Lex Anteinternet: Issues In the Wyoming Election. A Series. Issue No. 1 (c). The Economy again. . . Agriculture

President Calvin Coolidge carrying Wyoming's economy in his right hand. ..  after all, what other hand would free marketer Coolidge be carrying the economy in?

This past Tuesday I supplemented my first post on Wyoming's economy, dealing in that instance, with the extractive industries.

Now I'm doing with that with agriculture.

 

Agriculture really deserves to have price of place in Wyoming's economy, even if it no longer does.  It's the branch of our economy that makes the state what it is, for everyone. Whatever anyone does here, they do it because of agriculture.

Funny how we ignore it, while giving lip service to its heritage at the same time.

 

More than any other force, it was agriculture that caused Wyoming to come into being.  The attraction of the state to the cattle industry caused the evolution of the state from a frontier into a cattle, and then sheep, domain to come about starting in the 1860s.  The cattle industry came to so dominate everything about the state that it left the lasting term "The Cowboy State" to define Wyoming.  And agriculture remains, although not anywhere as dominant as it once was.

But it doesn't really have to be that way.

 

In other states, in recent years, agriculture has tremendously rebounded.  And American agriculture remains an industry that not only satisfies nearly all of our own needs (although this is also not completely true, but that's partially due to NAFTA), but is also an expert industry.  Wyoming's industry remains strong, but it isn't as strong as it could be, and in fact has suffered some real loss, due to Wyoming's economic libertarianism.  With some adjustment to that, the industry could be much stronger, and much stronger for actual Wyomingites.

Agriculture is prey, we should note, to much of the same set of problematic economic forces that the extractive industries are.  We are not going to eat all of the agricultural production we generate here any more than we are going to consume all of the petroleum oil that we produce here.  So the price of every agricultural commodity we produce is controlled by events outside the state.

 

Indeed, while it doesn't pertain much to me as we eat volunteers, so to speak from our own cattle, or wild game, when you buy meat at the grocery store in Wyoming you traditionally pay a lot more than you might in some other locations.  I'm often shocked by the price of meat at the counter, on the rare occasions I purchase it here.

And that has a lot to do with the fact that nothing is turned into a finished product here.  The meat isn't, by and large, packed here.  Wool isn't, by and large, processed here.  You get the gist of it.  And none of that is within the direct control of the farmer and rancher.

 

Nor is the price of the most necessary element of an agricultural enterprise.  In recent decades that has tended to be controlled by outside forces, and for some odd reason that's been driven in the West by those who can buy ranch land at playground prices.  No rancher can afford to pay those kind of prices and this means that people entering ranching who aren't party of landed families are basically foreclosed from doing so, if they really want to enter agriculture.  If they're rich people who want to own ranch land that's another matter.

All of this can be impacted statutorily, and some of it fairly easily, if there's a will to do it.  So far, however, there's been no will.

Let's start with agricultural land.

In some states statutes have been passed and tested which preclude the corporate ownership of agricultural land. That keeps out big absentee corporations from buying up the land.  Nearly as easily, it would be quite easy, statutorily, to draft legislation which would require that those holding agricultural land be engaged principally in agriculture for their livelihood.  That would shut the door on people who make their money in something else from buying agricultural and and pretending they're ranchers or just holding on to the land and it would, by extension, vest the land in people who are really willing to engage in what is a fairly hard way to make a living.

If this seems like its a simple fix, it is.  It would undoubtedly work.

 

But it's not going to be tried any time soon.  It controls the use of land, and Wyomingites including agricultural Wyomingites tend to be opposed to that philosophically, even if its in their best interest, and even if that means that at the end of the day money controls the use of land and they don't have it.

