Thursday, April 28, 2016

The Wyoming Economy. Looking at it in a different way.

 
 Big Horn foothills. There's a reason why I've posted this here, but you'll have to slog through the post to discover why.

I thought about starting this thread just the other day.  On what must surely be a "Great Wyoming Minds Think Alike" type of day, Neil Waring, on one of his blogs (like me, he keeps more than one blog) posted this item on the same topic:
Wyoming Fact and Fiction: Bring on the Tourists: Must Be In Wyoming With Wyoming coal now suffering at the hands of environmentalists, the downturn in crude oil prices, and natural g...
So he got there first.

I'm going to post anyway, however, and in doing that I'm actually combining three draft post that I had sitting in the hopper, one that dates as far back as last summer (there are ones older than that, I don't always write stuff in one sitting or block by any means).

I've been posting a lot on Wyoming's economy here recently. And almost everything I've posted on that has been bad economics news.  Petroleum oil is been sick in the respiratory ward for months.  Natural Gas is convalescing with a low price head cold that threatens to turn into pneumonia.  Coal is in the ICU and might not make it back out.  And just yesterday we learned that Uranium, a fuel that has nothing to do with anything we've just mentioned whatsoever, is in trouble here, due to an earthquake several years ago in far off Japan.

Now, in some other states people would just shrug and not worry much about this.  But Wyoming's economy is heavily invested in the extractive industries.  Indeed, as things started to tank I heard nervous comments about how this wasn't so anymore, but it is.

The extractive industries

Almost all of our real industry and almost all of our government revenue derives from the extractive industries.  Everyone depends on them.  The way it works is this way.  The resources is taken out of the ground and taxed.  That's where the state gets most of its revenue.  If the lease if public, the Federal government or the State gets more revenue, depending upon who holds the lease, and if that lease is Federal the Federal government pays back to the state an additional amount.  Obviously, the people working in the extractive industry make their money there. But so do all the vast number of support industries.  And that ripples out from there. As oil companies lay people off, for example, the support industries start too. And soon, not all that long thereafter, the hotels are empty, etc.
 https://4.bp.blogspot.com/-a33TS3yPPjQ/USthwP3AnuI/AAAAAAAABEs/KP57vwFfC1k/s1600/8255043392_5f1cd4dcd3_k.jpg
Early Wyoming oilfield.

Indeed, the Alaskan fishing industry was down in town the other day recruiting laborers used to hard physical labor to work on fish processing boats.  Seems odd, but makes sense.  When we couldn't find laborers in this state we recruited in depressed Michigan for the same reason.

Anyhow, with coal, oil, natural gas, and uranium all in a slump. the state's really hurting.  And it should be noted that this always tends to happen in this freakish way. There's no reason that the price of petroleum oil should fall along with coal, let alone uranium, but that's happened to us before.  An entire town in northern Carbon County disappeared just as the coal mining towns were starting to nearly disappear, and this in the 1980s.  Here we go again.

Well, whenever a slump happens we tend to wring our hands and declare, like The Who, that "We Won't Get Fooled Again" by the cyclical nature of the extractive industries.  Here we must note that some are so invested in the concept that the extractive industries are Wyoming that to even say that is taken as some sort of slam against them, which isn't true at all. Rather, we have to acknowledge the nature of those industries, which is that they boom and bust.  When they are booming, the income and revenue stream they provide to the state is great.  When they crash, however, it's a problem if we haven't prepared for it, and we seem not to.

As part of that, and here we need to be thinking of coal and its future, some of our former extractive industries do indeed disappear over time.  Wyoming at one time mined iron and gold.  It doesn't anymore.  Indeed, I posted some photos of a former gold mine at South Pass on a thread at Holscher's Hub, that thread being this one:
The Carissa Mine, South Pass Wyoming
 



Even within the last fifteen or so years there's been speculation about the possibilities of opening the mining at South Pass back up.  Well, I suppose its a remote possibility, but the key word  there is remote.  Sometimes the bust is for keeps.

Indeed, one of  my grandmothers on my father's side was from Leadville Colorado.  She was born there.  Her father had come there as a gold miner originally.  He switched to being a merchant, and they later moved to Denver, but Leadville provides a good example.  Leadville's mines closed and the town limped along for decades before remaking itself into something else, finally accepting that gold and heavy metal mining was not going to come back.

Now, I'm not saying that petroleum oil and natural gas will not come back. They may not come roaring back, but they'll come back.  But we should be cautious about assuming that they'll come back in the same way that Rick from Casablanca assured Elsa about regret, that it would come "maybe not today, maybe not tomorrow, but soon, and always."  The reason we should be cautious here is that there is reason to believe, at least with petroleum oil, that we may in fact be living in a new production regime.  For years people worried about "peak oil", with people who enjoy being alarmed particularly enjoying worrying about it. But it turns out that the problem here may not be peak oil, but we don't need the oil as much anymore, and that this trend will grow.  It seems to be.  In fact Saudi Arabia is literally banking on it, ramping up production to dominate the market while it scoops up what it thinks is the last of the oil bucks.  This doesn't mean oil will go away entirely, but it might mean that in an environment in which it is used increasingly less as a fuel it won't have the value it once had.

