Montana's economy is chugging along at a clip not seen since the energy boom of the 1970s, thanks in part to developing economies in other countries, a University of Montana economist said Sunday.

Energy is obviously having a major effect on this latest boom but so is the quieter export of metals from Montana, including copper, lead and zinc, said Paul Polzin, director of the Bureau of Business and Economic Research.

Unlike the boom of the 1970s, this one is driven by demand more than supply, which means the good financial times are likely to last longer than a more supply-oriented economy, Polzin said.

"We are becoming more and more optimistic about the Montana economy," he said.

Polzin was one of three speakers in Billings Sunday at a forum hosted by the American Association of Petroleum Geologists. The forum focused on the energy industry in Montana, Wyoming and North Dakota.

Montana barely felt the national recession that began in April 2001 and was exacerbated by the aftermath of the Sept. 11, 2001 terrorist attacks, Polzin said, but the state economy reacted quickly as oil and commodity prices started increasing in 2004.

State economists have repeatedly had to readjust their forecasts upward since then especially as the market picked up for oil and minerals in Montana. Not only did production increase, he said, but mines in Butte and Troy also reopened.

A major driving force behind higher commodity prices has been economic growth in developing countries such as China and India, Polzin said. The gross domestic product in those two countries grew by roughly 9.5 percent and 7.1 percent respectively in 2004, compared to 4.2 percent in the United States.

And in China, 66 percent of its economy is driven by goods and many of the raw materials come from Montana, Polzin said.

"China is now a dominant player, especially in terms of metals that we have in Montana," he said.

There are risks and drawbacks, though, including the instability of markets and politics overseas, he said. A financial crisis like the "Asian flu" of 1998 could shut down thriving economic markets.

"It could in fact bring this energy boom to a quick end," he said.

Closer to home, the demand for Montana coal will continue too, Polzin said.

Forecasters expect coal shortages in the coming years for the area that Montana typically supplies along the upper edge and northwest corner of the United States.

As that demand intensifies over the coming decade, so will the policy debates about energy development in Montana, he said.

Oil and gas is expected to continue in Wyoming and South Dakota, according to economists from those states.

Mineral development produces about two-thirds of Wyoming's revenue, said Buck McVeigh, a state economist. The energy boom has eased pressure on individual taxpayers and produced an estimated $1.8 billion budget surplus for the state, he said.

"Natural gas is really driving the bus in Wyoming," McVeigh said.

Western North Dakota has seen its oil and gas industry going strong over the last several years, said Larry Leistritz, a professor at North Dakota State University.

Oil production jumped 15 percent from 2004 to 2005 with the production of more than 35 million barrels. Just over $2 billion was produced in oil and gas last year in the state, he said.

Contact Mike Stark at mstark@billingsgazette.com or 657-1232.