What’s in store for Wyoming energy?
Naughton Power Plant outside of Kemmerer, Wyoming. (Tom Brandt/Flickr — click to enlarge)
In the years and months ahead of the Democrats’ big win in the general election, neither environmentalists nor fossil fuel proponents felt that their causes were fully embraced by the Obama administration.
Those contrasting views are very much at play here in Wyoming where our economy is overly reliant on the extraction of fossil fuels (coal, natural gas and oil account for more than half of the state’s revenue) and where a political minority has a small influence on the gravitational pull toward a carbon-constrained economy.
Sen. Mike Enzi at the Petroleum Association of Wyoming’s annual meeting in Casper. Association president Bruce Hinchey says the policies of slow permit and leasing processing are likely to continue. (Dustin Bleizeffer/WyoFile — click to enlarge)
For a glimpse into that frustration among Wyoming leaders, look no further than an address by Wyoming’s two U.S. Senators to the Petroleum Association of Wyoming back in August. Sen. Mike Enzi (R-Wyoming) said president Obama was “waging a war against energy.” And U.S. Sen. Barrasso (R-Wyoming) said the Obama administration was conducting a “regulatory jihad” against fossil fuels.
On the other side, noted Wyoming environmentalist and founder of High Country News Tom Bell, recently editorialized “Mankind and our civilization are at stake. If we do nothing to stop carbon dioxide from going into the atmosphere, planet Earth will face a future similar to that of Mars today. We are foreclosing the future for our children and grandchildren. … To do something about carbon means reducing the use of coal and oil. In Wyoming, that is speaking heresy. But we must begin to talk about it before it is too late.”
So what’s in store for Wyoming under a second term of the Obama administration?
“It’ll probably be like it’s been; slow permitting, slow leasing,” said Bruce Hinchey, president of the Petroleum Association of Wyoming.
Several large natural gas drilling projects in Wyoming have been delayed for years in the federal review process which, coincidentally, has taken place during a period of low natural gas pricing. Industry officials expect those projects — more than 20,000 new wells — will eventually move forward, but not without some wrangling over mitigation requirements that seem to become more stringent.
Industry and environmental interests clash on whether that delayed process stems from an honest realization that heavy industrial development has had measured, and at times unmitigated, impacts to wildlife and the environment or whether it represents a distaste for fossil fuels in the Obama administration.
Hinchey said continued access to federal minerals will likely remain a struggle under Obama’s second term, making it more likely that the industry will be forced to seek out plays on private lands, and even overseas. Despite President Obama’s call for more domestic drilling, Hinchey said the industry is likely going to have to battle Interior agencies in court.
Yet the environmental community still wonders whether President Obama will temper his call for more domestic energy development with a move toward more care in protecting the environment and cutting carbon emissions.
“The good news is that a number of initiatives will stay in place,” said Richard Garrett legislative and energy advocate for the Wyoming Outdoor Council. “For example fuel economy standards will be implemented – something that when fully realized will reduce our per vehicle consumption of oil. We might see the Production Tax Credit extended for renewable energy. The EPA’s carbon emission restrictions on coal fired generation should be secure. All of these are important building blocks to address climate change.”
Energy worries in Wyoming
After the election, Gov. Mead questioned Obama’s stance on coal. “I don’t think the current administration has a full appreciation of what the value of affordable American energy is to the economy,” Mead said during a press conference on Wednesday.
Mead said he preferred Romney’s stances on the development of domestic energy, particularly in Romney’s recognition of the value of coal, one of Wyoming signature resources.
Coal mining in Powder River Basin. Gov. Matt Mead questions Obama’s stance on coal energy, while Wyoming House Majority Floor Leader Tom Lubnau (R-Gillette) said his constituents are “very scared.” (Kimon Berlin/Flickr — click to enlarge)
“I don’t think that the president in his first four years has really appreciated and grasped the importance of coal to the country. I think coal has to be part of Wyoming’s future and importantly I think has to be part of America’s future. The fact is that it’s a fuel source that allows us to produce electricity at a very competitive rate,” Mead said.
