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Wednesday, November 5, 2014

Getting the boom, avoiding the bust

This excellent blog post by Sharon Kelly vividly illustrates the wide gaps between the hype and the reality of Pennsylvania's shale gas boom. Areas of the state still caught in the bust part of previous boom-and-bust cycles of resource extraction have not seen much improvement even though drilling is now occurring. Statewide, shale gas development is not driving job growth, and Pennsylvania has fallen to dead last in job creation among US states since January, 2011.

What's to be done? For starters, as I wrote here, officials at all levels must start thinking ahead - to not only plan for the inevitable day when the drill rigs go away, but to develop proactive plans to start diversifying the local and state economies. Now.

At the state level, that includes using Federal climate rules to our advantage - leveraging natural gas development - and driving the development of new technologies - and new industries - that could call Pennsylvania home.

It also demands forward-looking tax, savings, and investment policies. Other states like Texas that have created endowments for things like public education with some state revenue from drilling. West Virginia's new Future Fund, created with a portion of the state's severance tax, will fund education, workforce development, economic development, infrastructure and tax relief projects. (See this analysis of the original concept, and this one of the proposal as enacted, by my friend Ted Boettner of the West Virginia Center on Budget and Policy.)

And there's the obvious need to not only conserve our natural resource endowment, but to use it to our long-term economic advantage. Creating a conservation trust fund could endow statewide investments in the public lands, environmental improvement, and public recreation - and the immense number of sustainable jobs that come with them. Indeed, investing in community quality of life may be the surest way to make the state more attractive to high-growth businesses and entrepreneurs.

There's plenty that Pennsylvania can do - here and now - to avoid the boom and bust treadmill and create sustainable economic growth in all areas of the state. The only question is - will we?

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