It seems unlikely that we fact the same story with natural gas, which is likely to be used more in the future.  The problem here is, right now, that there's a lot of it, so the price is depressed.  We shouldn't assume that this will be the situation for eternity, however, and therefore we ought to really pause when we see gas being flared, as someday we may wish that we had it to sell.  Right now, however, the price is in the basement.  This past week the industry pinned some hopes on being able to export gas to China, which a recent Federal statute encourages.  We'll see how that goes.

With both petroleum oil and natural gas we'll also have to watch the advance of technology, which has been a huge factor in the recent boom. Hardly noticed it was also a factor in the slow revival of uranium with technology advancing so much in regards the mineral that scares the dickens out of the very people who should embrace it ardently that we don't really mine it in the conventional sense anymore. We drill for it and "mine" it in solution.  So here, the mineral that once created enormous mines with high paying jobs does not even with the price is good.  It still provides jobs, bu they're drilling jobs and infrastructure jobs.  Indeed infrastructure in some ways turns out to be the long term stable set of jobs for petroleum, gas and uranium.

I'll omit addressing the sad state of coal as I've written about it so much recently.

Anyhow, all that is really background for the observation that Wyoming has had a strong attachment to the petroleum industry since day one, but we've had a hard time ever accepting the boom and bust nature of it.  This isn't a criticism of the industry so much as its an observation on the reality of our blindness to problems in this area.  So this has always been a part of our economic picture, and that's what I propose to examine here, our long term economic picture.

The state's economic constants

As far back as you can go in Wyoming's history there are certain economic constants.  Some of them are that we have a collection of industries all related to one thing that just keep on keeping on.  Another is that we have hoped for the extractive industries to work economic miracles from our very onset of existence.  A third is the background role of government in providing jobs, even when we've been hostile to that.  Let's look at that.

And let's look again at oil.

Oil, and the other extractive industries, but oil very much in particular has been the expectant economic hope of Wyoming almost from day one.

July 15, 1891, Natrona County Tribune, reporting on both oil and gas production.

This may be surprising, really, for those who think of the early history of Wyoming all in the context of cattlemen, or perhaps earlier in the context of Mountain Men and Indians.  And it is certainly the case that cattlemen and Indians are part of the story (and still are, and we'll be looking at that shortly), but oil was expected to bring big returns early on.  Indeed the first time I realized that was in trying to research the Johnson County War back when I was in high school, as I plowed through a pile of microfiche issues of the Natrona County Tribune.  Issue after issue discussed oil finds, not, I expect, what we expect to see from a Natrona County newspaper in the 1890s. But it's there.

Okay, well so what?

Well, the point is that oil, gas, and coal are there and always have been.  But the boom and bust nature of those industries has always been part of them.  When the price rises, as it always has, we leap into them great guns.  After awhile we expect the boom to be eternal, even though there's always good indicators that the boom will not be.  And we are always surprised by the crash.

Wyoming Oil World, June 15, 1918.  A crash was soon to occur with the end of World War One.

A real change, it should be noted, has occurred in the oil industry since the 1980s, and that's been the demise of the local refinery.  This has to be noted here as its significant, and ties into what I'll later note.  Wyoming had refineries almost from the onset of oil exploration here.  Casper had three refineries here in town up until the 1980s. Every town in Wyoming had one, it seemed.  Glenrock had a refinery.  Laramie had a refinery.  Now we have four operating refineries of which I'm aware.  Maybe there are more, but I'm not aware of them.  Refineries provided good blue collar jobs for decades, now they provide very few.  In fairness, gas plants have come in whereas up until fairly recently we didn't have many of them.  But that points out what I intended to note above.  Gas builds and is still building infrastructure in Wyoming.  Petroleum oil does as well, but not in the way it once did. Refining has tended to shift to super huge refineries on the Gulf Coast, which can take in U.S. production, and also take in imported production.

 
So what we can accept here is that oil and gas will remain, but in looking at this aspect of our economy, can't we do more to build local stable jobs from that?  We'll round back around to that towards the end.

So, we've looked at coal, gas, uranium and oil a bit, and will come back to them, what else is out there?  We tend not to notice much until the crash.  One thing is what Neil Waring already noted, tourism, but we will come back to that bit later also.  That's because, in order to look at tourism, we have to look at why anyone comes here at all.  And that comes from. . . agriculture.

Agriculture

 Oats

Agriculture is the great ignored industry in Wyoming.

This will being the hackles up on some, because agriculture in Wyoming is generally conceived of as ranching, and ranching has some real opponents in the modern U.S., even though in the West, contrary to the anti's views, its darned near environmentally neutral.  In fact, truth be known, it's environmentally positive if objectively views. That's right, that's what I'm saying as that's the truth. An environmentalist, if they're realistic, ought to thank a rancher every time he sees one (and ought to be for nuclear power also, but that's another topic).

