Changes

Looking at the Charleston Gazette online today, the first two stories illuminate what I feel are some of the main issues facing West Virginia's economy. The first story involves the sale of Mountaineer Gas to an Oklahoma company. The second story reported that the state has the third-highest adult obesity rate in the nation and is first in the percentage of adults with diabetes. Although the focus of the Gazette story on Mountaineer Gas was the increase on monthly gas prices, and the obesity story dealt primarily with the impact on health and the government's attempt to combat the problem, the angle that should be noted is the negative impact on West Virginia's ability to reverse its economic trends. The new study on obesity supports the previous post's position on the tie-in to a population's healthy lifestyles and its economic prowess. As stated in the article by Shelly Hearne, the executive director of Trust for America's Health, a nonprofit, nonpartisan health organization in Washington, D.C., "As the state struggles more and more with an obesity epidemic, it's going to cost people in their quality of lives and in their pocketbooks". Although Ms. Hearne was no doubt speaking of the increased medical costs stemming from obesity and diabetes, the economic impact goes beyond that direct cause-and-effect. The ability of the state to attract companies to the state is shadowed by the impression (and a certain degree the truth) that the state's workforce is fat and unhealthy. Why would a company wish to come or stay in West Virginia when it knows that it will be facing higher medical insurance costs and higher missed productivity? The state has not only a moral and medical obligation to get the obesity rate down, but also a clear-cut financial and economic incentive also.

The sale of Mountaineer Gas is not only troubling as the obesity study, it is also expected. It is part of the disturbing trend of the assets of the state being sold to out-of-state interests. Of course, it must be remembered that Mountaineer Gas's current owner, Allegheny Power, is based in Pennsylvania, and that the sale to IGS Utilities and ArcLight Capital Partners (who also recently signed a deal with Arch Coal to take over a number of mines in the state) reportedly will create some new jobs, which is always good news. But the sad fact remains that the profits from this utility, a state-allowed monopoly that gains its earnings from the people of West Virginia, will be leaving the state. That means that not only the profits, but that money's purchasing power and investment potential is also going to benefit some other state, some other region. What does it say that ArcLight Capital Partners, a private investment firm based in Boston and New York, has been involved in the purchase of West Virginia's energy assets and there has been no in-state involvement? It is not that ArcLight is pursuing some nefarious course of action; the firm is doing what it should be doing, looking for great investment opportunities. But why is there not a West Virginia version of ArcLight out there, purchasing these assets that will not doubt have great returns, especially in the current energy situation? No doubt there was some involvement from different in-state players, from legal counsel to perhaps banking advice and loans. But the bottom line is that the ownership of Mountaineer Gas, like too many other aspects of West Virginia's economy, is not in the state, and therefore the state will continue to suffer because of this fact.

How, then, can West Virginia's economic path be changed? I think that there are three different avenues of change that be pursued in the short-term that would have a positive impact. First, investment in in-state companies and start-ups needs to be increased. Second, ownership in West Virginia's economic assets, particularity its energy and natural resources, should be sought by in-state firms and individuals. Third, the efforts to obtain foreign investment and entice foreign companies to open facilities in the state should be intensified. Two of these avenues are already being addressed to a certain degree, but increased efforts are needed to reverse the tide.