Addressing other problems would be more difficult, but not impossible.  Problems that exist in the packing industry have been well known for decades and consolidation of the industry has effectively driven the small packing houses out of business in the state, unless they are specialty packers.  State sponsorship, along the same lines as now about to get rolling, maybe, for air transportation could address that and could do it successfully.  As all the constituents in the state are here for successful packing, the state could enter this on a break even basis, or on the Theodore Roosevelt corporate participation model, and successfully compete, bringing jobs to the state.  A person could easily imagine packing houses located in southeastern and southwestern Wyoming, and Fremont County.  Such plants would likely draw in cattle and sheep from neighboring Nebraska, Utah and Colorado.

 

Its that's a little too socialist, and it may very well be just that, a state sponsored agricultural co-op might be an even better option.  Something along the lines of the Irish Ornua (New Gold). Ornua, formerly the Irish Dairy Board, is an agricultural marketing co-op that was founded by the Irish government.  You know it as Kerrygold, a brand of really excellent Irish dairy products.

The key here is that Ornua is state sponsored, but it's singular in purpose and its a co-op owned by the farmers whose products it markets around the globe.  A similar Steamboat brand of beef, or something, could model itself on the Irish Diary Board and seek buy in from the state's producers.  Indeed, that element would be necessary as ranchers basically won't organize themselves.

 

A similar, or perhaps identical, approach, perhaps by the same entity, could be undertaken for other Wyoming agricultural products, such as wool.  A state woolen mill, for example, could be organized by the same entity.

Again, I don't see any of these things happening soon. Which doesn't mean they aren't worth considering.  Otherwise, we seem content to do nothing.  The approch noted above, I think, would increase the number of Wyoming farmers and ranchers who are really Wyomingites and who are working people, and otherwise boost employment in the state in what are basically industrial concerns.  We've long been accustomed to the concept that support industries are good for the state in the oilfield. They exist, although they are largely ignored, in the agricultural field as well. This would increase them to the state's benefit and make agriculture a more local, more productive and more stable industry than it is.

But my guess is that none of the candidate are going to mention anything about agriculture this election season at all.

 

The Y.M.C.A. Bryant Park Eagle Hut, New York City. Saturday, June 15, 1918.

"Retreat", Ord. Supply School, Camp Hancock, Ga. June 14, 1918.

Lex Anteinternet: Issues In the Wyoming Election. A Series. Issue No. 1(b). The Economy again. . . dare we say it. . . Government (shush). And, what's up with Wyoming's GOP hating the Federal Government?

Mother government batting down the hard working forces of free market capitalism from her perch on the economic stool.  Or maybe just a mother teaching and playing with her kittens.

To listen to Wyoming's Republican politicians, the state is being occupied by an enemy army intent on squashing the rights and liberties for hard working free minded folks.

Southern Yeomanry serving as Confederate soldiers, prisoners of war at Gettysburg, 1863. These deluded saps believed the Federal government was their enemy as well when it was their own state's that would in the end deprive them of their traditional rights.  That lesson shouldn't be lost on Wyomingites today.

It's baloney.

The "hate the Federal Government" thing has been around at least since the 1970s. It arose during the Jimmy Carter Administration when certain sectors of Wyoming's economy, most principally agricultural sectors, began to imagine that it was being picked on by the Federal Government.  That sparked the "Sagebrush Rebellion" which, contrary to the way it may be remembered by people elsewhere and its proponents today, was deeply unpopular amongst most Wyomingites. Anti Federal Government feelings in a muted form helped get Malcolm Wallop, a patrician candidate with English aristocratic roots elected to office, but it quickly burned out.  Jim Geringer, the GOP candidate for Governor none the less managed to ride the wave to the state house when the feelings of rank and file Wyomingites ignited and put the rebellion out, largely over the issue of public lands and the ownership of wildlife.  It's been a good thirty years since then, but once again fueled by fiction, the movement in a new form is back.  Once again, it's deeply unpopular amongst average Wyomingites but the GOP is not getting the message. There's a fairly good chance that Wyoming will elect a Republican Governor who will be semi hostile to public lands and the counter revolution will once again have to start.

