While much of the focus of the Marcellus shale debate has been economics versus the environment, until now, few have researched what may happen in the wake of a natural gas boom in West Virginia.

Thursday, the West Virginia Center on Budget and Policy released “Booms and Busts,” a study of the impact of energy on the West Virginia economy. In it, the authors explore the tendency of energy-based economies to flow through “boom and bust” cycles as production, prices and resource availability fluctuate.

West Virginia has long been tied to the “boom and bust” cycle, beginning with the heavy mining of coal.

“Our research shows that the counties with heavy concentrations of coal mining and gas drilling employment underperform economically in the long run,” said Sean O’Leary, a policy analyst with the West Virginia Center on Budget and Policy. “These counties also tend to be economically distressed, with higher rates of poverty and poorer health outcomes and quality of life.”

The solution, the authors of the report suggest, is to create an energy trust fund that could be used to stabilize what is currently a volatile revenue source.

Ted Boettner, executive director of the West Virginia Center on Budget and Policy, co-authored the report with O’Leary.

“The state can benefit from the current energy boom by creating a permanent energy trust fund like the ones in Wyoming, Alaska and New Mexico,” Boettner said. “A trust fund will ensure that the economic benefits of today’s coal and gas production are with us well into the future and that the income from the fund can help us build long-term economic growth.”

The purpose of the trust fund would be to stimulate economic diversification and invest in education, child care, infrastructure and enterpreneurship in communities where the economy may be in flux based on energy market performance.

Coal has long dominated the state’s economy. Now, coal mining employment is just under 21,000, the lowest since 1895, WVCBP points out. At its peak in 1940, coal mining employment was at 130,000 workers.

Natural gas has been a dominant force in West Virginia’s extractive industries, but in the past few years drilling has greatly increased due to discovery of the Marcellus shale. Since 2000, natural gas severance revenue has nearly quadrupled to $80 million.

“With the Marcellus shale development, the natural gas industry is booming,” the report states. “As with coal in the past, many proponents of natural gas drilling point to this activity as a path to, and source of, economic growth.”

But the report warns economic growth is typically not as high and especially not as permanent as many would like to believe.

Counties where mining jobs made up more than 14 percent of jobs, the report states, fared far worse than other counties in measures of poverty, income growth and employment.

“The economic performance of mining counties relative to the state as a whole can be seen by examining growth in two main factors: earnings and total personal income,” the report’s authors state. “The picture that emerges is that counties dependent on energy development experienced booms and busts but have not necessarily had long-term growth and prosperity.”

Additionally, 13 of the 14 counties identified as heavy mining areas by the WVCBP were classified as “distressed” or “at-risk” by the Appalachian Regional Commission. In total, 30 West Virginia counties were classified as “at-risk” or “distressed.”

The lack of performance, the authors of the study conclude, is a result of a combination of factors, including a lack of economic diversity, lower education levels and high income inequality.

“In the past, West Virginia counties with a concentration in mining saw their economic performance dramatically decline after an energy development boom,” the report concludes. “Today, their economies are weaker than the rest of the state, and they are ill-positioned to compete and grow.

“It is uncertain whether today’s energy boom, led by natural gas extraction, will bring the prosperity to West Virginia that it promises. While the potential revenues from this boom seem to be an attractive source of economic growth for communities, history shows that natural resource booms inevitably lead to busts.”

— E-mail: tkuykendall@register-herald.com