Coal layoffs and Northeast Wyoming

Peabody Coal Company, the world's largest coal producer, and Arch Coal have announced layoffs in the Gillette area which amount to a combined 450 jobs lost.  And the losses won't stop there.  With that many jobs lost the local economy in Campbell County will be undoubtedly impacted.  Additionally, a loss of that many jobs clearly indicates big changes in operations at the mines themselves, and the energy infrastructure in Campbell County, which is what the economy of the county is based on, will be hit.  It's unlikely, therefore that the job losses will stop there.

This is a rim news for the area economy.  And for the state.  School funding is principally based on the coal severance tax.  Without ongoing major coal production, the schools are in big trouble.

Moreover, this may reflect such a major shift in the economics of coal that there may never be a return to its former position in the economy, either nationally or locally.  Wyomingites have been quick, in some quarters, to blame regulation and the current Administration for coal's demise.  One of the interviewed miners blamed the event on regulation and expressed the thought that things wold turn around under a new Presidential administration.  Our Superintendent of Public Instruction mentioned budget problems, in a recent op-ed, as being due to "the war on coal".  But people shouldn't fool themselves.  This likely represents a shift so deep in the economics and culture of coal that current events show an existential change much deeper than merely a current White House discontent with it.  

Indeed, even twenty years ago I was told by an energy company executive that "coal is dead".  I was surprised by his view at the time, but he was quite definite in his views.  But he was expressing an energy sector long term view, at that time, that coal wouldn't survive a switch to other forms of power generation.  Ironically natural gas, of which North America has a vast abundance, has really eaten into the coal market and that's not going to change.  Power plants take years to build and years to permit.  Coal fired plants are being built, they're being retired.  This not only won't change overnight, it won't change at all.  The coal industry itself pinned its hopes on the Chinese market, which uses a lot of coal, but China also has a lot of coal.  The Chinese economy is in the doldrums right now, and that will likely change, but when it does the question is whether China will enter an economic period mirroring Japan's long endured slow economy, or change to a more growth oriented but volatile economy like North America's and Europe's.  And a bigger question is whether China, which is under pressure from much of the rest of the world on emissions, will itself move away from coal.  It hasn't so far, but there's no guaranty that it will not.  Coal, to the extent it retains any popularity (and that's little outside of the coal producing states), is popular only in the US and China.  Indeed, in some areas of the US it is now so unpopular that efforts to ship coal by sea to China were opposed in Pacific maritime states, something that had not been worked out at the time the local coal producers went into this slump.

So chances are high that this is a sea change, not a downturn.  And if it is, it's one that has huge implications for the state.  The state didn't deal with them in the last Legislature, or even really discuss dealing with them. By the next one it will have no choice.