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    WVU researcher highlights escalating gas prices, stagnant gas industry employment for state lawmakers

    November 16, 2022 - Mike Tony, The Charleston Gazette-Mail, W.Va.


      Nov. 16—Natural gas prices delivered to West Virginia residential consumers have soared over the past year and are about to get higher, a West Virginia University researcher told state lawmakers at a legislative committee meeting Monday.

      Gas prices delivered to state residential consumers have escalated by 20% in the past year, according to the presentation from John Deskins of the Bureau of Business and Economic Research at WVU's John Chambers College of Business and Economics.

      Those prices have climbed to $15 per thousand cubic feet after not exceeding $13.50 for at least the past 11 years, according to Deskins' presentation during the interim legislative session before the Joint Natural Gas Development Committee at Cacapon State Park in Berkeley Springs.

      Gas prices are determined by the global market for crude oil, the raw commodity used to make gasoline.

      Deskins alluded to a projection from the federal Energy Information Administration that Henry Hub spot natural gas prices will fall and stay below $6 per thousand cubic feet next year after exceeding $8 earlier this year. Henry Hub is the pricing point for natural gas futures contracts on the New York Mercantile Exchange.

      But Henry Hub prices were below $4 for most of the previous decade.

      "Even a year from now, prices will still be high," Deskins said.

      Deskins offered lawmakers an observation looming large over the economy in West Virginia, which had the third-largest natural gas reserves of any state in 2019, per Energy Information Administration data.

      "We don't see hardly any response in employment to the price volatility that we've seen this year," Deskins said.

      Deskins' presentation indicated that employment from natural gas production in West Virginia has steadied around 5,000 since early 2020. Even during the last decade's gas drilling boom, employment never reached 10,000 and has stayed below 8,000 since 2015, per Deskins' presentation.

      The Ohio River Valley Institute, a Johnstown, Pennsylvania-based pro-clean energy nonprofit think tank, released an analysis last year finding that a rise in natural gas production from 2008 to 2019 did little to lift up the economies in 22 gas drilling-heavy counties in West Virginia, Ohio and Pennsylvania.

      Jobs increased in those counties by just 1.6% from 2008 to 2019, 2.3 percentage points behind all West Virginia, Ohio and Pennsylvania counties and 8.3 percentage points below the national average, the report noted.

      The report concluded that a dramatic increase in gross domestic product in those counties over the same span that came with the natural gas boom didn't yield economic prosperity because the boom depended heavily on out-of-state workers and service suppliers, yielded less leasing and royalty income for property owners than expected and generated comparatively little income going to employee compensation.

      The 22 counties examined in the study included Doddridge, Harrison, Marshall, Ohio, Ritchie, Tyler and Wetzel counties in West Virginia.

      Studies show that West Virginia's increase in natural gas production hasn't translated into significant long-term job gains or short-term energy cost relief, but Deskins noted that the production hike has swelled the state budget surplus.

      Deskins estimated that the increase in natural gas price accounted for about one-fifth of West Virginia's state budget surplus of $575 million as of the end of last month.

      That's the calculation that Deskins said he was asked to present to state legislators.

      Deskins said his estimate of how much of the budget surplus was attributable to natural gas price increases likely was an underestimate because it didn't account for higher prices boosting corporate tax and personal income tax collections, the latter through a boost in royalty income. Higher gas prices also sparked a bump in coal severance tax revenue by driving up coal prices, Deskins indicated.

      But another upshot of higher gas prices, Deskins noted, is diminished spending to fuel the economy as customers contend with higher gas bills.

      Deskins said the trend of higher gas prices probably will persist over the next year given a lag between global prices and the impact on customers.

      "[S]o prices will get even worse," Deskins said.

      The panel of lawmakers had no questions for Deskins after his 20-minute presentation other than a pricing clarification question from Senate Finance Committee Chairman Eric Tarr, R-Putnam.

      Mike Tony covers energy and the environment. He can be reached at 304-348-1236 or Follow @Mike__Tony on Twitter.


      (c)2022 The Charleston Gazette (Charleston, W.Va.)

      Visit The Charleston Gazette (Charleston, W.Va.) at

      Distributed by Tribune Content Agency, LLC.


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