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The race to expand Appalachian natural gas production in anticipation of new power demand for AI data centers and increased export capacity of liquified natural gas (LNG) is unlikely to generate long-term job growth or local prosperity.
“For over a decade, Ohio, Pennsylvania, and West Virginia have premised their economic futures on the ability of natural gas and its downstream industries, from petrochemicals and hydrogen to rising LNG exports and data center-driven power demand growth, to deliver jobs and prosperity,” report author Sean O’Leary, Senior Researcher with the Ohio River Valley Institute, explains. “But these industries have proven structurally incapable of delivering almost any real, measurable economic benefit to the region.”
Since the dawn of the Appalachian fracking boom in 2008, the thirty largest gas-producing counties in Ohio, Pennsylvania, and West Virginia have logged robust growth in economic output but concerning declines in key measures of economic wellbeing:
- Jobs have fallen by 1% despite 14% growth nationally,
- Population has dropped by 3% and the number of employed persons has fallen by 4% while the nation’s population grew by 10%,
- Income has grown at just three-quarters the rate of national growth.
Despite fracking’s failure to reverse regional depopulation and job loss, policymakers are doubling down on incentives for new gas production to meet demand growth projections driven by uncertain electricity demand forecasts and a still-constrained LNG export market.
“There is reason to believe that power demand projections and LNG export forecasts are overblown,” O’Leary explains. “But even if demand for natural gas increases as much as expected, structural weaknesses in the natural gas industry and downstream industries, including data centers, mean that it won’t have much beneficial economic impact for host communities.”
“Data centers and LNG exports are destined to disappoint as the latest in a series of putative economic game-changers deriving from Appalachia’s natural gas boom,” O’Leary concluded. “But alternative economic development strategies, ones centered around energy efficiency, clean energy development, and improving quality of life, have demonstrable promise as engines for job growth and local economic prosperity. Policymakers would do well to see beyond these ‘shiny objects’ and shift focus to people-centered models of economic development.”
“Beyond creating construction jobs, the potential economic benefits of an AI industry are questionable. Hype brings risks, and history shows that an AI bandwagon can run roughshod over people and the environment. A balanced policy approach to growing AI that considers communities, ratepayers, taxpayers, public health, climate, and natural resources is urgently needed,” added John Quigley, Senior Fellow with the Kleinman Center for Energy Policy at the University of Pennsylvania.