WVU economist tells Senators Capito and Manchin six counties now in “great depression”

MORGANTOWN, W.Va. — Centuries of economic reliance on the energy industry and how best to move forward during some of West Virginia’s darkest economic times were among the topics discussed at an official field hearing of the Senate Energy and Natural Resources Committee Monday afternoon in Morgantown.

U.S. Senators Shelley Moore Capito (R-WV) and Joe Manchin (D-WV) listened to experts in academia, construction, labor, natural gas, coal, and manufacturing discuss the future role of West Virginia’s energy industry in the larger scope of it’s flailing economy.

Some of the testimony showed a potential path forward for the coal and natural gas industries. Jeff Keffer, CEO of Longview Power LLC, testified about the Longview Power Plant’s overwhelmingly positive results in efficiency and low heat emissions.

“I’m encouraged that we’re going in the right direction from what we’ve heard today,” Capito said. “My concern is that we’ve got to seize the moment. I don’t want to see this moment pass for us because we’ve got so much to capitalize on.”

But much of the afternoon involved economists Dr. Brian Anderson and Dr. John Deskins–professors at West Virginia University–talking about the urgency of West Virginia’s current economic predicament.

“The coal jobs that have been lost have been very heavily concentrated, leading to the devastation of entire communities,” Deskins said. “Making it much, much harder for laid off coal miners to find alternative employment. The situation is much worse because of the concentration.”

Deskins said six counties in West Virginia are currently undergoing a “great depression” of their own due to enormous job losses.

“Boone County, for example, had 55 percent of it’s jobs in coal before recent events,” he said. “Now Boone has lost around 70 percent of it’s coal jobs. Very, very difficult time for the community.”

Now, fewer than 20 percent of the jobs in Boone County are coal jobs.

“That’s startling in and of itself,” Capito said. “And we see that.”

Deskins also included McDowell, Wyoming, Mingo, Clay, and Logan as part of the “great depression” counties.

“Those job losses, those output losses, have been heavily concentrated in southern West Virginia and especially in six counties,” Deskins said. “We have six counties that have lost between 25 percent and 33 percent of their jobs just over the last few years.”

The coal numbers, their impact on Central Appalachia, and their contrast with the other coal-producing areas of the nation are stark, according to Deskins. While coal production has dropped nationally by 10 percent since 2010, in West Virginia that production has fallen by 51 percent in that same span of time.

Deskins does expect natural gas prices to stabilize and rebound–and that’s where he, Dr. Anderson, and Senators Manchin and Capito see a potential way forward.

“We don’t have to reinvent the wheel here,” Manchin said. “Go down to southwest Lousiana, go down into Texas. See what they’ve done. They built infrastructure. They built the lines to keep the product. They built the refineries. If you build it, they’ll come. If you have a product, they’ll come. If you have a work force, they’ll come.”

Manchin and Capito both offered their support for streamlining regulations in the industry, encouraging additional investment in West Virginia in renewable energy, and simultaneously building the infrastructure–pipelines and storage basins–to fully capitalize on the potential of natural gas.

“Otherwise, we’re going to have the resource,” she said. “We’re going to pull it out of the ground, and it’s going to go to Louisiana, North Carolina, New York. We’re not going to use it here.”

Manchin expressed his frustration with the Obama Administration’s failure to develop a long-term solution in Appalachia–which has been hit particularly hard due to the rising costs and inefficiency of mining thinner seams of coal deeper under the ground.

“[The EPA] was asking us to do things that the technology wasn’t their for us to do,” Manchin said. “They had no plan at all except they wanted to move away from fossil. Well, if that’s the direction they were going, don’t you think you ought to have a plan for the people you are leaving behind?”

Manchin said carbon capturing and sequestration need to become more economically feasible moving forward.

During his testimony, Deskins described the economic factors that led to West Virginia’s current economic situation as a “perfect storm” of events that have created a wide-reaching problem without a “silver bullet” solution.

“We have job loss, which leads to out migration, which leads to an aging of the population, which leads to drug abuse, [and] educational outcomes are not as strong as they would be,” he said. “But all these problems make it less attractive for potential businesses to locate to West Virginia, which leads to more job loss creating this vicious cycle.”

Though Deskins supports calls for economic diversification, he testified that the surest answer in the short-term is investment in the energy industry.

“We need to help all these other industries, but that’s long term,” he said. “That’s not going to happen overnight. That’s not going to happen over five years even. That’s a long-term proposition that requires action on the part of community leaders, government leaders, business leaders, entrepreneurs. In the short-term, a real solution is helping energy, helping coal, helping natural gas.”

Dr. Anderson cited the potential for a natural gas rebound as one reason to be optimistic–citing it’s potential impact on the state directly and indirectly through the contributions of the plastics industry.

He also issued a hint of urgency during his testimony. Despite early potential for petrochemical and plastics growth in West Virginia, most of that industry’s growth has been in the Gulf area of the United States.

“I contend that the types of infrastructure necessary to benefit both the region and the nation is not only a reliable, modern network of pipelines, but also a robust regional system of natural gas liquid storage and distribution,” Anderson said.

Other speakers included Chad Earl, Director of Business Development for ORDERS Construction, Matric President and CEO Steven Hedrick, and Business Manager/Secretary Treasurer Dan Poling of the District Council 53 International Union of Painters and Allied Trades.

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