And it will start.

There's also a fairly good chance that Mary Throne, the only candidate who seems solidly behind the public lands, may end up Governor as a result.  That may very well depend on where she comes down on other issues, but right now, it's Thorne who is most attune to average Wyomingite's views in the Governor's race in regards to this. Next to her, in the race for Congress, it's the eclectic Rod Miller.

So what's up with this nonsense?

It's hard to say, but a blistering lack of knowledge has a lot to do with it.

The common story in Wyoming is that the Federal Government is keeping the economy down, and otherwise picking on people.  It simply isn't true. The entire fable is based on a street level concept that Wyoming's economy has been regulated out of existence when the truth is much more complicated than that and has a lot more to do with the price of a barrel of oil in Saudi Arabia.  The idea is kept current by the drumbeat of those who support this view, even if its a false view of our economy.  And it rarely seems to be the case that people stop to take notice that a deprivation of the Federal Government's role in the state would fall on the residents of the state in a highly unequal fashion.  People with money could buy their way around what that meant.  Most people would leave much poorer lives, in every sense.

Let's start with the basic facts.

It's a popular notion to say that "freedoms die when regulations grow" but in reality freedoms are often preserved by the restraint of unregulated monied interests by regulation.  Now, it is definitely the case that regulations can get to be nuts and very restrictive. The entire wacky set of regulations that pertain, for example, to "comfort animals" is a a really good result.  And there are many others. Add to that there are laws that are definitely unjust on a local level and the courts, a branch of government, can greatly compound that in a way that average people can do nothing about.

But in regards to Wyoming's basic industries, this just isn't happening.

The oil and gas industry is undoubtedly subject to regulation. But few in the industry in Wyoming feel the regulations are excessive and they're fairly readily complied with. They exist, for what it is worth, on the state and local level, so its hardly the case that if the Federal Government were to pack up and go home Wyoming would have a perpetually blissful regulation free existence.  A lawyer is a lot more likely to end up in front of the Wyoming Oil & Gas Commission on a regulatory matter than in front of the Federal Government.  

And truth be known, a lot of the time that a lawyer may be interacting with the WOGC or the State Department of Environmental Quality, it's likely to be for a land owner, probably a rancher, whose land has been impacted by some activity on it.  It's easy to pretend that the extractive industries have no impact on the land, but they do, and this creates a fair amount of the actual agency practice, i.e., landowner v. extractive industry.  Put another way, it's all fine and good to say that regulation is putting the industry down, but I suspect if an oil company was on the Gordon or Hageman place and spilled 300 barrels of oil, neither Hageman or Gordon would want the call to the company to be met, with "well, when regulations grow freedom dies. . .stick that up your wazoo!".  No, they don't.

Again, that doesn't mean every state regulation is great.  But the concept that all regulations are bad, and that they are Federal, isn't exactly wholly accurate.

Anyhow, at least since the Reagan Administration regulations have been pretty balanced in many fields, but certainly not all of them.  Now, some would point toward regulation of the coal industry as an exception, and they may have a point, but those regulations never really came into full effect and the coal industry too an economic dive anyhow.

Which brings me to my next point.  Under the current administration, we're in an environment that's more friendly to industry since any since Reagan. . . assuming that it's not more friendly to any since Calvin Coolidge.  It's impossible to imagine an environment any more friendly to industry than the current one.  We have a Republican administration and two Republican legislative houses at the national level, plus all that at the local level.  So the"the Federal government beat me up in an alley and stole my lunch" just doesn't make much sense right now in terms of the exractive industries.  It might in terms of many other endeavors, but not this one.  And basically they don't pretend that it does.

Bureau of Reclamation land open to the public courtesy of the Federal Government. This land is used for hunting, fishing, recreation, irrigation and power generation.  The state has no role in the projects that lead to this whatsoever.  Pathfinder Dam being built by the State of Wyoming?  Give me a break.

