One million dollars is a huge sum of money. But in Wyoming’s desperate scramble to save its coal industry and help communities hurt by lost industry jobs, it amounts to peanuts.
That makes me wonder if it’s even worth spending at all.
I’m not the only one who doubts if a proposed state coal marketing program makes sense. When the Joint Minerals Interim Committee considered a bill proposal at a recent meeting in Casper, a lobbyist and a lawmaker also expressed reservations.
“Right now, we don’t know whether to oppose or support this,” said Shannon Anderson of the Powder River Basin Resource Council. “We don’t know what it does. It’s rather vague; [it] expends funds to who, to what, for what purpose?
“It just seems to create a fund that may not end up doing anything at all,” she continued. “We’ve seen efforts like this before … You put in a million dollars and it sits on the shelf.”
I doubt that will be the outcome. When legislators appropriate money for special programs, especially to benefit an industry state government relies on so heavily to provide tax revenue, it gets spent. But as Anderson pointed out, what will it actually buy?
These are extremely tough times for a coal industry that has been in sharp decline for the past decade. Sales to coal-fired power plants have shrunk by nearly half, as the product now accounts for only about 27% of all domestic electrical generation. Experts say coal will continue to be squeezed out of the market by much cheaper natural gas and growing use of renewable resources like wind and solar.
Meanwhile, coal corporations are in disarray. Blackjewel LLC closed the Eagle Butte and Belle Ayr mines in July, throwing 600 employees out of work. Cloud Peak Energy declared bankruptcy, while Peabody Energy and Arch Coal have proposed a merger to cut costs.
Cloud Peak banked on being able to ship coal from the Powder River Basin to Asian markets via Pacific ports in Washington and Oregon. But environmental groups have successfully sued to stall construction of such export terminals. Wyoming has shown support of a developer’s suit against Washington over blocking a proposed terminal.
The staunchest legislator pushing coal exports is Rep. Chuck Gray (R-Casper), who with great bluster told the committee there is a war on coal that “is a threat to our way of life” and “a systematic assault on Wyoming industry.”
No, there isn’t any war. Instead, as University of Wyoming energy expert Rob Godby detailed, coal is at overcapacity in the Powder River Basin. More mines will close, he said, until there is a return to competitive levels in the market.
That means the state’s cities, towns and counties will continue to struggle with the loss of workers and other major hits to their economy.
The Minerals Committee seemed universally sympathetic to the plight of local governments. Sen. Chris Rothfuss (D-Laramie) ended up supporting the draft bill, which moved forward on a 7-4 vote, but did so with mixed emotions.
Rothfuss said such a plan isn’t necessary because Wyoming has a market access problem that isn’t going to be helped by advertising. What he didn’t say, but I firmly believe, is that the effort to force Washington to approve a coal export terminal will fail in the courts. Federal judges are simply not going to force other states to do an industry’s bidding that is perceived to be an environmental threat to their residents.
Committee co-chairman Mark Greear (R-Worland) said the bill will effectively create a budget footnote. “This is putting $1 million in the governor’s back pocket to deal with emergencies when they crop up. Plain and simple,” he said.
Rep. Bill Henderson (R-Cheyenne), who voted no, said it lacks specificity. If the bill is indeed meant to act as a budget footnote, he added, the Legislature should just create a line item in the budget to give the governor an account for coal emergencies.
And what exactly would such an emergency look like? Giving the governor more money for litigation against northwest states over terminals that aren’t going to be built would equate to throwing money away.
It was suggested that Wyoming could use the new $1 million account to fight the premature retirement of coal-fired power plants. But plant owners have a right to close polluting coal-fired facilities and convert them to cleaner, less expensive natural gas and renewables. Such moves will also save ratepayers hundreds of millions of dollars, which can’t be overlooked.
Other states don’t have to buy Wyoming coal, and they don’t have to allow its coal industry partners to build terminals so it can reap profits at their residents’ expense. The sooner Wyoming realizes that the rest of the world doesn’t owe it anything, the sooner the state will be forced to concentrate on economic diversification away from its overwhelming allegiance to fossil fuels.
As Rothfuss noted, $1 million “will probably buy us two days’ worth” of an overall effort to provide help to Wyoming communities negatively impacted by coal’s decline.
Right now, Anderson said, the bill is “just a coal marketing plan,” and that’s not what Wyoming needs. The rest of the world has known for decades that the state has abundant coal resources. A marketing blitz in Beijing isn’t going to help spread the news to potential buyers.
I am weary of empty exercises like the committee’s two-hour review of the state of Wyoming’s coal industry. Wyoming Mining Association Director Travis Deti admitted that coal is losing its market share, but maintained the industry is far from dead.
“We’ve seen a lot of bad news in the papers that kind of taints some things, but there are some very good opportunities in the basin,” Deti said.
Greear and Co-chairman Sen. Jim Anderson (R-Casper) sang coal’s praises and assured the public that the so-called war on coal ultimately won’t succeed.
I was hoping someone would throw much-needed cold water on this whitewashing of the industry’s woes. Rothfuss took up the mantle of truth-teller.
He recalled that a decade ago, common belief held that coal’s dominance would never be threatened by other industries.
Support WyoFile with a tax-deductible donation today.
“We convinced ourselves of that and we didn’t take any strong policy action,” he said. “We could have done more; we should have done more.”
