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Notes from the Field

Cooperating at the Tri-State Shale Summit

States typically compete for jobs and investment; this event was different. Find out how.

The views expressed in this report are those of the author(s) and are not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System.

Never mind the autumn leaves near peak color blanketing the mountains around Morgantown, West Virginia; a more strategic reason drove the decision to hold the inaugural Tri-State Shale Summit there: its proximity to Ohio, Pennsylvania, and West Virginia. Why would this matter? States typically compete for jobs and investment, but the agenda for this event was focused exclusively on how these three states could benefit by working together on economic development. To give a little background, oil and gas companies have drilled thousands of wells in these three states since the mid-2000s, which has led to their expanding energy-related infrastructure and processing capabilities. The next step is capitalizing on the region’s expertise in chemical manufacturing (e.g., plastics), with the goal of developing a regional economy built around natural gas and its various components, similar to the Gulf Coast. But the states realize they can achieve this only through cooperation instead of competition.

At the Morgantown event, the phrase “economic benefits don’t stop at state lines” resonated as speakers touted the region’s petrochemical expertise, nearness to population centers, and academic institutions, as well as the virtues of working together. And it wasn’t just talk – the governors of Ohio, Pennsylvania, and West Virginia each signed a regional cooperation agreement to solidify the understanding. This agreement, in effect until the end of 2018, lays out four broad areas of cooperation: Marketing and promotion, workforce development, transportation and infrastructure, and research.

Here in the Community Development Department at the Cleveland Fed, we’ve been closely following shale gas drilling that’s occurring across large parts of our district. We’re interested in how communities can leverage the boom for future development and how they can diversify their economies to mitigate the effects of the industry eventually leaving the region. Our interest isn’t limited to natural gas, either; it extends to natural resources whose economic activity has a significant impact on the communities we serve. For example, rural communities in eastern Kentucky are struggling to reinvent their economies as the demand for coal continues its decline and thousands of its residents become unemployed.

Driving back from the conference I reflected on what I heard and the potential economic benefit to the region. A commodity-based economy ebbs and flows with the price of that resource; these fluctuations are unpredictable at times, another reason why cooperation and collaboration—which includes spreading the costs and sharing the risks more broadly—are appealing. Fortunately, it’s easy to see, driving through the colorful, picturesque landscape, that tourism will remain an important piece of this region’s economic development far into the future.