So what's up with all this animosity towards the Federal Government?

I'm not sure what got it rolling, but it seems to be something that really took off during the Obama Administration.  For the most part, the Obama Administration was pretty ineffectual in these regards for about 3/4s of its Administration, but was effective in the final 1/4. Be that as it may, the real animosity towards the Federal Government seems to have really took off right from the point of his election, and it never stopped.  Indeed, perhaps the roots of this go all the way back to the Clinton Administration, which is basically when the Wyoming Democratic Party ceased being a full contender in state elections.  If I'm correct, it seems that the idea alone that President Obama was a radical liberal was sufficient to fuel a counter reaction, and not just in Wyoming, but across the Untied States. We're still living with that in Wyoming even thought almost everything that movement stands for has now really jumped the shark in so far as Wyoming is concerned.

Well. What, you might ask, has the Government done for me lately?

Well, as previously noted here, if you live in Central Wyoming, it may have kept your region from sinking into a depression during the last oil and gas slump, although that would have been a combination of the state and Federal governments that did that.  Massive public funding for construction projects injected huge amounts of money into Wyoming in the last few years, just when the economy needed it most.

Beyond that, Federal money puts millions of dollars into the state in the form of highway money, money for administration of all types of the public lands (a State of Wyoming study commissioned by the legislature determined the state couldn't afford to administer the public lands, which would be likely why they wouldn't try and would shortly just sell it all off), and military money, just to name a few instances.  Towns like Guernsey and Cheyenne benefit from military bucks.  Towns everywhere benefit from highway money.  We have airports because of the FAA.

State money adds to that.  The largest employer in Natrona County is the school district.  Government offices in Natrona and Laramie Counties are major contributors to the economy.  If we expand out to universities, the impact across the state is even larger.

Which gets me to what should perhaps be my next point.  I find few Wyomingites, to include Wyomingites who came here from neighboring states, who really hate the Federal or State government.  A strong element of this thought, although not limited to it, is concentrated in people who brought such attitudes into the state with them.  Some of them have in turn funded this view. Others have just picked it up.  It's fairly significant in the state's GOP right now, even though a logical analysis would hold that if the GOP hates the government it ought to be hating itself, as it controls the government.  It would almost like the Soviets rebelling against the Soviets in 1925.  It's really rather odd.

So if we step back from this all and just consider the facts for what they are, what would we end up with?

Well, in terms of contribution to the local economy, the dirty little truth is that the Federal Government is contributing more than its taking.  At current levels, the State government may be as well. That doesn't mean the level of state government is perfect.  But for that matter, it might be the the current funding model for state government is not realistic at this time either.

 Pathfinder and Alcova Reservoirs, two Federal Bureau of Reclamation projects.

And it might also mean that the level of Federal Government in the state is about right.  Certainly the state has done everything to encourage some Federal funding to increase, such as at Camp Guernsey, of the past three decades.  As the Federal Government must exist, even if we feel the current level to be about right or even a little too big, we might wish to keep on keeping on in getting a share of the pie where we can.  Politicians who argue the contrary ought to demand that institutions like Camp Guernsey or F.E. Warren but shut down and the state take over all  highway funding, for example. That's not going to happen.

And if we take into account that education spending is government spending, we might want to consider that one of the items which is claimed to keep Wyoming's economy down is that we have one four year university, and it doesn't teach every field significant to the state.  Veterinary medicine, which is significant to the state, is not taught there. Nor is medicine.  The University of Wyoming has done an excellent job of bringing four year programs to towns across the state, through association with the community colleges, but at this point we have to wonder why a second or third university doesn't exist. Why doesn't Casper have a four year school with advanced degrees?  It could, it just doesn't, as the state won't fund it. For that matter, what about Gillette, or Rock Springs?

