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Even proud locals in this city of rolling hills on the Mahoning River have to admit that Youngstown has seen better days. But it has also seen worse. In fact, for the first time in years, this symbol of the Rust Belt is seeing some shiny glimmers of hope.

A vacant home in Youngstown, Ohio. This steel mill town was once one of the busiest along the famous American Rust Belt.
Benjamin Lowy | Getty Images

The better days in Youngstown were in the first half of the 20th century, when as many as 170,000 called the city home, and it was the third-largest steel producer in the nation. It all abruptly came to an end on Sept. 19, 1977—the date still known here as Black Monday—when Youngstown Sheet & Tube announced massive layoffs and began shutting down. Youngstown has never recovered, and it is still one of America's fastest shrinking cities, with a population of around 65,000. Over the last seven years, the city has demolished thousands of vacant homes in abandoned neighborhoods as a result of its decline.

But now some of the same advantages that made Youngstown a steel powerhouse in the 1930s are fueling the early stages of a rebirth. The city still sits in an area rich with resources, strategically located almost exactly midway between Cleveland and Pittsburgh. It is also adjacent to two giant oil and natural gas deposits—the Utica and Marcellus Shales, which cover much of Eastern Ohio and Pennsylvania. Extracting all that energy, through the process known as fracking, requires lots of steel. Now, you're talking Youngstown's language.

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Vallourec Star, a unit of French steel giant Vallourec, has spent more than $1 billion to expand its steel pipe plant in Youngstown, adding 350 jobs. Another subsidiary, VAM USA, is spending more than $80 million on a steel pipe threading plant nearby, adding another 80 jobs.

Unemployment in Youngstown, which topped out at 12.7 percent during the recession, is now 5 percent—well below the national average. But just as the resurgence of Youngstown gains steam, there is a potential roadblock. Plunging oil prices are changing the economics of fracking, practically on a daily basis. While there has been no official talk about scaling back the steelmaking expansion, officials are watching the situation closely.

"Right now it's a little bit too early to tell exactly what's gonna happen," said Vallourec Star President M. Judson Wallace in an interview. "If it's a fairly short-lived deal, I don't think we'll see much of an effect."

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Ohio Gov. John Kasich, whose economic record could be a factor in a rumored 2016 presidential bid, said he is taking a long view on the future of energy production in the region.

"I don't worry about falling oil prices when it comes to the shale revolution," he told CNBC. "I mean, things will come a little bit faster or a little bit slower, but at the end of the day, there's gold in them thar hills, and these companies are in here."

That may be true, but with shale operations going on across the country, companies have a choice of where to expand.

Vallourec Star, a unit of French steel giant Vallourec, has spent more than $1 billion to expand its steel pipe plant in Youngstown, adding 350 jobs.
Michael Williamson | The Washington Post | Getty Images

Ohio improved to 18th place overall in CNBC's 2014 America's Top States for Business rankings. And our study found the cost of doing business in Ohio is actually lower overall than domestic energy giants North Dakota and Texas. But the heavily unionized state finishes near the bottom—46th place—in the workforce category.

But Wallace is confident about the Youngstown operation's future.

"We have a lot of tech, a lot of knowledge, a lot of inherent knowledge about building pipe, making pipe," he said. "Plus we have a lot of universities that have steel-making expertise that we can draw from in this area."

The cross currents involving the price of oil come at a difficult stage in Youngstown's recovery. While job growth is strong and unemployment is low, the area has recovered less than half the jobs it lost during the recession.

Youngstown's economy has seen false starts in the past, and there is a real risk the fracking boom is just another in a long line.

Youngstown's rust belt rebound
Youngstown's rust belt rebound