Frackalachia Update: Peak Natural Gas and the Economic Implications for Appalachia
In summary:
- Job growth in Frackalachia went from a meager 1.6% gain in jobs since 2008 to a decline of 2.1% and an overall net loss of more than 10,000 jobs.
- Income growth fell further behind both the nation and also the combined states of Ohio, Pennsylvania and West Virginia.
- Population loss worsened, from a decline of 3.8% in 2019 to 4.8% in 2021, nearly 47,000 people in all.
These findings present a unique and troubling challenge to policymakers in the northern Appalachian region and to all of us who care about the economic wellbeing of a place that has suffered mightily since the collapse of the steel industry in the 1980s. Development or redevelopment strategies were first focused on trying to cling to the industries that for a century had been the drivers of jobs and commerce in the region. But, when that approach failed and all others as well, the natural gas boom and downstream industries, including petrochemicals and plastics manufacturing to which it was expected to give rise, became saviors in the eyes of the region’s policymakers – a belief that was greatly encouraged by the gas industry, which provided relentlessly sunny economic impact studies predicting the creation of hundreds of thousands of jobs.
This report, its predecessors, and struggling downtowns in communities throughout Frackalachia provide overwhelming evidence that the predictions weren’t only wrong, they were the products of deeply flawed and biased analyses and, more importantly, the reasons why the natural gas boom and its offspring – a second US petrochemical hub and a third natural gas liquids storage hub – failed to deliver on promises of economic prosperity are structural in nature, meaning they are not going to change.
Sadly, the same is likely to be true of the most recent shiny object being dangled in front of the region’s policymakers – the promised creation of an Appalachian hydrogen hub, which would be heavily subsidized by the federal government. The proposed hydrogen hub suffers from the same shortcomings as its predecessors. First, like the once imagined but unrealized Appalachian petrochemical hub, it is unlikely to come to fruition in anything but a highly abbreviated form. Second, the expanded hydrogen economy of which it would be a part, while growing to perhaps two or three times its current size, will still not be large enough to induce fundamental economic change in the region. Third, the hydrogen hub, like the petrochemical hub, may not come to fruition at all because private markets may not support it, despite generous federal subsidies. Finally, even if a hydrogen hub is realized, the plants and facilities that would comprise it are, in many respects, like the natural gas industry – highly capital-intensive, not very jobs-intensive, highly polluting, and destructive of quality of life.
…Then in 2016 something changed in Centralia….With $55 million in economic transition funding from the mine’s and power plant’s owner, the Centralia Coal Transition Grants Board began investing in energy transition – energy efficiency and renewable resources – and education. The result was four years of job growth at twice the national average, wage growth 50% greater than that of the nation, a restored downtown, and a growing population. And, best of all for communities in northern Appalachia, the Centralia model appears to be replicable.