As the grim economic news kept coming in. . . mixed signals

Just yesterday I ran our item featuring news from a couple of energy outfits.  It likely can't be regarded as cheery.

After I published that, I ran into somebody I know who worked in a service company.  A local, in his early 60s, he told me he'd been let go a couple of months ago.  Notably, he's a Wyoming native and he was taking it well, and not even worried really.  Almost 62 years old, he was basically marking time until he could take early retirement, which he now intends to do.  Ironically, at the same show I ran into my wife's old landlord (from before our marriage), a really nice guy, who once worked for one of the refineries.  He's actually gone back to work as a parts runner as he was finding retirement to be boring.

Anyhow, in today's Tribune, which now features a Sunday "energy" section, there's a detailed article noting that prices at the well head are up to $40/bbl and aren't falling. They might be rising a bit.  They're now high enough that a couple of local outfits are contemplating drilling if the price holds.  We might keep seeing some layoffs for awhile, but if the price holds, and it looks like it will, we will probably be returning to an exploration economy in the petroleum industry, but not a superheated one. This might be a good thing overall.  It won't happen right away, but I wouldn't be surprised to see an increase in rigs by late 2016.

Today's Tribune also had a column written by the new state Superintendent of Public Instruction. She was in the news taking a little heat over eliminating a position in her department recently, but was featured today regarding her term in office so far.  In her column she summarizes her time in office so far noting, in one paragraph, the challenges that declining revenue are putting on the education budget.  She noted the trouble in the petroleum and coal industries specifically.

I note that here not only because it's real, but because she termed the coal problems as "the war on coal.".  That's a common perception here but it is a political one as well.

On what she noted, I'm surprised she mentioned petroleum as petroleum only directly impacts the education budget.  It's coal that really does.  When this system was set up in the 1970s coal was doing really well and there was no reason to add petroleum to the mix.  As hard up as coal has been recently, however, we might really want to think about adding petroleum severance taxes to education funding.  Petroleum is doing poorly, but it will come back at at least some level.  Indeed the articles in the tribune noted that US production will fall next year which will cause the price to at least stabilize.  Natural gas, part of the petroleum story, is likely to do increasingly better in the future as power generation is switching over to it nationwide.

Which brings me back to "the war on coal".  It's been popular here to conceive of the troubles coal is having as part of a dedicated effort against it.  I suspect that was thrown out as a little political kibble to the public, but she may perceive it in that fashion. Quite a few people in the state do.  But such thoughts should be realistic.  It is true that coal has lost favor in the eyes of much of the public.  But, no matter what we here in this state may think of coal, we need to be realistic. That view is going to increase, not decrease.  Indeed, while the state is funding "clean coal" efforts, the trend evidence is that production curve on coal may have shifted forever.  The industry itself was banking on Chinese importation of coal, not American consumption, and that gamble proved to be a bad one.  The conversion to natural gas for power generation appears to be irreversible and in the future that's what fossil fuel burning plants will burn.  Indeed, no new coal burning ones are being built in North America just as the construction of oil burning power plants, which used to also exist, is now a thing of the past.  So, even while there are those who are dedicated opponents of coal out there, it's really economics and long term trends that are imperiling coal.  The industry is well aware of that, I'm quite sure.  Coal mining is not about to disappear overnight, but those who are looking to the 1970 to 2010 era in coal to reappear are going to have to face the hard facts that certain fundamental things have changed in the industry, and fundamental changes need always to be adapted to.