Pages tagged "Economic Development News"
Natural Gas Liquids Tax Incentive Could Bring More Development and Jobs: Fewer West Virginians Employed Now Than Before the Shale Boom
For Immediate Release
Contact Sean O'Leary at 304-720-8682
While West Virginia's natural gas industry has grown exponentially, many of its jobs may be going to out-of-state workers and job growth in major natural gas producing counties as been mediocre at best. The state is poised to repeat history with more of its natural resource wealth flowing out of state, including jobs, profits and lost tax revenue, unless policy makers act to incentivize more downstream development. PDF of news release. PDF of report.
According to "A Win-Win Marcellus Shale Tax Incentive," a report released today by the West Virginia Center on Budget and Policy, policymakers should consider taxing natural gas liquids (NGLs) at a higher rate if they are not being used to develop more in-state industries like chemical manufacturing. The report recommends increasing the severance tax on natural gas liquids from 5 to 10 or 15 percent while offering a tax credit to offset to the higher rate if the NGLs are processed at a cracker facility or used in chemical manufacturing.
"West Virginia has a long history of relying on natural resource extraction to fuel our economy, but that reliance has recently resulted in the state shipping our most valuable resources out of the state to be developed," explained Sean O'Leary, fiscal policy analyst with the West Virginia Center on Budget and Policy. "As we have seen with the booms and busts of the coal industry, this leaves behind an economy lacking diversity and development with not enough good-paying jobs."
With the Marcellus Shale boom, history looks to be repeating itself, as West Virginia exports the jobs and economic development derived from its natural gas resources. Policymakers, however, can act to keep more of the economic benefits of West Virginia's natural resources in-state, while incentivizing economic development that will create more West Virginia jobs.
- While natural gas production is booming in West Virginia, the boom has not led to greater economic development. Overall, West Virginia lost jobs during the boom, and growth has been disappointing in the counties that have seen the biggest increase in gas production.
- With little success, West Virginia has offered large tax incentives to encourage chemical-based manufacturing plants to locate in the state and use its natural gas liquids. Instead, companies pipe the liquids out of West Virginia to be used elsewhere, taking jobs and economic growth with them.
- A new severance tax incentive, based on a higher rate for natural gas liquids, with a credit to related in-state industries, may encourage ethane cracking and other chemical manufacturing to create in-state jobs while generating additional tax revenue for investment in infrastructure and human capital.
- If West Virginia increased its severance tax on natural gas liquids from five to ten percent, it would increase revenue by an estimated $168 million over the next five years.
Bloomberg Business - In Kentucky's Letcher County, emergency response time for sheriff's deputies averages an hour, up from 30 minutes a year ago. Martin County, also in eastern Kentucky, couldn't afford to open its public swimming pool this summer. West Virginia's Boone County, once the richest in the state, is considering ending free garbage pickup. The cutbacks stem from a steep drop in coal production as tougher environmental regulations and low natural gas prices make coal less competitive. "It's just been devastating to us," says Kelly Callaham, judge-executive of Martin County, which has a $7 million budget, down $1.5 million from three years ago. "You take a million and a half out of a budget that size, it's a disaster." Read
The Appalachian Regional Commission, a federal-state economic development organization, classifies 93 of 420 counties as distressed. Many of them are in central Appalachia, which straddles Kentucky, Tennessee, Virginia, and West Virginia. The region has been mined for two centuries, and the cheapest and best coal has been dug up. The remaining seams are lower quality and more expensive to mine. Many utilities have replaced Appalachian coal with cheaper fuel from Illinois and the Powder River basin in Wyoming and Montana, or switched to burning natural gas. Coal's share of electricity generation in the U.S. will fall to 35 percent this year, from 50 percent a decade ago, according to the U.S. Energy Information Administration. Coal production is expected to fall to less than 914 million tons, the lowest in 29 years. The number of active pits in the U.S. has plunged 39 percent from the end of 2005 through June 2015.
Clarksburg Exponent-Telegram - Last week was marked by volatility and uncertainty on Wall Street, but experts said short-term trends in the stock market are unlikely to have much impact on what's happening in West Virginia's economy. Read
That said, as the global financial markets rise and fall by the hour, there are a number of longer-term economic trends impacting the Mountain State, they said.
"It's very limited in terms of what Wall Street means in West Virginia, especially considering so few people have investments in Wall Street in West Virginia," Ted Boettner, executive director of the West Virginia Center on Budget and Policy, said. "The stock market is not the economy, and it surely is not a reflection of people's day-to-day lives in terms of wages and incomes."
Wall Street Journal, Nasdaq, The Australian - Workers in a rural warehouse here are restoring four machines: a locomotive for coal miner Consol Energy Inc., and three 1947 San Francisco streetcars. Read
By this time next year, the coal-mining equipment could be gone, and the workers at Brookville Equipment Corp. left repairing just streetcars.
