By various - Reclaiming Appalachia Coalition, 2019

The certainty of an Appalachian transition has become self-evident. The questions that remain are “What shape will that transition take?” and “Will our region seize the opportunity to establish just and sustainable economic models that invest in our strengths and set the region up for meaningful and healthy participation in the new economy?” Foundational to our coalition’s work is the understanding that specific, targeted intervention is necessary to ensure that an equitable vision becomes reality.

Appalachia is at the threshold of a paradigm shift into the new economy, ushered in by communities that are taking their futures into their own hands like never before and implementing innovative ways to address long-standing economic issues with degraded lands. The table on page 6 shows funded projects illustrating this shift that have been supported by our coalition, ranging from ecotourism, renewable energy, arts and culture, and creative waste recycling.

This report highlights the successes achieved in 2019 from previously submitted projects and showcases a brand new round of innovative projects. We’re very excited about both the successes that have already been funded and implemented, as well as the new opportunities that are currently being considered for Abandoned Mine Lands (AML) Pilot funding.

Read the report (Link).

By Sue Sturgis - Facing South, December 15, 2017

Dominion and Duke Energy got more bad news about their controversial Atlantic Coast Pipeline project this month, with North Carolina regulators announcing they would not issue the necessary air quality permit for a planned compressor station in Northampton County by Dec. 15, as the utilities had hoped. The proposed 600-mile pipeline would carry fracked gas from West Virginia to North Carolina, with most of it used to generate electricity at gas-fired power plants.

On Dec. 4, the N.C. Department of Environmental Quality (DEQ) — headed by the Environmental Defense Fund's former Southeastern regional director Michael Regan — asked for additional information about air pollution impacts, indefinitely extending the deadline for a response. This marks the fifth time that Democratic Gov. Roy Cooper's administration has asked the ACP developers for more information about the project, which has the necessary approvals from the Federal Energy Regulatory Commission but still needs air, water and erosion permits in North Carolina. Last month the state requested additional details about economic benefits to communities along the pipeline's route.

Amid ongoing questions from state regulators about the ACP's impacts, its developers are running TV ads in North Carolina touting the project's job-creation potential. They're doing so through a group called the EnergySure Coalition, an alliance of pro-pipeline businesses and associations that's funded by Dominion and Duke as well as the other two minor ACP investors, Piedmont Natural Gas and Southern Company Gas.

One of the recent ads features Durwood Stephenson, a commercial and industrial construction contractor based in Johnston County, which lies along the ACP's route. He's also the executive director of the U.S. 70 Corridor Commission, a regional economic development group.

"We need the pipeline if we're going to bring in industries and jobs," Stephenson says.

But are those job claims accurate? Will the $5.5 billion pipeline that would be financed primarily by Dominion and Duke Energy ratepayers be an economic boon for Eastern North Carolina, a region that faces higher-than-average unemployment?

An analysis released last week concluded that the developers' jobs claims are overly optimistic. It was commissioned by the Natural Resources Defense Council and carried out by the Applied Economics Clinic (AEC), a nonprofit consulting group housed at Tufts University in Massachusetts that focuses on energy, environment and equity. The researchers looked at the overall economics of the ACP as well as specific claims about manufacturing jobs and found the developers' promises to be unsubstantiated.

"Recent data on states with new natural gas pipeline capacity does not support the claim that the addition of a new natural gas pipeline in a state is correlated with lower industrial electricity prices or an increase in the number of manufacturing jobs in that state," the report said.

By Les Leopold - Common Dreams, April 7, 2017

“C’mon, fellas. You know what this is? You know what this says? You’re going back to work.” ― Donald Trump on signing an executive order to reverse the Obama Administration’s rules on coal, March 28, 2017.

Lyndon Baines Johnson in 1964 buried Barry Goldwater in West Virginia, 67.9 percent to 32.1 percent. By 2016, Trump completely reversed that landslide by defeating Hillary Clinton 67.9 percent to 26.2 percent. What happened to turn such a deep blue state into flaming red?

The Democratic Party establishment has a simple explanation: West Virginians are so hung up on cultural issues like guns, gays, abortion and their mythical self-image as “coal country” that they vote against their own material interests. They seem impervious to the fact that they are major beneficiaries of Obamacare and Medicaid. They don’t seem to notice that health care jobs far exceed coal-related jobs which have been decimated by new technologies, and market competition from natural gas and renewables.

