The modern U.S. oil industry began in Appalachia in 1860, with a frenzied boom in northwest Pennsylvania and, a decade later, the Ohio founding of Standard Oil, which later spawned both ExxonMobil and Chevron. But by the turn of the 20th century, Appalachia’s status as a major oil producer had crested. As the region’s oil production dwindled, the industry shifted its attention to new discoveries in Texas and other western states.
Then, starting just over a decade ago, Pennsylvania, Ohio, and West Virginia witnessed a revival of its petroleum industry. Improved extraction techniques — particularly horizontal drilling and hydraulic fracturing, or “fracking”, which uses pressure to split the hydrocarbon-bearing underground formations — unlocked previously inaccessible reserves, boosting Appalachia’s production of natural gas and associated liquids to all-time highs.
There are now signs that Appalachia’s gas boom may soon run out of steam. Key global energy markets, including the United States, are quickly shifting to inexpensive renewables and other forms of low-carbon energy. The global pandemic seems to have accelerated these trends: fossil fuel demand, prices, and investment have all declined during the pandemic, even as renewable investments have continued their ascent.
The risks of a “bust” in natural gas follows closely on the heels of the ongoing collapse of Appalachia’s coal industry. These disruptions to coal were caused in part by the fracking boom, which encouraged electric utilities to shift from coal to inexpensive gas. Now there are signs that gas itself could get passed up for lower carbon and lower-cost renewables, introducing new risks for communities that rely on gas extraction for employment and tax revenue.
This paper explores trends affecting the economic viability of the gas industry in Pennsylvania, Ohio, and West Virginia as they recover from the pandemic. It finds that northern Appalachia should rethink its reliance on the gas industry, and instead foster a more resilient economy insulated from the booms and busts of fossil fuels.
Design and development by Soapbox.