 
Laramie Range hayfield.

Agriculture is an economic constant in Wyoming. While there was some economic activity, even national economic activity, if we consider that courier du bois  and trappers were in fact part of an international industry, it's agriculture that really created the state and made it what it was, and is.

Agriculture made its appearance in a recognizable form in Wyoming as early as the 1840s when New Mexican laborers brought up to work on Adobe buildings at Ft. Laramie stayed on and started small vegetable farms on the "Mexican Hills" near there.  This gave them in an income in that the produce was available to sell both to soldiers at Ft. Laramie as well as to travelers on the Oregon Trail, who by that time no doubt were pretty darned ready for something green and fresh.  Unfortunately, while the area remains a farming area, as far as I know there aren't any farms in the area that are descendant from the original ones.

Cattle, of course, is what we think of in terms of Wyoming agriculture, although it was really farming that made its the first appearance and it certainly continues on in a big way.  Crop farming continues on in southeastern Wyoming which has a climate and soil much like Nebraska's, and hence is part of the giant corn and wheat belt that stretches all the way into the Mid West and which is a massive part of the economy in many such states.  It also exists in Fremont County as well, and in Big Horn and Washakie Counties.  Hay crop production exists in many places, as long as there's water to support it.

 
Porta-vet box of a large animal vetrinarian.  A common ranch site in some times of the year.

Where there isn't sufficient water, which is most of the state we have cattle and sheep, although now days mostly cattle.  And Wyoming cattle live out on the range.  They're fed in the winter, but on the range.  Really, they're making use of the ground that in earlier eras buffalo made use of and in the same way, save for the fact that buffalo tended to crowd into Cottonwood groves in the winter and destroy them.

It's cattle and sheep that keep Wyoming wild.  This use of the land keeps the land open and natural. When that stops, you get houses and "ranchettes", something that environmentalist should keep in mind.  A strong cattle industry makes for a strong wild Wyoming.

Given this, and that it's so much a part of the background of the state, you'd think that this is an industry the state would seek to support in some ways.  But it doesn't.  Stockmen and other agriculturalist are largely on their own in all sorts of ways.  There is the leased ground, a very misunderstood public asset, but even this is under attack, unfortunately by agriculturalist as well as others.  At any rate, agriculture is an industry which, in spite of the slams against it, just keeps on keeping on by itself under its own steam, ignored by the state and by Wyoming communities.

It should and must be noted that employment in this industry has really changed over the years.  In the early days Wyoming ranches large and small employed a fair number of people directly.  That was due tot he nature of the operations, and even though a very significant amount of the labor on ranches remains the same now as it was in 1890, not nearly as many people are directly employed in the industry as once were.  There are a lot of reasons for this.

 

One reason is that barbed wire changed the nature of ranching and accelerated the change to smaller, in relative terms, family operations.  When that occurred large numbers of year around employees were not needed and to some extent those employees were members of the immediate family.  As this evolution took place family run operations relied on neighbors and friends for additional labor support during those times of the years which, at one time, caused large numbers of seasonal cowhands to be employed.

Another big factor was the 4x4 truck.  Up until World War Two ranches had to rely on cowhands stationed at the edges of their lands for winter feeding in many instances. The truck stopped that, and it reduced the need for labor as well.  Ranchers that once would employ several hands on remote areas of their ranches could now simply drive their with a 4x4 truck.  Such trucks were first available immediately after the war, and it was the war that really brougth them on in strength and proved their utility.  So now many ranches, even large ones, employ no individual cowhands at all, although there are still quite a few that do.

 Army truck manufacture (Dodge). Army officers attending the school conducted by the Chrysler Corporation to assist our fighting forces in the job training men to operate the thousands of trucks required by today's streamlined division are given actual practice in driving the trucks in a testing field. Above is an Army officer putting one of these trucks through its paces in a heavy mud wallow which is just one of the many tests to which the driver and vehicle are subjected

The demise of the sheep industry also really played a large role in the number of direct employees.  There are still Sheepmen in Wyoming, but not like they once were. And this is because, in part, due to the fact that that sheep production was in fact one of the rare areas where there was government involvement, as up until the late 1980s the Federal Government supported the price of wool due to the Defense Wool program.  That program came in during the Korean War when the military had to purchase heavy woolen clothing in large quantities and found that there wasn't a sufficient supply of it. The wool program was therefore brought in but it carried on well after it probably should not have.  Even defending the program it has to be admitted that ending it in the late 1980s made sense, keeping in mind that we hadn't fought a cold weather war since 1954 (we would again in the 2000s) and the technology of winter clothing had changed a lot in that 30 year period.

 Sheep in Natrona County, Wyoming, 1940s.  This photo could have been taken at any point in the 20th Century up into the 1990s.

