No one-stop shopping for solutions to job losses in coal communities
by Allen Best
For decades, Wyoming has been asking itself how it can diversify its economy. Jackson Hole has an abundance of billionaires, but hydrocarbons do the state’s heavy financial lifting.
Mineral taxes rank first in delivering state revenues, followed by interest on investments Tourism comes third.
Now, the same question about diversification is being asked again, this time with more urgency. Coal has been sliding, as witnessed by the bankruptcy filing last year of Peabody Energy and Arch Coal, the nation’s first and second largest coal producers. Both are major operators in Wyoming’s Powder River Basin.
The Powder River Basin became nationally prominent because of the abundance of low-sulphur, low-mercury coal. Those attributes became important as electrical producers across the United States were forced to address acid rain and other impacts of burning coal in the 1980s and 1990s. That led to 110-car trains lined up four to six deep on the sidings south of Gillette, the basin’s largest town, waiting to join the virtual conveyor belt of coal to power plants as far away as Florida.
Even now, after dozens of coal plants have been retired, the Powder River Basin still delivers 12 percent of total U.S. energy. That figure is for all U.S. energy. Not just the coal sector but also hydropower from the big dams, gasoline imported from the Middle East, solar collectors in California and wind turbines in Kansas.
But here’s a telling statistic: the assessed valuation of Campbell County, located at the heart of the Powder River, has dropped a third in the last two years, from $6 billion to $4 billion now.
What can local leaders do? A conference, “Strengthening Economies in the West: A Regional Forum for Coal Reliant Communities,” was held during April in Denver, Among the speakers was Mark Christiansen, a county commissioner in Campbell County, where Gillette is located.
Christiansen indicated that he believes Wyoming has made wise decisions but has no easy answers ahead. State revenues for many years were salted away for a rainy day. That downturn became evident about four years ago as coal was undercut by both natural gas prices and renewables.
From strictly an economic, not environmental, perspective, natural gas poses the greater challenge to the coal-dependent communities of the Powder River Basin. Christiansen described a gray area of energy economics. Electrical producers will absolutely crank up the gas turbines if natural gas falls below $2.50 a million Btu, as it often has been in the last several years. When gas is above $3.75, coal is cheaper.
Wyoming’s decision to build financial reserves has allowed it to operate differently than many places. “Wyoming has a different philosophy. We pay cash,” he said.
But no money has been deposited in the state fund for four years, Christiansen said. Campbell County has also experienced declines, but still has a cash reserve of $260 million. Minerals provide 90 percent of the county’s tax base.
Christiansen painted a mixed picture of the efforts made to diversify Wyoming’s economy. Revenues were plowed into the University Wyoming. It has what he called a tier-one engineering school. “We are educating the best and the brightest—and now we’re seeing them all leave. Now we’re trying to figure out how to get them to come back to us.”
During the good times, it was hard to find enough people for all the high-paying jobs in the coal fields and power plants. “Everybody talked about economic diversification when times were easy, but at that time there wasn’t enough workforce for the demand we already had in the energy industry.”
During the 1990s, an office park was built in Gillette that was intended to be a home for call-centers. It didn’t work out. Call centers don’t pay high wages. Coal fields do.
Gillette and Campbell County created a place where people want to stay, he said. “You can’t have a community be attractive until that community is willing to be attractive to families,” he said. Even as the coal economy has declined, many in the community of 45,000 people found ways to stay “because they like the community. We have good schools, we have art and education.”
Wyoming isn’t ready to give up on coal. The state launched a Carbon Research Center, which is focused on creating value-added products from carbon. One of them is water purification.
In Montana, jobs in the coal sector are also declining. Like Wyoming, Montana has used severance taxes collected on coal mines since the 1970s to pay for state infrastructure, according to Jim Atchison, executive director of the Southeastern Montana Development Corp., but also public retirement funds and long-range building at the universities, even libraries and parks.
“Coal pays a lot of bills in Montana. And Montana is blessed to have $1 billion in its permanent trust fund,” he said.
Montana has 25 percent of the U.S. proved reserved coal reserves. Atchison’s area encompasses the Colstrip mining area, an extension of the Powder River Basin of Wyoming. Montana actually has more coal, but the Wyoming component of the basin is located closer to the surface. That enables less expensive surface strip mining.
But the Colstrip area still has 800 coal-related jobs, and some will be lost. Two of the four coal-fired units will be closed in 2022, the result of a lawsuit settlement concerning air quality violations.
“So far, we haven’t been hit like Colorado or Utah or some of the other Western states,” said Atchison in an interview after the conference. He describes it being like a storm on the horizon. “You just don’t know if it will hit you at 5 o’clock or 8 o’clock.”
Demographics also pose a challenge for Montana. In age, it is currently the 6th or 7th oldest, and within he next two decades it projected to have the 4th oldest population.
Colorado is less reliant on coal severance taxes than Wyoming and Montana, but it has major production in primarily two areas: Northwest Colorado, both Routt and Moffat counties, and in the North Fork of the Gunnison River Valley, east of Delta.
Irv Halter, executive director of the Colorado Department of Local Affairs, pointed to efforts to extend broadband to all areas of the state. Broadband extends across 70 percent of the state, and officials hope to make that 100 percent by 2020. In the North Fork Valley 50 percent of jobs have been shed in recent years.