And what about, dare we suggest it, occasional direct intervention in the economy where it is warranted.  We mentioned one such example here yesterday, although we doubt that would occur, and will be mentioning another shortly.  One we'll mention here is the ENDOW studies endorsement of subsidization of air travel, which was passed by the Legislature.  It's easy to decry something like that, but in areas where its necessary for economic development, but where it can't get a start in the market place, it's long been the case that various governments in the US have subsidized things until they were on their way. Subsidizing something in decline is one thing, but as start up seed money, that's quite another.

And the lack of transportation infrastructure is precisely the sort of thing that keeps Wyoming's economy in what is essentially a third world state.  With the regional big cities drawing in business like suns gather planets, individuals, including some individual candidates, who seem to believe that Wyoming's economy wills stabilize through happy thoughts are fighting facts that can't be ignored.  The border of Wyoming is just a line reflecting a public subdivision, not a lien of Everest like mountain peaks.  If looked at realistically in that context, what that means is any major business activity will tend to gravitate towards the big regional cities, Denver, Salt Lake, and Calgary.  Not to Douglas, Sheridan and Casper.  Business that comes in, basically has to, as that's where their work is.  But even at that, they only have to to an extent. 

Marathon Oil provides a good example of this.  It was formed in Ohio and moved to Wyoming due to the Salt Creek oilfield.  It set up its headquarters in Casper.  It later moved them to Cody, where its more productive fields were, in the 1970s.  It bought a headquarters in Houston, and now that's where it is.  It operated its Wyoming fields, when it had them, out of Houston.  So does Anadarko.  So does Conoco.  Others, more regional in nature, operate out of Denver.

This is a fact of our situation.  The ENDOW study noted that a factor in Wyoming's economy was that it had no major cities.  It doesn't, and frankly most Wyomingites are very glad that it doesn't, to include me.  I absolutely hate big cities and I'm glad that we have none.  But in fact it isn't completely true that "we" don't have big cities. We do.  Our big cities, as noted, are Denver, Salt Lake, and Calgary.  Those are the regional big cities.

Anyhow, a factor in all of this is transportation, and that brings the role of the government back in.  As we have a third world economy, based on colonization from the outside when the commodities are advantageous, we have third world transportation. I work all over the state, and I go everywhere by truck.

Yes, truck.

Indeed, I can always tell a recent import lawyer as they'll try to travel the state in the winter in their Metro Geo, or some such vehicle.  Nope, you need a 4x4 to live and work here.  And that is in part because we have no travel infrastructure that's not based on asphalt.

We could, however, and that will require the state to get it rolling, just as government money did the same with rail, highways, and air travel elsewhere.

Well already I can hear the Chuck Gray's of the state denouncing this website as a dangerous Communist inspired propaganda network.

Probably  how some in the GOP are presently imaging the author of this blog.

Nope, I'm just taking a page out of the historical GOP book.

Let's start with the first example, railroads.  

Railroads were started by private enterprise in this country and everywhere else, pretty much.  But it took government intervention to cross the country, in the form of massive public backing during the Abraham Lincoln administration.

Abraham Lincoln.  Dangerous Socialist?

I've gone into the 19th Century government support of the transcontinental railroad before, but the thing to note here is that it happened and was massive and it wouldn't have had, or it would certainly have taken a lot longer, if the Civil War era Congress, freed of Southern Democratic economic views, which strongly resemble quite frankly current Wyoming GOP economic views, went ahead and supported a radical program of gigantic rail expansion.

Maybe Wyoming ought to consider the same thing.

Eh? 

This actually came up in the recent economic forum involving the Gubernatorial candidates in Cheyenne. The topic was whether or not the state should support high speed rail between Cheyenne and Fort Collins, Colorado.  It's a radical idea, and none of the candidates supported it. And I can see why they wouldn't.

But that doesn't mean it doesn't  have some merit. 