Also related to it, however, is that the United Kingdom joined the European Community which in turn caused the UK to dump the market policies that favored its former Dominions.  During the late Empire stage of the UK the UK had a policy of developing agricultural production in its Dominions but finishing the products in the UK. So Australian, New Zealand and Canadian wool all went to fine British wool mills for a finished product.  When the UK became part of the EC, however, that violated the EC's policies and the British stopped doing that, focusing on local markets instead.  Indeed, the EC has sort of a bizarre semi autarkic economic policy that heavily impacts agriculture in a negative way in some instances and which explains some odd things, such as a constant EU effort at serious beef production, which it really doesn't have an agricultural landmass to support properly.

When that occurred the Australians dumped their wool in the United States and an already ailing American wool industry was really hurt. So we see few sheep now, although they've come back a bit.

The sheep industry supported an infrastructure that was immediate and obvious, which brings us to the next part of this story.  While Wyoming has lost direct employment in agriculture, it's really lost the infrastructure over the years in a major way.

Early on, there was no infrastructure and everything produced here was shipped out for processing in some fashion.  We've almost completely returned to that.  Turning first to wool, when the sheep industry massively contracted all the supporting wool buyers and shearers, an immediate support industry, were hurt.  But its in other areas where the change has been more dramatic in some ways.  Wyoming once had a very large number of stockyards. Every city had them, and they were mostly associated with railroads.  Those are almost all gone, and that's due to the fact that commercial trucking has completely taken over that role from the railroads, although as late as the 1990s the railroads were still attempting to get back into this for sheep.  Perhaps nothing can be done about that and it was inevitable.

Less inevitable, however has been the end of the local meat processing operations on a large scale. There are still some, but they're really small custom houses.  It was this industry that brought my father's family to Wyoming, as we owned a packing plant here in Casper. Today there is no packing plant in Casper, or anywhere in Wyoming for that matter, of that type.  The plant produced not only meat for sale to stores, but other products as well.  Now, you will not find that in Wyoming.  The cattle are all here, but they are shipped out of state for finishing and processing.

 Closed packing plant, Omaha Nebraska.

You'll also not find much in the way of dairy production, although the Starr Valley in western Wyoming hands on in this area, producing cheese on a commercial basis. At one time most larger towns had a creamery that processed milk, and indeed my family had one for a time here in Casper. That meant that there were dairy cows nearby, which there were, and where you have dairy cows, you have to have a large quantity of high quality hay for them, which was also produced locally.

 

Now all of this is gone.  National consolidation of these things is the reason why.  The situation in the meat packing industry is legendary and is the source of steady complaints from both ranchers and consumers.  Indeed, ti's slowly spawned a direct buy movement, which is now pretty common, where families will purchase a cow, i.e., a "beef", for a half beef, for slaughter.

Having said all of this, the direct economic impact of agriculture remains quite large in Wyoming, it's just not very well noted by anyone. Independent truckers, local feeds stores, professional services, and even local manufacturing all rely on it pretty heavily.  Seemingly nobody notices.  Indeed, in some instances, local governments can be a bit hostile to agriculture when some sorts of support facilities are proposed.

Before I depart from this topic, I'm going to note one thing that seems self evident but for some reason is never treated that way.  Silvaculture, the raising of trees for harvest, is agriculture. That makes logging part of agriculture.  Indeed in Wyoming, all logging, to the extent any remains, and it isn't much, takes place on land that cattle are normally on.  Logging is an industry that's really been hurt in the US over the last thirty years and this may actually be one area where environmental concerns have hurt agriculture, although ironically here too its something that environmentalist should reconsider.  Growing trees are carbon sinks.  Full grown trees much less so.
 
 Cattle sharing ground with camping fisherman.

Tourism of all types

In a real sense the tourism industry, and if we consider out of state sportsmen part of that, which we should, is ancillary to agriculture.  It's the open lands, largely caused by agriculture, that cause people to come in and tour Wyoming for a whole host of reasons.  Neil Waring, as noted, has done a fine entry on that the other day and I'll not go into it, therefore, in too much depth.  I will note that most towns and cities have gotten pretty good at promoting this.  Indeed, maybe a little too good.

I will turn however to the sportsmen aspect of this, which is often missed and which may be the part of this that aggravates locals the most.  Indeed, some months ago, before the downturn in the economy here really got rolling in a big way, I ran across this:

Found on Facebook and posted via fair use.

This was going to be on one of those threads I started as a draft quite awhile back, and I'm just getting around to posting now, as I think the topic has changed a bit in context.

When I was a boy, you used to frequently see a bumper sticker around here that said "Live in Colorado, fish in Colorado. . . live in Wyoming, fish in Wyoming. The gist was that people were tired of being overrun with Colorado fishermen.

It was also during a period of time when we were in one of those oil booms.  We felt rather overrun, including by Colorado fishermen.  The view wasn't limited to fishermen, however, as it extended to out of state hunters in general.  This was particularly the case when landowners, who can be their own worst enemies, took a legislative run at trying to own the state's wildlife, a move that came about with a view much like that of the effort to get the Federal Government to give us a gift of the Federal domain against our own interest.

