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Muchow: WV energy exports helped soften blow of great recession

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West Virginia weathered the economic storm better than most other states, and that's partly because so much of the state's economy depends on energy.

Mark Muchow, deputy cabinet secretary of the West Virginia Department of Revenue, told media at the Associated Press Legislative Lookahead Feb. 7 that energy production is the reason West Virginia is considered a growth state.

"Economically, coming out of the Great Recession, West Virginia was one of the leading growth state in the country because we're an energy-producing state," Muchow said.

North Dakota, another energy-producing state, leads the country in terms of growth, he noted. Although the mining industry has ran into trouble as of late, Muchow noted mining has been a growth industry since 2003.

"Not only that, about 86 percent of total GDP growth since 2011 is attributable to the mining sector," he said.

But things in the mining industry began to change at the end of 2011. Coal markets began to shrink, there were changes in the electrical power generation market, many coal-fired power plants across the country began to close and Europe went through its own economic crisis.

"Europe is key … for  West Virginia," Muchow said.

About 40 percent of West Virginia's coal exports go to European markets, he said.

Although coal production was down in 2012, natural gas production increased. Now, natural gas production is up more than 30 percent over 2011, but there's one problem.

"They can't sell the product," Muchow said.

Natural gas prices and natural gas severance taxes are both down, he noted.

"Natural gas severance taxes have been declining faster than coal," Muchow said. Meanwhile, oil production is increasing, "but we don't have a whole lot of oil in this state compared to other states."