Many in the environmental community worried that a Republican White House and Republican-controlled Congress would lead to the disembowelment the U.S. Environmental Protection Agency, replacing scientific formulas with cost-benefit analysis for setting standards. Now, with a second Obama term — and the Democrats retaining control of the U.S. Senate — many environmentalists expect President Obama to strike a balanced approach to domestic energy development and that he will address climate change in a more meaningful way.
“My expectation is that President Obama will continue to work on climate change — he said as much when he acknowledged his reelection and Senate Majority Leader Harry Reid has expressed his support, too,” said Garrett.
Since the reelection of President Obama, some in the fossil fuel industry are sounding a conciliatory tone, yet still sticking to their guns, insisting that too bold a move toward carbon reductions will only lead to more litigation.
“The electorate has spoken, and I’d like to offer congratulations to President-elect Obama,” said Greg Schaefer, Arch Coal, Inc. vice president, external affairs, western region. Arch has major coal mining operations in Wyoming.
“Like it or not, he is our president for the next four years, and we’re going to have to work with the administration,” Schaefer continued. “My hope is that during this next term he does like Bill Clinton and moves to the center.”
However, Schaefer said the coal industry is no more likely to go with a cap-and-trade approach to curbing greenhouse gases under a second Obama term.
Wyoming House Majority Floor Leader Tom Lubnau (R-Gillette) said his constituents in the coal-rich Powder River Basin are “very scared.”
“We see huge deficits, higher taxes but no effort by this administration to produce anything that’s competitive in a free market economy,” Lubnau told WyoFile after the election. “If you drive up the price of electricity you drive up the price of cars and goods and it doesn’t compete well with the world economy.”
Lubnau said Wyoming’s coal industry will rely on growing exports to Asia to maintain a strong level of production, adding that coal exports will also help the rest of the nation.
“Exporting energy and becoming an energy exporting nation is the key to saving our economy, and it makes me sad that there are individuals who would interfere with what I see a clear solution to a prosperous future to the country,” said Lubnau.
“We need to develop a process to defend our minerals and our sources of revenue or we’re going to have huge budget shortfalls which will impact the ability of the state of Wyoming to continue to provide the services its providing and the salaries its providing to folks around state,” said Lubnau.
Wyoming Senate Minority Floor Leader John Hastert (D-Green River) agreed that Wyoming must fight during the next four years to maintain its energy industries.
“As far as energy goes, I know that there are certainly a lot of concerns over coal, and so I’ve got to keep an eye on that because coal is part of what makes Wyoming tick, and we desperately can’t afford to have reductions in coal,” said Hastert.
— Dustin Bleizeffer is WyoFile editor-in-chief. Reach him at 307-577-6069 or dustin@wyofile.com. Follow Dustin on Twitter @DBleizeffer. WyoFile reporters Gregory Nickerson and Kelsey Dayton contributed to this report.
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{ 8 comments }
Clearly the market and an over-abundance of natural gas is having a far greater impact on coal than federal regulations. Eastern coal fields are diminishing and electric utility companies would be foolish to go with coal over natural gas, purely on cost basis/ BTu, not to mention the clear air benefits of natural gas, which are now impacting the low sulpher advantages of Wyoming coal.
These GOP politicians may be dead and gone before the worst of climate change hits, but their kids and grandkids are likely to experience nightmare-like extreme weather–dought, floods, food emergencies, heat waves and ever more energetic storms, thanks to global warming. For a bunch that like to mouth platitudes about the morality of grandkids saddled with debt, where’s the morality of sacrificing future generations to climate change for today’s energy profits?
Dewey, just to follow up on your question about coal severance tax. I got this from the Wyoming Taxpayers Association website; “Surface and underground coal severance taxes rose regularly from 1973 to a peak in 1978 at 10.5%. Underground coal taxes were lowered in 1984 and continued to fall to 3.75% in 1993. Surface coal rates fell from 1987 to 1993 to 7%.” http://www.wyotax.org/severance_taxes.aspx
— Dustin Bleizeffer
By the way , count me among those who believe Wyoming should raise the severance tax on Coal back up to where it was before that tax rate was lowered before the present coal boom took off. Although gross production is tapering off now, we are still booming compared to pre-2000 levels.