I ran across this on Facebook (actually I ran across it sometime back, and started working on it as a draft, and then forgot about it and rediscovered it). When I did, the old complaint was back, but when I first noted this, we were in what turned out to be the last stages of an oil boom, now turned to bust, and that's what happened the last time too.  When I started this, it was really reminding me of the 1970s.   Our current times, however, remind me of the 1980s.  I wonder if these sentiments, that caused the revival of this view, will now persevere.  One thing that we really started thinking shortly after this is how glad we were that out of state outdoorsmen came in and spent their cash when they did.

That's where I suspect we are again.

And then there's the government.

The Government and Employment in Wyoming

Oh, I know, what people expect on this, particularly from a Wyomingite, is "that darned government is ruining everything. . . we need to get the government out of . . . "

And, indeed, if you read the newspaper comments on Governor Mead's recent decision to scale back the state government by 8% in spending, you'll see some comments of that type.

But, as I posted here awhile back, government spending has been propping up the state's economy recently and keeping the downturn from being a wholesale disaster. . . so far.

We hate to think of this that way, but a good argument can be made that, in the economy we've had since the 1890s, the government is one leg of a three legged stool.  One of those legs, the mineral industry, is now wobbly, another, agriculture and what it supports, keeps on keeping on, and the third, government, is saving our bacon right now.

It's doing that through, in part, construction projects, but that's not all.  In quite a few towns around Wyoming government itself is the major employer.  In Natrona County the school district is the largest single employer.  Indeed, even the bus fleet the school district supports is really impressive.  If we add the towns, cities and the county itself, and then the Federal Government, you get quite the number of employees.   A state agency, the Oil & Gas Commission, has a major building here.

And lets' not forget the Federal Government, one of our favorite whipping boys around here.  The Bureau of Land Management, which gets no love it seems, has quite a facility here supporting both agriculture as well as the mineral industry.  The Soil Conservation Service also has a facility. The constant suggestions that we "take back" the Federal Domain in part amount to a suggestion that we just axe these agencies and have no real state expression of them which would mean. . . more jobs right out the window.  We already know that we don't have the money to spend in this are that the Federal Government does, so really, we just aren't going to. And in turn we would stumble and stammer under the strain. "Trail permit?   Um. . . . what's a trail permit. . . what's a trail?"

And stuff like this is true all around Wyoming.  Douglas has the Police Academy. Every county has a Game and Fish facility.  Laramie has the university.  Every substantial town has a community college or an extension of the University of Wyoming.  Guernsey has a major state park and the huge National Guard training range (really an Army training range).  Northwest Wyoming has the parks, and not just Yellowstone.  It goes on and on.

And part of the way that it goes on and on has to do with the massive amount of government sponsored construction that goes on here.  Schools (three huge projects in Natrona County alone), highways, it's nearly endless.

So where do we go?

So then, what to make of this?

Well, usually when we go through a crash, we start to talk about diversification.  We also usually start to take about cutting back government spending.  And we're going to have to talk about a new government revenue sources, or having a state government that matches the money we take in.  It's probably time for all of that.

Maybe its' time to talk about building upon what we have, and actually realizing what that is.  And, as we can see from the above, in terms of private industry, that's agriculture, tourism and mineral extraction.  And, like it philosophically or not, we have a lot of government employment in this state and government entities that are pretty darned involved in some sectors of the economy, particularly oil and gas, already.

So, what do we have to build with?  Let's start with mineral extraction.

Mineral extraction?  Perhaps you're thinking "why I thought you were arguing against relying on that?"  No, I'm really not. I'm arguing that we have to be smart and realistic about that.

The boom and bust nature of much of the mineral industry is a feature of it that is pretty fixed, long established by history, and that's all largely beyond our control.  We have to accept that.  But these industries aren't going completely away.  Even coal, which is in real trouble, isn't going completely away and indeed even right now there's an effort by one coal company to start a mine near Sheridan.

The thing we can do, therefore, is to be smart in our planning on these industries.  And that would have to accept that they're going to have rocky periods.

We may also want to be very careful, and we very rarely are, about thinking that when times are good that they're going to go on forever.  There are those who will act that way and they nearly take any suggestion to the contrary as a hostile comment.  Planning for the crash ought to go on during the boom, rather than waiting until it occurs, and that's just smart.

It's also smart to recognize long term trends, none of which are hugely favorable towards the fossil fuel industry.  Recognizing that isn't being hostile, once again, it's just recognizing it.

And perhaps we also ought to at least ponder that, like the oil exporting nations of the Middle East, we really don't do much with the raw product anymore.  We did at one time with petroleum oil, in that we did refine it here, but we no longer do that.  Natural gas, because of its nature, is "refined", or rather processed here, and that will go on.  We ought to consider all of that, however.  We never processed the iron we mined, for example, even though we had all the things necessary to do it (except, perhaps, the large scale shipping necessary for that).