So it goes in coal country, which has been bruised by competition from natural gas, regulation of coal's heavy carbon footprint, and economic forces like the strong dollar. As big coal miners struggle, their equipment suppliers—thousands of firms sprinkled throughout Pennsylvania, West Virginia, Ohio and Kentucky—are scrambling to find new customers anywhere they can, from gun shops to the San Francisco Municipal Transportation Agency.
The State Journal - The vibe at The Greenbrier Resort is usually a relaxed one. The historic resort is usually full of visitors from out of town looking to unwind. Read
However, for a few days each year, business men and women flood the colorful, floral-themed rooms in suits and ties ready to talk about policy and how to ensure West Virginia has a future as bright as the sun that kisses the neatly manicured golf course greens of "America's Resort."
The West Virginia Chamber of Commerce hosts the annual conference to bring the state's leaders together. This year will likely see Republicans touting what the party was able to accomplish during the most recent regular legislative session. This marks the 79th year for the Business Summit. The GOP became the West Virginia Legislature's majority party for the 2015 legislative session for the first time in 83 years.
Atlanta Journal Constitution - The coal industry is in deep trouble, and Southern Company's decision to buy an Atlanta natural gas utility puts it even deeper in the hole. Read
For years, coal producers have been taking it on the chin as electric utilities have closed more and more coal-fired power plants and switched to cheaper, cleaner-burning natural gas.
The situation was made worse when coal shipments to the once-voracious Chinese market slowed.
"You can see it across the industry," said Kristoffer Inton, an investment analyst who covers the coal industry for Morningstar in Chicago. "Neither the domestic situation nor the international situation looks good for coal."
Coal producers' revenues have dropped 25 percent or more in three years and profits have disappeared, he said.
Wall Street Journal Blog - Poor West Virginia. Read
It's the only state in the country to have lost a statistically significant number of jobs in the past year, the Labor Department reported Friday, as falling energy prices have rippled through its coal mining industry and beyond.
The state shed 19,100 jobs between July 2014 and July 2015, the Labor Department said, a 2.5% decline in employment. The 35 other states to post a statistically significant change in employment all had notable gains.
The coal industry has experienced high-profile layoffs over the past year, with mining companies like Murray Energy Corp. and Alpha Natural Resources Inc. shedding jobs as coal prices have fallen by around 15% in the past year.
Other West Virginia industries have suffered perhaps even more. Jobs in construction and manufacturing have fallen by 23% and 16%, respectively, since the recession.
West Virginia's growing natural gas industry initially cushioned the fall in coal prices. But as a natural gas glut pushed prices down, jobs in that sector also got hit, said Ted Boettner, executive director of the West Virginia Center on Budget and Policy.
Clarksburg Exponent-Telegram - Earlier this year, President Barack Obama revealed his POWER Plus Plan, which proposes investing millions in aiding coal-dependent communities impacted by the industry's downturn. Read
The plan coincides with the Obama Administration's controversial Clean Power Plan, an Environmental Protection Agency regulation to limit carbon emissions from U.S. power plants — a rule that would, by all accounts, force a reduction in the nation's use of coal for electricity generation.
The POWER Plus Plan, announced roughly eight months after the release of the draft version of the Clean Power Plan, proposes investing more than $55 million in aiding coal communities for the 2016 budget year, according to a document released by the White House.
Clarksburg Exponent-Telegram - Last week, President Barack Obama revealed the final version of his unprecedented plan to cut carbon emissions from U.S. power plants, and the battle over the future of the nation's electric grid escalated. Read
West Virginia's political leaders have decried the U.S. Environmental Protection Agency's Clean Power Plan since it was first revealed in the summer of 2014.
Once the final rule was officially made public, state and congressional leaders mobilized to advocate for West Virginia coal. Long serving as the base load for U.S. electric generation, coal now finds itself, because it is a carbon-intensive energy source, the target of the Obama administration's climate change initiative.
But the looming threat of the EPA's Clean Power Plan isn't the only problem West Virginia's coal industry has faced in recent years.
Charleston Gazette-Mail - As coal industry officials and their political allies launched furious opposition to a federal effort to fight climate change, President Obama on Monday urged coalfield communities to support the plan, offering to work with local leaders to address coal's legacy liabilities and provide new economic opportunities where the mining industry's decline is being felt the most. Read
In a White House speech, Obama criticized those who have been campaigning against and planning lawsuits over his administration's "Clean Power Plan" before the U.S. Environmental Protection Agency had even finalized details of its series of rules to reduce greenhouse gas emissions from power plants.
"They will claim this is a ‘war on coal' to scare up votes, even as they ignore my plan to actually invest in revitalizing coal country and supporting health care and retirement for coal miners and their families and retraining those workers for better paying jobs and healthier jobs," Obama said.
"Communities across America have been losing coal jobs for decades," the president said. "I want to work with Congress to help them, not to use them as a political football. Partisan press releases aren't going to help those families."