Even before the economy cratered last summer, Rhode Island was adrift from its neighbors. Only four in 10 jobs in the state paid more than the national average, according to numbers published by the R.I. Economic Development Corporation. In Connecticut and Massachusetts the number was closer to six in 10.
Now, of course, relatively low wages are less of a problem than an unemployment rate that regularly contests for the top spot (meaning the worst) in the nation. Though Rhode Island birthed the Industrial Revolution in America, its 21st century economy is on life-support.
And what are our prospects? Contrary to what many now believe, Rhode Island’s relative prospects are excellent. This is because the primary challenge to America’s economic recovery is likely to be the cost of energy. As recovery spurs rising energy consumption, prices will increase, perhaps dramatically. Since energy underpins all economic activity, those regions capable of operating in an energy-constrained environment will have relatively bright futures. Rhode Island, which already uses less energy per person than any other state, is particularly well-suited to meet the challenge.
This isn’t mere speculation. According to data published by the Department of Energy, since 2005 the global production of crude oil – the most critical of all energy resources – has been stalled at approximately 85 million barrels per day. As existing oil projects inevitably age and decline, newly tapped resources are typically smaller, harder to reach and of inferior quality.
So why does this matter? While 85 million barrels per day is a lot of oil, consider that the Department of Energy also expects worldwide demand to exceed 110 million barrels per day by 2030.
Unless alternatives can fill this looming chasm between supply and demand, we won’t simply see a replay of last summer’s high prices. More likely we will return to gas lines reminiscent of the 1970s.
For cities and regions that developed under the influence of relatively cheap oil, the effects of increasingly expensive energy are likely to be severe. Development patterns hostile to pedestrian mobility and public transportation will hinder the movement of people and goods. In this scenario, the Sunbelt, with megalopolises strung from coast to coast, is in serious trouble.
As these larger cities to the south and west seek to retrofit themselves, Providence, for example, will benefit from its compact layout. The financial district, with its proximity to rail and water transportation as well as plentiful housing within walking distance, should grow increasingly strong as a regional center of commerce.
Beyond the financial district, many Providence neighborhoods boast their own local business districts, which are responsive to local needs. And, while Rhode Island did not escape suburban sprawl, the state is rich with formerly bustling towns and villages just waiting to be rebuilt and repurposed.
None of this is to say that Rhode Island can be complacent and hope to rise to the top by default. We must make it a priority to elevate Rhode Island to the top tier of New England economies, regardless of broader economic conditions. Gov. Donald L Carcieri’s proposal to gradually phase out the corporate income tax, for example, should be seriously considered. Renewable energy technologies must be vigorously implemented. And efforts must continue to stamp out the aura of corruption that, fairly or not, colors many impressions of the state.
Whatever we do, we must not give in to the temptation to believe that we can sustain the unsustainable or recover the unrecoverable. Some jobs are never coming back.
For a long time in Rhode Island, nothing seemed to go right. What was left untouched by the Great Depression and the 1938 hurricane was slowly sapped by the long post-war decline. Now we are on the verge of a new chapter that promises risks and opportunities unimaginable only a few years ago. We need only have the courage to turn the page.
David M. Marquez is an attorney at Hinckley, Allen & Snyder in Providence. He can be reached by e-mail at [email protected]