Commuter rail is extensive in Denver Colorado, and frankly it's great.  I'm a good example of this.  I used to drive a lot.  Now I rarely do, and only do if I have to.  I take the morning flight to Denver International Airport.  From there, I used to rent a car.  I no longer do if I can avoid it, and I usually can.  I take the A Train downtown.  I haven't had the occasion yet to use a transfer to another part of Denver, but looking into it, I think I fairly readily could.

All of which puts me in the class, I suppose, that has somewhat lost the love of the road. 

Anyhow, soon rail will extend to Fort Collins and thousands who drive from Fort Collins to Denver everyday will take the train. The thought is that Cheyenne could be linked into that. Frankly, not only Cheyenne, but Laramie could be linked into that, and existing rail lines could be used for a lot of that.  Which would sort of freakishly bring us back to the state of things up until the 1950s.

If this is a good idea, the thought that would link Cheyenne and Southeastern Wyoming to the regional business hub of Denver, and making getting back and forth much easier for Wyoming business.  It'd put Cheyenne in the Denver business satellite orbit.  And frankly, not matter what is done with Wyoming's air system, it isn't going to include Cheyenne.

Or it could just make Cheyenne a bedroom community for Denver.  If you listen to your Chamber of Commerce types, that's great but most people don't really think so.  It might work, or it might not, but it is not likely to hurt. 

Except for the state's purse.  It might be pretty darned expensive.

It's not going to happen, however, as none of the candidates like the idea.

Anyhow, the rail line that went from the Union to the Pacific didn't get there due to hopeful wishes and business risk.  The government backed it in various ways so it went in.

The Union Pacific in Torrington early in the morning.  It wouldn't be there if the Federal Government hadn't backed it.

As we're going in date order (and we'll circle back to air in a second), let's consider the second example.  The highways.

Highways are such a bad economic bet that in modern Ameican history they'v never been private.  You can find some early examples to the contrary, but by and large, highways are a state subsidy for transportation.  On the state level, some states take a toll of the use of some highways. Colorado does, for example, on the E470.  Federal highways do not take a toll.

I'm not really going to go beyond this except to note that for those who are always opposed to a government role in the economy, highways are essential to the highways, and they're all government all the time.  All of Wyoming's highways were state highways on the state's dime until the Lincoln Highway.  Following that, it was Dwight Eisenhower who brought in the modern Interstate Highway.

Dwight Eisenhower.  Raging Socialist?

I guess I will note that the state's highways are super expensive to the state but nobody seems to notice.  I've been on a lot of lonely stretches of highway that are simply auxiliary highways to towns served by other highways.  For example, Sublette County seems ot have some highways that are duplicative of other state highways.  Nobody ever seems to suggest that these should go.  It's odd.

Anyhow, back to air travel.

Air travel is another thing that came about due to government support. 

Yes, it did.

United Airlines didn't just spring forth from the pockets of Citibank or something.  No, what happened is that  the United States started supporting air travel of the mail through the post office, basically assisted at first by the U.S. Army.

1919 celebration of the first anniversary of air mail, with photograph including the Post Master General and Army officers.

Soon after that, as soon as commercial air travel was available, the Government started contracting with air lines for the delivery of air mail, and it still does.  As this became more viable over time, commercial entities that essentially are air mail services made big roads into that.

The point is that air travel in the United States became viable because the US Government took up air mail as a service, and then supported commercial carriers though the subsidization of contracting for the carrying of the mail.

There's not much difference between that and the state subsidizing local air travel, which its going to do.  But perhaps it should take it up fairly seriously.  If the state provided regular air service to its towns and cities in this fashion, it'd be used.  It might be used enough or the subsidy to eventually be removed.  It'd certainly be a boon to the state, and its a good thing that the state is taking it up.  Indeed, I've been asked by out of state clients about why I drive to places like Evanston rather than fly.  I don't fly, as you can't.

Governor Mead deserves a lot of credit for backing this.  I'm concerned, however, that the next Governor will not.  It's pretty clear, I think, that Throne would keep the service.  Maybe Gordon, Galeotos or Freiss would as well.  I doubt Hageman would as Hageman seems to be of the view that the oil and gas industry is the only industry that matters.