Now, at this point in time, I may have to admit that the ship has sailed on all of these things.  Down to a handful of refineries, I don't see that industry coming back.  There's a reason that super sized refineries are all located on the Gulf Coast.  But if we're not going to process our raw products here, maybe taxing slightly what we export would be a good idea.  Nothing radical, but to add a little bit of a tax in addition to the existing ones for what is departing would not impact the price and might help us out quite a bit in lean times, particularly based upon how the funds were earmarked.  And who knows, maybe that would encourage a little processing here as well.

All of which might do nothing at all, I'll concede.

Okay then, what about agriculture the one we ignore?

Well, here's something I think we can do a fair amount about.

Agriculture in the state has weathered all the storms. Everything we've ever raised or grown here we still do, we just don't do it in the same proportions as some prior eras, but that's not surprising. What we don't do is to process hardly anything here.  We don't pack any of the meat on a large scale.  We don't process any wool into woolens.  We don't mill any flour.  We don't do any of that.

Indeed, the only processing we do, and its a return to something we hadn't done in a long time, is to brew beer and bottle it and (and this is new) to distill grain and bottle that.

Maybe it's time to sit back and have one of those beers and ponder that.

There's a lot we can do here, but in some ways we have to be a bit bold and buck some trends.  There's a large multi-state industry devoted to processing remotely here, and to suggest we ought to do it locally means having to deal with that.

But it can be dealt with.

Let's start with the toughest aspect of that, the beef cattle industry.

At one time, Wyoming had at least one packing plant, indeed right here in Casper.  There was another just outside of the state in Scotsbluff, right over the border, and yet another in Denver.  There were probably others, including perhaps some in the state, but now there are none and all of those which I have mentioned are gone, although one remains in Greeley Colorado.

 February 1922 Casper Packing Company advertisement.

Now, they are gone because the meat packing industry has become amazingly consolidated and the profit margins in packing are, or at least were, low. But if the packing industry could be revived, it would be a natural for Wyoming.  We have everything it requires, at least in certain localities, that being cattle, agriculture for hay and feed corn, sufficient water, good roads and land.

The situation is similar when we consider sheep.  While the sheep industry has really taken a hit, it's slowly somewhat revived over the years and we do have sheep.  Sheep, as an agricultural animal, are interesting in that their primary crop is really wool, with meat being a secondary one.  The meat aspect of this is already addressed by the comments on beef above, but the wool part isn't.

Wool itself used to contribute quite a bit to the Wyoming economy in that there were wool buyers, sorters, and shearers, all in addition to the sheep ranchers, who employed themselves and their herders.  What we never had, however, was a woolen mill, to process raw wool into anything.  We could, but we don't.

This is also true of the milling industry; i.e., flour milling.

 

Wyoming grows a fair amount of grain, and grows it all over, even though we often do not seem to realize it.  Major agricultural areas can be found in southeastern Wyoming, west central Wyoming, northeastern Wyoming and northern Wyoming.  We grow a fair amount of wheat and corn and if milling facilities were here, we could go the next step.  We don't, however.

We've done better with sugar. We do have some sugar facilities serving, in particular, the Big Horn Basin. Those, it should be noted, are owned by co-ops that formed to operate them with the sugar companies pulled out of that area.  Elsewhere we haven't done as well with that.

Probably the one area that we've done well at recently that might point the way forward a bit is in the category of alcohol.  


I addressed the introduction of a local bourbon some time ago, indeed quite some time ago, on a thread that was once one of the most popular here on this page, that being The Rebirth Of Rye Whiskey And Nostalgia For 'The Good Stuff' & Beer and Prohibition.  That thread also addressed, a bit, the history of local beers.  On the whiskey, I noted; 
This trend has really continued since then, and there's apparently some sort of distillery in Teton County now as well, and there is one that is distilling a couple of different types of hard alcohol here in Natrona County.  I can't opine on the Teton County one at all, and I'm only aware of it as the state government recently turned down the request of an Idaho distiller for a grant to help relocate its headquarters over into the county, as another distiller opposed it.  For that matter, my experience with the local Natrona County distiller is limited to having had a single shot of its vodka, given to me by a friend as proof that not all vodka is bad.  While my position on vodka remains that the difference between the best vodka and the worst is the price, I have to say that I was impressed because . . . well, it didn't taste like vodka.

It's not only hard alcohol that's making inroads into Wyoming and processing the state's agricultural produce. Beer has made an amazing return in these regards.


Snake River Brewery in Jackson Wyoming.

I've commented on this before, but here too the trend has really developed.  And to an amazing extent.  There are now breweries in quite a few Wyoming towns putting out a really high quality product.  This industry has gone from one which, a few years ago, would have required a person to hunt for a Wyoming beer (and a few years before that there were none) to one in which a person could easily buy beer on any occasional and always find a high quality Wyoming beer of any type.  It's really amazing.  

Indeed, Wyoming beer is even canned now.  That may not seem so amazing, but a brewery has to put out quite a bit of beer before they begin canning it.  But that's now going on.  Indeed, beer is the Distributist Economic champion of Wyoming.

