Energy-Producing Counties in the West Fall Behind

[imgbelt img=Campbellcounty.jpg]Basing a county’s economy on mining coal or drilling for oil and gas can produce high incomes in boom times, but over the long run rural counties were better off without fossil fuels.

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mbruck77

Coal mining in Campbell County, Wyoming, the most energy intensive county in the West. Mbruck77 snapped this shot while on a flight from Berlin, Germany, to Phoenix.

There was a bumper sticker popular in the West Texas oilfields in the late 1980s that said, “PLEASE GOD, Just Give Me One More Oil Boom. I Promise Not to Blow It Next Time.”

 There was another boom when oil peaked last year and now that oil prices are dropping again, another bust. Did they blow it? Who can tell? The question rural counties need to be asking is whether a local economy built on mining, pumping and drilling for energy is better than the alternatives?

Researchers at Headwaters Economics in Bozeman, Montana, say no. Counties that have a large percentage of workers mining coal or drilling for oil and gas have weaker economies than counties without natural resources, according to a recent Headwater study.  Energy-intensive counties have slower growth. They are losing people to migration. They have lower rates of growth in household income. 

“In the long run, the economies of energy-focusing counties grow more slowly than the economies of their peers that are not pursuing energy extraction as an economic development strategy,” concludes a recent Headwaters report, Fossil Fuel Extraction as a County Economic Development Strategy. The Headwaters researchers found that energy-intensive counties were like the hare in the race with the tortoise. Counties rich in oil, coal and gas race ahead when energy prices spike, but in the long run, the tortoise counties win the race. 

Moreover, energy-intensive counties appear to be experiencing diminishing returns to energy booms. Western counties specializing in coal and oil experienced less of an economic bump during the most recent energy boom than in previous surges in energy prices.

Headwaters conducted a straightforward comparison. It grouped the 26 rural counties in the West that have at least 7% of their workers engaged in the extraction of fossil fuels. The firm compared these counties to the 254 rural western counties of a similar size (fewer than 57,000 people) that don’t have large numbers of workers in the energy industry. (See the map below. Energy intensive counties are in yellow.)

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