Which circles back to a central point.  Wyoming takes in more Federal dollars than it sends to Washington.  And we benefit a lot from what the Federal Government provides for us in all sorts of ways.  We aren't really being oppressed by Washington D. C..  And that's a Republican Government.

We'd additionally note is that the current era in which every Republican candidate feels compelled to run against Washington, which they also control, is really absurd.  If the GOP has to run against a government it controls, something is deeply amiss with our way of thinking, or our way of acting.

And maybe to some extent we ought to consider those aspects of Wyoming in which the average citizen benefits from the government. A Harriet Hageman flyer was left in the door this past week in which it is asserted that Ms. Hageman sued the EPA, Forest Service, U.S. Fish & Wildlife, and other states "and won".  I don't have any complaints with the Forest Service or the Fish & Wildlife and before I'd regard suing them as a good idea, I'd sure like to know what it is that its claimed they did.  Just a blanket assertion that a lawyer sued them for some client doesn't tell me much. And as most of us work both sides of the fence for pay, although perhaps she does not, I'd really want to know what the cause was before I simply assumed that it was a battle between good and evil like so many seem to assume.

Deal? What deal?

It may be just me, but I can't see where President Trump obtained any real deal in Singapore at all.

Promises, yeah well. . . Clinton and Obama had promises too.

Catholic Stuff You Should Know: On the Road To Monte Casino.

An interesting episode covering some interesting topics:

ON THE ROAD TO MONTE CASINO May 10, 2018 • Fr. John Nepil & Fr. Michael O'Loughlin & Fr. Nathan Goebel

The loss of a refuge

On odd occasion, although only very rarely, I'll work from home.

I can't now due to the ongoing home destruction.

Oddly, I have found this to be enormously dispiriting.  Even depressing.

I had not really realized it, but simply having in mind the concept that, should I need a quiet place, I have it, is pretty important to me. 

And I suppose it is to a lot of people.

Lex Anteinternet: Issues In the Wyoming Election. A Series. Issue No. 1 (a). The Economy again. . . the extractive industries

More on the Wyoming economy. . . which is sitting there just to the right of the photo.

I just posted on Wyoming's economy, in the context of the election, here:

Issues In the Wyoming Election. A Series. Issue No. 1. The Economy

In this post we don't propose economic solutions.  Indeed, while we have in the past, and will do so again in the future, this post doe...

In that I borrowed Harriet Hageman's stool analogy, which all other other candidates essentially use in one form or another, and then went on to place the economy in context, I hope, in terms of the election.

In doing that one thing that I think perhaps came through is that while all of the candidates talk about the economy, they all tend to do so on a superficial level, or even on an unrealistic level. That was made pretty plain in the Trib's interview of David Dodson, Republican Senatorial candidate, who essentially thinks that simply being a salesman for the state would cure our economic ills.

Not so much.

Here we look at one of the "stool legs".  More will follow but as the first leg of the stool I mentioned is so often cited, it's worth taking a closer look at.

The extractive industries.

To listen to every major candidate except for Democrat Throne you'd get the idea that (Republican controlled) Washington D. C. has the extractive industries in chains and that this is keeping the industry down.

This is a bit surreal for a variety of reasons

And as noted before, I've covered that before, which I'll set out, in part, here again in a long winded way (but for a reason):

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:

Let's look at how I summarized this stool leg earlier.  Here's what we wrote:

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.

 

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.

 

Standard Oil Refinery in Casper. 

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.

And so how did I sees that in the context of the economic future and building a more stable Wyoming economy?  Here's what I had to say on that:

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, at this point I'll admit that all I seem to be doing is repeated myself.  As I'm repeating myself.

But everything I wrote there I think still holds up.