Now, Rothfuss said, “we’re hearing that everything’s fine. It’s not … We have to take action as a committee.” The problems, he said, “are not going to take care of themselves.
“We send each other emails, we prop each other up, we say great things [about coal]. We’ve been doing that for 10 years,” he said. “We’ve had multiple mine shutdowns and we’re still telling ourselves that everything is OK.”
Wyoming is investing in carbon capture and carbon sequestration, and this research may eventually help sustain the industry, though at a much lower level of production than its peak in 2008.
But Rothfuss’ message was clear: The committee needs to “stop blowing smoke” and be realistic.
He’s right. The Legislature must address how to protect mine workers from losing their benefits and reduce the impact on communities severely affected by mine closures. No million-dollar marketing plan is going to help achieve those goals.
CORRECTION: This column has been updated to note that Wyoming is not suing the state of Washington over its denial of a permit to build a $680 million coal export terminal. The developer is suing and Wyoming is one of six states that filed a friend of the court brief supporting the developer. At this year’s session the Legislature passed a bill facilitating a legislature-led lawsuit against Washington, but it was vetoed by Gov. Mark Gordon. — Ed.
$1 million would go a long way in training workers for clean energy jobs, which Wyoming has great potential to tap into, H E L L O!!!
The PRB coal industry was dealt a mortal wound in the late 90’s (Summer of 1997 I believe), when the railroads told the big oil companies that they were going to “share” the profits of the coal upgrading plants. “We don’t haul diamonds for the same rate we haul coal,”. was the phrase passed around.
The PRB value had fallen from a 1978 spot price ~$27.50/ton, to ~$1.70/ton. Note: costs reported above are marginal costs (cost of the last ton produced), not the government figures reporting prices of average costs. Business decisions are made on marginal costs.
The PRB coal producers needed to be able to customize their products, to get out of the commodity price debacle. The oil giants could not beat the railroads, but they thrive with the Department of Transportation (DOT) regulation of pipelines. That is where Wyoming (and more importantly the US Government), should spend some money.
The sham transactions allowed by Wyoming’s Uniform Commercial Code (UCC) needs to be shredded. The current proceedings are cloaked in “Beltway Speak,” obscuring the issues. The Obama Administration recognized the problem, but they didn’t confront the issues in a timely manor. In December 2016 they finally made a decision to stop the practice of honoring the price dictated by a parent company to their wholly owned subsidiary as a “valid market price.” Such sham transactions are not permitted by the UCC of the US Government, or any other state that I am aware of in the USA.
The Valuation Rule 2016 by the Office of Natural Resource Revenues (ONRR), is the Beltway Cloak hiding the taxpayer rip-off!
The PRBRC has joined with several other “environmental groups” to recover monies lost to the self-dealing of faux sales. When companies cannot “walk away” from a deal (arm’s length), there is no fair market value” established by any sham transaction.”
Unfortunately, most people don’t understand the basics of economics. Our civics education was largely discontinued in the 1960s, because of the Civil Rights Movement.
We need to understand what markets can do, and what they cannot do. Then we can use them, instead of being railroaded! Markets prioritize human wants very well, but they cannot address human needs. We need our representative government to work for us!
I too would like to see something done to help keep the mine workers from losing their benefits; however, recent losses have been the result of court rulings based on federal bankruptcy laws, which favor corporations and ignore the workers.
Maybe the mine workers and others should consider voting for someone who will at least acknowledge these laws are a problem.
Wyoming is a state like a legislative fenced chicken coop … You could even state a chicken coop full of Legislative hens laying eggs… Those Wyoming Legislative committees gather those eggs for well over a hundred years and sucked the yokes of those eggs for taxes to provide for a state abundant in Governmental revenues… Then in 2010 a weasel enter, known as Natural Gas and the basket was emptied by several revenue eggs at that time frame… Yet those legislative Roosters just clucked up excuses and ran around in circles… Not to mention all those little chickens known as Communities wanting more grain in revenues and beaks in the air asking for more…
What was done by the Farmers of Wyoming we the people, nothing, we listened to conditions in the Hen House but voted to keep the same old roosters. Why?
Now faced with reduced revenues, we have a committee to study our plight to the tune of Million Dollars of Grain or wasting on marketing calls… Still sounds like the funny Farm and the outcome will be the weasel will eat all the chickens along with the eggs…
I like it Ken and you seem to nail it….I would contend prosperity has gone down due to the increased price to get excess energy (the source of profits) and instead of dealing with that reality we borrowed a great deal of money to maintain prosperity and a way of life that is unsustainable. Wyoming is a canary in the coal mine when it comes to being able to afford our current Wyoming lifestyle. We cannot afford the roads, prisons, education and subsidizing agriculture while keeping sprawling small town life afloat. Market signals are telling us these things but the humans in charge of the hen house refuse to listen.
You would think that Wyoming would realize that wind and solar are the future. Wyoming has a lot of land, sun and wind. It could easily become a major electricity export state. In one of the articles I read someone said that Wyoming coal would be okay as long as they could produce at least 300Mt a year. Well, guess what? It will be closer to 270-280Mt this year and dropping again next year. Four Wyoming supplied Illinois coal plants with capacity of 2GW are retiring at the end of 2019. I don’t know how many more of 10-12GW that are retiring this year are supplied by Wyoming, but I bet it is non-zero.
It is easier to deny reality than deal with it.