We Can All Keep W.Va. From Becoming a Banana Republic

April 10, 2017

The State Journal. A small country that is economically dependent on a single export commodity, such as bananas. That is how Free Dictionary defines banana republic. West Virginia doesn’t have any bananas, but we come close to that definition.

For decades we exported coal and timber, but we also had a booming chemical industry and a glass industry. With coal on the decline, our glass and steel industry almost gone and many of our chemical plants closed, natural gas may be our next big export item. But do we want natural gas to become West Virginia’s bananas?

I just returned from the World Petrochemical Conference in Houston, Texas. I was part of the Shale Crescent USAorganization. We sponsored the opening night reception for the conference. Over 1,400 leaders from over 600 companies and 50 countries attended. For the next three days, we got to visit with them and hear about the current state of the petrochemical industry and where the experts see it going. We also got to tell them about the Shale Crescent Region of West Virginia — the Mid-Ohio Valley. We told them about out abundant and cheapest natural gas in the industrialized world, abundant water resources of the Ohio River and our proximity to over 50 percent of the United States market.

Here are the key things I heard and saw at the WPC:

The petrochemical industry is poised for growth. Much of this growth will come from the developing world. World population continuing to increase. Middle class will grow.

Additional chemical industry capacity is being built now, especially on the Gulf Coast, with $140 billion in new chemical industry investment in the U.S. to 2022. The U.S. will capture market share from Europe and the Middle East; U.S. chemical industry capacity will exceed Western Europe. This is due to shale gas growth in the USA.

Expect increased demand for natural gas and natural gas liquids. An interesting point was the belief that driverless car technology will result in more electric cars. This will not reduce oil and gas demand. It will increase demand for petrochemicals. Electric cars will still need natural gas for electricity. The northeast is taken seriously as a natural gas and NGL producer. The Gulf Coast is planning on northeast natural gas and NGL to fuel and provide feedstock for their expansion. Development of northeast petrochemical industry is seen as a threat by many on the Gulf Coast.

We are already sending natural gas and liquids out of the northeast. As more pipelines are built, we will see more export out of our region. This is a good thing overall for West Virginia and the USA, but West Virginia could become a “banana republic” if we allow all of our natural gas and NGLs to be sent out of state. We need to develop a more diverse economy and natural gas can be the key to that. The first cracker was built by Union Carbide at Clendenin in the 1920s. Natural gas created the petrochemical and glass industries in West Virginia.

The challenge is to develop a substantial and stable local manufacturing and/or petrochemical market for our natural gas and NGLs. This will require more infrastructure locally — primarily pipelines and storage of ethane. Local manufacturing, ultimately, will give West Virginia other products to export out of our state resulting in a growing and more diversified economy. It will result in more local high wage jobs, more tax revenue and greater opportunity for our children and grandchildren in West Virginia, as well as more demand for our natural gas. Local sales of natural gas will help the businesses of West Virginia producers to grow and thrive.

The main goal of Shale Crescent USA, a nonprofit organization, is to promote industry expansion and growth in the Ohio Valley to use local natural gas and create jobs. Any time industry expands or relocates anywhere in West Virginia is a good thing. We all can be promoters of this effort. The West Virginia Commerce Department is already active in this effort and had a representative at the WPC. The Polymer Alliance Zone was also a major sponsor of the WPC and was well represented. Two videos promoting West Virginia played on the conference big screen monitor. Working to get industry to come to West Virginia is a team effort, and all of us worked together at this conference. We have common interests. A reminder, the 2017 Marcellus and Manufacturing Development Conference is May 2-3 at Waterfront Place Hotel in Morgantown.

The U.S. economy is poised for growth. We see this in the stock market and the new optimism I see and hear in my travels since the November election. Foreign companies are looking to invest in the USA again because of our cheap and abundant energy. We saw this in Houston at WPC. There was fear that Hillary Clinton’s policies would continue the regulatory environment that forced companies to leave despite our cheap energy. This exodus hurt the environment because countries like China and India have no or very little environmental regulation.

There is another indictor you may not know about: I am a professional speaker. When the recession hit in 2008, the speaking industry was one of the first impacted, and it was devastating. People stopped having meetings, which hurt professional speakers. Organizations were cutting costs and laying off workers so trainers were not needed. My National Speakers Association chapter is based in Columbus, Ohio. Our members work all over the country and in all industries. I am the chapter newsletter editor and started to see some slow growth in our members getting gigs in the past two years. However, starting in December 2016, bookings of our members increased sharply. In February of this year, our members had the biggest increase in bookings since I started doing the newsletter over 10 years ago. Three longtime members reported their best January ever. What does this mean? Companies from all industries are having meetings, anticipating growth and are hiring again. We don’t want to miss this growth cycle. I personally believe that both political parties in West Virginia understand how critical job growth is.

I am concerned the politicians in Washington, D.C., did not hear the message from the voters in November that jobs and the economy are their biggest concern. The biggest concern in Washington seems to be conducting witch hunts. They apparently don’t understand energy — particularly that the USA is now the No. 3 oil producer in the world behind Russia and Saudi Arabia. Clinton’s proposed policies would have restricted U.S. oil production and raised oil prices creating a windfall of billions of dollars for Russia. Russia’s worst nightmare is Donald Trump as president and they know it.

West Virginia doesn’t just need jobs; we need good jobs the manufacturing and petrochemical industries provide. I can still remember the prosperity of this area when I moved to Charleston in the 1980s. Today, we have coal miners that have become solar panel installers for $25,000 a year. I have a friend that was a manager at a bank. He was laid off and is now driving a delivery truck earning a fraction of his former job. These are two of many examples. We need to get West Virginia back into growth mode. To keep natural gas from becoming West Virginia’s bananas, we all need to promote local industrial growth. A little support from Washington would be nice. We need to diversify West Virginia’s economy by using our abundant natural gas to fuel more local growth and create local jobs. This isn’t just important; it is the right thing to do. Thoughts to ponder.

By Greg Kozera

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