The tax then was north of 10.5 percent. Presently , it’s south of 7 percent for surface mines . ( please correct if in error…my memory is not to be trusted …the Equality State Policy Center is all over this ).
Natural Gas is supporting lots of new Petrochemical Plant Projects along the Gulf Coast. These projects also depend on a network of Refineries, Salt Domes (for brine & storage), Ethylene plants, & suppliers of Industrial Materials. Other areas like Wyoming can develop these things too. Send me an email for a current list. Randy Peterson hcosite@bellsouth.net
“War on Coal” and ” Jihad on [hydrocarbon] energy” as spoken by our two industry-puppet US Senators are merely Frank Lutz-like propaganda phrases…emotive buzz words… bumper stickisms. They are slogans designed to deflect or deflate any serious substantive arguments about a comprehensive 21st century energy policy not beholden to the desires of Robber Barons and the multinational corporations who have appropriated Wyoming. It is not government policy or Obama that is diminishing the demand for coal while simultaneously keeping the price of natural gas so very low and the price of gasoline at the pump so very high. Not at all.
It’s the market, stupid…
So, elected republicans use terms like “War”, “Jihad”, and then exclaim that the people are “very scared”…
Anyone who has reviewed the Wyoming state financial records publicly available on the web or in their local library understand how Lubnau, Gov. Mead, and fellow conspirators who occupy the capitol building in Cheyenne have hijacked the state’s economy for political gain. The state is almost $3 billion in the black (yes, seriously folks!), and the republican-seized government has chosen to call for further budget cuts instead of releasing back to us, the people and businesses of the state, what we have contributed to it.
Let’s set that obvious fact aside and review what Lubnau admitted above. Lubnau opines: “Exporting energy and becoming an energy exporting nation is the key to saving our economy, and it makes me sad that there are individuals who would interfere with what I see a clear solution to a prosperous future to the country.” Really? Perhaps Mr. Lubnau wasn’t aware of it but higher demand for gasoline in Asia forced our gasoline prices to soar above $3 or $4/gallon. At least that’s what the energy industry has stated publicly. (By the way, despite that the price per barrel of oil is currently hovering around $80, our gasoline prices have not reduced to $1.859/gallon, which is where they were when price per barrel was $80 a few years ago.) He wants the energy industry easier access to Asia, so our prices for natural gas, for gasoline, and for other products dependent upon oil grow to astronomical prices. Thanks, buddy, but, no, let’s not give the energy industry another reason to hike up our already super-inflated prices.
Second, Lubnau claims, “We need to develop a process to defend our minerals and our sources of revenue or we’re going to have huge budget shortfalls which will impact the ability of the state of Wyoming to continue to provide the services its providing and the salaries its providing to folks around state.” I couldn’t agree more with Lubnau here, but I’m sure his plan involves reducing taxes and easing restrictions for the energy industry to access “our” minerals and natural resources. If these natural resources are — in fact — our own and if these natural resources are not available elsewhere in the country, then Lubnau and his colleagues ought to increase taxes and barriers to the energy industry who seek to exploit “our” state’s natural resources. Only those companies who seriously want to invest in the welfare of Wyoming, its citizens and skilled workers, will choose to set up a business here. Others, especially those who are interested in making massive profit and who do not consider us anything but a means to their own prosperous ends, will be dissuaded from doing business here. It’s time to protect ourselves from foreign business invaders.
Lubnau’s comments aren’t the only ones we should scrutinize. Gov. Mead opined that the President doesn’t “appreciate” the role the Wyoming coal industry plays to the rest of the country. Although this might be true, I don’t believe that Mead appreciates the role the coal industry plays to our own state. Increasing taxes on an industry that exploits the natural resources which are our own is an imperative Gov. Mead ought to pursue aggressively over the next few years. Only those companies seriously devoted to the state of Wyoming and its fine citizens will remain here to do business in and for itself. Unfortunately, the governor will continue kowtowing to the energy industry because they threaten to leave and to take jobs with them. The trouble is that the governor should not submit to these threats and coercive tactics some businesses have decided to wield; rather, he ought to recommend companies unwilling to support the people of this state leave and do business elsewhere. Of course, he should mention that they might not find another state in the Union so amenable to their business.
which scientific formulas were in danger of being replaced?