This revival, it should be noted, represents a return of an industry that once was all over and very local.  Casper, which recently saw local beer return at The Wonder Bar, an bar that dates back forever in Casper's history, once had a regional brewer in the form of Hillcrest Brewery.  

Bottles from Hillcrest Lager Beer, a beer that was once brewed locally but is no more. Casper doesn't bottle any beer anymore, but it does brew it once again.

There are even a couple of winerys in Wyoming. I don't know anything about them, other than that they exist, but this is additional evidence that at least in terms of processing a local agricultural product into a finished one, alcohol leads the way.

Okay, its one thing to point all of these things out, but what of it.  We don't have packing plants, mills, etc.  What, a person might ask, do you propose?

Well, I'd propose something that Wyomingites hate, state assistance for private enterprise, or even direct involvement in it.

Now, before people have their hackles up too much, let me point out that we only oppose this to a limited degree.  We're actually okay, based on our track records, of supporting start ups with grants.  We're also okay with investing in doubtful technologies, if they relate to the mineral industry.  Witness there all the money the state is sinking into Clean Coal Technology.  I'm not opposed to that by any means, but we must admit that the chances of it ever paying off are remote.

So, before we get too much further, let us consider North Dakota Mill and Elevator.

Eh?

Postcard of the North Dakota State Mill, 1915.

While nearly a neighboring state (it doesn't border us, but you can sprint across the corner of South Dakota and be there in no time at all), North Dakota, which we will return to when we discuss education, has a really different cultural history compared to Wyoming.  With a heavily Scandinavian immigrant population from early in the 20th Century, North Dakota had and still has a political culture that, quite frankly, was occasionally sympathetic to socialism.

Now, let me be frank, I'm not terribly sympathetic with socialism, but we can take a page out of an example of something that works, if it works.  And here's something that has worked for North Dakota.

It's a state owned operation, formed to address problems that farmers were experiencing, but it doesn't receive a subsidy from the state and its self supporting.  

This is the same model used by the other Dakota, South Dakota, for South Dakota Cement, an operation so successful that it has expanded even recently and markets its product in every state bordering South Dakota.  It even had a plant, at one time, here in Casper.

Now, I'm not suggesting that we need state run or owned industries everywhere.  But perhaps we can take an example where there isn't a private industry.  Critics would say, and they should be listened to, that if a private industry isn't operating it's for a good reason. But, we also have to admit that there are a fair number of industries that get their start from some sort of government support.  Indeed, the entire transcontinental railroad was such an example, getting state support in the form of massive land grants, which is essentially the same as a massive infusion of capital.  There's no reason to pretend otherwise.

So, where we don't have a local industry, perhaps we should consider if the state should help. The state's already helping the coal and petroleum industries via various studies at the University of Wyoming, including clean coal.  The very day I wrote this part of this entry, Governor Mead was appearing on the front page of the Tribune at a state funded facility studying clean coal.  And let's not forget the pile of administrative entities that help business one way or another, from the Farmers Home Administration to the Small Business Administration.

So, suing the North and South Dakota models, could the state infest in the infrastructure for milling, packing and wool processing?  Perhaps it could. And, after an initial start up, perhaps it could require those industries to run on a self-sufficient basis.

Now, granted, this is a species of socialism, albeit of an odd type that differs from the classic economy destroying the government owns everything variety.  The concept would only be, on sort of  Distributist basis, to form those entities aiding major Wyoming industries where we aren't able to finish the product ourselves on an reasonably economic level.  We can't, for example, create refineries and have them compete.  Nor power plants. But packing plants are another matter, and mills are a demonstrated different matter.  This wouldn't bring in an economic miracle by any means, but it would allow us to further make use of the resources that we do have, right here. And there would be a market for the product, including a small market right here, in that the state is already in the lunch business for kids up to age 19.  Moreover, tags like "Wyoming beef" do have a local price and maybe even a regional one that could be useful for a product grown and finished here, and that is already the case.

One of the things that state and local government do spend money on is tourism.  That's fine, and that's already been addressed by the fine post on Neil Waring's blog that I mentioned earlier.  So I'll forgo going into that in depth, other than to mention that I really think that tourism is an offshoot of agriculture.  Let's face it, without agriculture, tourism in Wyoming would be Yellowstone National Park, and that's about it.  Sure, we have other things, but agriculture keeps them going.


That circles us back around, I suppose, to government. Right now all the local governments are contracting.  Everyone is out of money, and given the means by which the state raises money, that makes sense. But what's the long term impact of that?