As New York Times columnist Paul Krugman recently writes, “So West Virginia voted overwhelmingly against its own interests. ....Coal country residents.... were voting on behalf of a story their region tells about itself, a story that hasn’t been true for a generation or more.”

By Trevor Houser, Jason Bordoff, and Peter Marsters - Columbia Center on Global Energy Policy, School of International and Public Affairs, and the Rhodium Group, April 2017

From the introduction: Six years ago, the US coal industry was thriving, with demand recovering from the Great Recession, and global coal prices at record highs along with the stock prices of US coal companies. By the end of 2015, however, the industry had collapsed, with three of the four largest US miners filing for bankruptcy along with many other smaller companies. While coal mining employment has been on the decline for decades – from a peak of more than 800,000 in the 1920s to 130,000 in 2011 – the pace of job loss over the past six years has been particularly dramatic. After campaigning on a promise to end what he called his predecessor’s “War on Coal,” President Donald Trump signed an Executive Order in March 2017 ordering agencies to review or rescind a raft of Obama-era environmental regulations, telling coal miners they would be “going back to work.”

This paper offers an empirical diagnosis of what caused the coal collapse, and then examines the prospects for a recovery of US coal production and employment by modeling the impact of President Trump’s executive order and assessing the global coal market outlook. In short, the paper finds:

• US electricity demand contracted in the wake of the Great Recession, and has yet to recover due to energy efficiency improvements in buildings, lighting and appliances. A surge in US natural gas production due to the shale revolution has driven down prices and made coal increasingly uncompetitive in US electricity markets. Coal has also faced growing competition from renewable energy, with solar costs falling 85 percent between 2008 and 2016 and wind costs falling 36 percent.
• Increased competition from cheap natural gas is responsible for 49 percent of the decline in domestic US coal consumption. Lower-than-expected demand is responsible for 26 percent, and the growth in renewable energy is responsible for 18 percent. Environmental regulations have played a role in the switch from coal to natural gas and renewables in US electricity supply by accelerating coal plant retirements, but were a significantly smaller factor than recent natural gas and renewable energy cost reductions.
• Changes in the global coal market have played a far greater role in the collapse of the US coal industry than is generally understood. A slow-down in Chinese coal demand, especially for metallurgical coal, depressed coal prices around the world and reduced the market for US exports. More than half of the decline in US coal company revenue between 2011 and 2015 was due to international factors.
• Implementing all the actions in President Trump’s executive order to roll back Obama-era environmental regulations could stem the recent decline in US coal consumption, but only if natural gas prices increase going forward. If natural gas prices remain at or near current levels or renewable costs fall more quickly than expected, US coal consumption will continue its decline despite Trump’s aggressive rollback of Obama-era regulations.
• While global coal markets have recovered slightly over the past few months due to supply restrictions in China and flooding in Australia, we expect this rally to be short-lived. Slower economic growth and structural adjustment in China will continue to put downward pressure on global coal prices and limit the market opportunities for US exports. Indian coal demand will likely grow in the years ahead, but not enough to make up for the slow-down in China. The same is true for other emerging economies, many of whom are negatively impacted by decelerating Chinese commodities demand themselves.
• Under the best case scenario for US coal producers, our modeling projects a modest recovery to 2013 levels of just under 1 billion tons a year. Under the worst case scenario, output falls to 600 million tons a year. A plausible range of US coal mining employment in these scenarios ranges from 70,000 to 90,000 in 2020, and 64,000 to 94,000 in 2025 and 2030 -- lower than anything the US experienced before 2015.

These findings indicate that President Trump’s efforts to roll back environmental regulations will not materially improve economic conditions in America’s coal communities. As such, the paper concludes with recommendations for steps that the federal government can take to safeguard the pension and health security of current and retired miners and dependents and support economic diversification. Attracting new sources of economic activity and job creation will not be easy, and even at its most successful will not return coal country to peak levels of past prosperity.

But responsible policymakers should be honest about what’s going on in the US coal sector—including the causes of coal’s decline and unlikeliness of its resurgence—rather than offer false hope that the glory days can be revived. And then support those in America’s coal communities working hard to build a new economic future.

Read the text (PDF).

By Lauren Gurley - In These Times, December 15, 2016