For about ten years of my life, I ignored writing obligations and worked as a hunting guide at the HF-Bar ranch located west of Buffalo.
During that time, I had a chance to guide the top brass of the Peabody Coal Company. Smart, informed, and passionate about coal, these hunters spent many an hour discussing matters other than bagging elk or antelope, such as American energy policy.
I no longer guide but recall being wowed in 2006 by the Peabody stock price: over $100/share. Not bad for a company whose shares were selling for under $20 in 2002.
On April 13,,, 2016, Peabody Coal, the largest coal company in America and a major operator in Wyoming, filed for bankruptcy. It was the fifth bankruptcy declared by a major coal company within a year.
In Wyoming, we pretend this tectonic shift is a blip, an anomaly primarily caused by that dang, coal hatin’ Obama administration in Washington. Elchin Mammadov, an analyst at Bloomberg Intelligence has more sober observation. “Coal is in terminal decline, and those countries investing in coal for export markets are making reckless decisions.” Countries? What about states? In 2015, the Wyoming legislature authorized issuing up to $1 billion in state bonds to finance construction of coal terminals in the Pacific Northwest. “And in coming years, we don’t need to let up (on coal incentives) we need to double down. We must assure coal’s continuity,” declared Wyoming Gov. Matt Mead.
Mr. Mammadov offers an overly bleak scenario. I doubt coal is about to disappear. Neither will oil or natural gas. But what Wyoming can’t afford to do is think the glory days of coal are coming back. Furthermore, only the most optimistic of soul banks on a revival of $13/mcf natural gas.
Yeah, yeah, you say. Most people, in their heart of hearts, think there’s some truth to this assessment. Maybe. Then how come the honest discussions about Wyoming’s economic future take place only behind closed doors, among friends, and with a few Crown Royals under our belts?
It’s time we talk turkey, in public.
This fall, I will offer a class at Sheridan College, “Wyoming’s Community and Economy: The Conversation We’re Having Behind Closed Doors.” We’ll discuss a series of questions, too many to list for this article. But here are four.
• 1. How much time and energy and money is Wyoming going to spend promoting products that rest of the world is spending billion trying to avoid? In other words, how long is Wyoming going to be the 21st century version of a whale oil salesmen? Or, in economist speak: what are the opportunity costs for Wyoming promoting a fossil fuel economy? Couldn’t we be doing something else with the money?
• 2. Wyoming holds a durable assumption that communities can enjoy a sustained prosperity by promoting an extractive economy (oil, gas, coal, ranching, and timber). Historically, extractive societies world-wide have struggled. Look at Russia. Why are we the exception? And what’s the alternative?
• 3. How do we stop feeling like victims of federal government policy? This victim’s narrative may resonate with some voters (look at the current campaign message among office aspirants) but from an economic point of view, it’s a non-starter. Wyoming has spent most of its existence opposing the power of the federal government yet without money from Washington, the state would hemorrhage red ink. Approximately 36 percent of the Wyoming state budget in 2015 came from the federal government. Have we heard a single, serious discussion among small government advocates how they plan operate a realistic state budget without federal money?
• 4. How is Wyoming going to manage its sovereign fund and $19 plus billion in unobligated assets? Wyoming’s done some things pretty well, like stick money in the bank. We have over $7.2 billion in that sovereign fund (our Permanent Mineral Trust Fund) and roughly $12 billion in other funds such as the Common School Permanent Fund and the Worker’s Compensation Fund. Are we going to sit on these piles of gold or make the money work for Wyoming’s future?
These queries are hardly new or original. Yet Wyoming has been having the same discussions, most of them informal, over and over again, or variations of them. There remains a long-standing unwillingness to face Wyoming’s contradictions, i.e., we tout independence but the financial engine of the state runs on one massive wealth-transfer: we take money from the energy companies and, basically, give it to people. Wyoming citizens contribute almost nothing to the running of the state. In 2015, the Tax Foundation ranked Wyoming 50th for state and local tax burden as share of overall state income.
We lived in a siloed world. As Jonathan Haidt has observed, people no longer read newspapers or blogs or watch television news to become informed, they do it to become affirmed. Wyoming, with 70 percent of its revenue coming directly or indirectly from the mineral industry, can’t afford to not explore all options concerning our economic future. Please come join me.
Samuel Western is a writer specializing in Wyoming economic history. He’s written for many publications, including the Wall Street Journal and the Economist, and taught classes in Wyoming economic history at the University of Wyoming. He is the author of one of the best-selling books in Wyoming literary history, Pushed Off the Mountain, Sold Down the River: Wyoming’s Search For Its Soul. He is currently working on a follow-up book to Pushed Off the Mountain