Probably bad.  Construction contracts are actually keeping the state's economy from sinking into a real disaster right now.  Major construction projects, funded some time ago, are big deals in the cities where they are occurring.  That isn't an argument for deficit funding, but it is an argument for both planning ahead and figuring out what a more stable source of funding for state government may be.  It doesn't seem to me that the state spending every got truly out of control, although the last couple of years some really big projects were funded.  We're not going to be able to keep that going at the level it was at, unless we figure out another funding source. We probably ought to be able to do that at least in part, however.  We should consider it, not because we should build just to build, but because we have to acknowledge the construction has been necessary and in some instances (like the lack of a swimming pool at one of the local high schools)  actually underdone because it was too local.  I'm not proposing an income tax for the state, but we ought to reconsider how we tax.

As part of that, we can also consider what we don't tax, and that may prove to be an incentive in addition.  Not taxing start up industries on their land is a possibility, for example.  On the flip side of that, Wyoming could take a page out of some Mid Western states books and restrict the corporate form in some instances which would favor local entities.  For example, there's no really good reason to encourage land to be idled as a type of playground if it could be used by local agriculturalists.  Distributist, of whom there are few of course, would go further and attempt to restrict the corporate form for large retain in order to encourage small retail.  But that latter approach is not done anywhere in the US at the present time.

Another thing we should be considering is education.  This has been a long embattled topic in the state but we really ought to ponder it. Most Wyoming school districts do really well but we have seen the unfortunate rise of battles at the state administrative level in the last few years, much of which had to do with a person's political concepts.  Let's hope that's over.  Beyond that, we've also seen the gerrymandering of school placement in order that high schools cold keep their athletic classifications, which is absurd.  Notable examples of that have occurred in Campbell and Natrona counties.  That ought to cease in part because it might cause high schools to be built as real high schools, rather than as campuses or special facilities, a trend which ought to be stopped.

More importantly however this would be a good time to expand post high school education.  Indeed the University of Wyoming and the community colleges already are anticipating a crush of new students from the recently laid off mineral sector economy.  That's fine, but perhaps this is a time to expand what we've already been doing, which is to convert more of the community colleges into four year institutions.  This was a big battle back in the 1970s which saw UW pitted against the community colleges and which resolved in an armistice which saw UW steadily expand onto community college grounds.  Now Casper College, for example, offers a fair number of four year degrees through the UW extension there. This ought to be encouraged and expanded, as its been done very well.

Now, I admit all of my ideas placed here are not silver bullets  Maybe none of them would do much.  But I expect they would.  We have a selection of industries based on the land that we're under utilizing.  None of them will result in high dollar wages in the same way as the oilfield did, but they might offer steady employment while needed, and form a base for local economic expansion.  Tourism is going to have to keep on keeping on.   Government spending is something we hate here, but we actually employ a lot, and we may wish to find ways to keep funding the necessary construction that we require, as right now, that's keeping our economy afloat.

So what do you think?

3 comments:

Neil Waring said...

Well thought out and well explained. I think you have hit on the key and that is it must be spread over many areas to work in the long term. I hope we are not too late to save some of our agricultural interests. I wish the sugar factory in Torrington could have been saved, maybe it could fit into your state run idea. As far as your school ideas, we have been overbuilding facilities for years. I was a teacher and coach for more than 40 years and cringed at the spending on school construction. I proposed on one twitter site that we put a moratorium on new school construction for a few years until we get this new economy figured out. A few readers came after me with buckets of tar and bags of feathers, but I still think it is a good idea. Build the ones already funded then wait. I hope others will carry on this topic and come up with more ideas to keep our great state going.

Pat, Marcus & Alexis said...

It is a shame about the sugar plant in Torrington. The situation there reminds me of the one up in the Basin. There the growers formed a co-op with the bank when their plant closed down and they bought it, thereby managing to keep it running.

Of course, they also were lucky in that a Pepsi Cola plant located there and they have a really good source of water in the form of a Marathon well that turned out to be a really good water source, and was turned over to Worland's use.

I appreciate your comments regarding school construction. I'll comment on that further is a separate entry here in the comments in just a moment.

Pat, Marcus & Alexis said...

Regarding school construction, as noted your entry helps explain an observation that I had but didn't really quite grasp regarding the ongoing school construction here in town.

Three major school construction projects are going on here now, all three of which are really high school projects.

In order to to save our local athletic classification for a year, rather than build a third high school, which we really needed at the time, the third facility was built as a campus of the other high schools. That seemed extremely odd to me at the time. Anyhow, due to our state funding model major sums of money were available to rebuild NCHS and KWHS, but money was not available to fund the replacement of the pool at NCHS, which had been there since the 1920s, and a separate bond issue was floated for that. I was part of the effort to float the bond, which I think would have passed but for the fact that the city counsel asked the school district to have a separate election as they were worried that the city's .01 elective tax would go down in the current anti tax mood. That was bad for the school bond as it meant that the general voters basically didn't come out for the election.

Anyhow, the district tacked on a pool at Midwest (needed) together with funding for equipment for the third high school campus onto the bond issue. Quite a few teachers were against the bond, which really surprised me. It wasn't the pools, but the equipment for the third campus they were opposed to, as they were opposed to the third campus in general. The bond issue failed, not because of the teacher opposition, but without the teachers even being in favor of the bond, it didn't help.