Indeed, I think recent evidence shows that my analysis in this are was fully correct.  The petroleum industry has partially rebounded, indeed significantly own, all on its own due to market forces and not anything else.  The coal industry has reestablished a new normal at a lower production level, again all its own, but it's clear that long term power industry fuel trends paint a bleak future for it of slow decline. As we've also noted, that decline has been going on for a century.  There is an anti regulation President in the White House and regulations, I'm told have been very much curtailed.  In spite of all of this Wyoming's candidates keep talking of "cutting regulations" under the theory that this will, at this point, do something.  It's been done.

What is also the case, as I've described before, is that the industry has now changed technologically and at the exploration end, and maybe even downstream, it will require fewer employees per unit than before.  Our local politicians also seem to miss that.  Everyone is also missing the fact that petroleum consumption, but not gas consumption, is on a long term decline nationally as a new generation of Americans have seemingly lost the American love affair with the car.

The long and the short of it is that, in terms of production, there's not much the state can do.

Would this mean that the state can't do anything about jobs associated with the petroleum industry.

Well. . . .it probably can, but I doubt that it would want to.

Wyoming lost jobs on the exploration side during the recent downturn. But before that, it lost jobs on the manufacturing side back in the late 70s and early 80s. That's when our refining industry started to slide. And its never come back.

As an example, up into the late 1970s Casper had three refineries.  It now has one.  If we look back to the mid 20th Century a lot of towns and cities in Wyoming had refineries that no longer exist.  Laramie, for example, had a refinery, now just a rusting hulk south of town.  Thousands of jobs existed in those facilities.

Since that time, we've acquired a lot of gas plants, as gas has to be processed locally.  Petroleum does not, however, and throughout the United States refineries in the interior have been closed as giant refineries on the Gulf Coast replaced them.

This is the one area in the petroleum industry where local jobs could be created. ..  but the industry isn't going to take that step.  I.e., if new refineries were built in Wyoming, and plants that processed petroleum into various products such as plastic, there would in fact be thousands of local jobs  created.

That isn't going to happen, and in fact the opposite is going to happen.  Long term, the industry wants Gulf Coast refineries for a variety of reasons.  And those reasons make sense for the industry.

But, and this is a radical thought, the state could do it.

But it won't.

You are familiar, of course, with Dakota Mills and South Dakota Cement.  Indeed, you read about them here.

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.

This would be a massively expensive undertaking.

I'll be coming back to them again.

Anyhow, it would be possible, but it won't occur, for the state to play a direct role here by building one or two refineries in the state, perhaps one in the Pinedale region and another around Douglas.

But this won't happen.

It would be massively expensive, to be sure.  And that would draw the ire of people like Representative Chuck Gray who would be horrified by the expense.

And expensive it would indeed be.

But, frankly, so are the "clean coal" efforts, and we seem comfortable enough with that.

And such an effort, if on the South Dakota Cement or Dakota Mills model, could probably at least break even, and would likely have a ripple effect on the economy.  It would, bare minimum, employ hundreds and creates hundreds of more jobs, using a raw product that we produce here locally and then send out of the state for processing.

Which is not too say that this has a ghost of a chance of occurring, or that its uniformly a good idea.

It certainly would be problematic for a host of reasons. For one thing, it would put the state into an industry that is associated with massively expensive environmental problems.  Indeed, one of those Casper refineries, the one that basically built the town, was subject to just such a clean up.  It's now the Three Crowns Golf Course. No way the state would want to be tied up in something like that.

For another, it would put the state directly into competition with private industry, which is problematic for obvious reasons (although apparently not if you are North or South Dakota).  

And it's politically unrealistic in this industry.

Which brings us to something less unrealistic, which is not to say realistic.  The state could encourage the building of such infrastructure locally. . . with the only really realistic way to do that through taxation.

Now, any time taxation is mentioned in Wyoming people have a fit. Heck, we barely passed the coal severance tax that funded our schools for years.  But we could do that.  One purpose of taxation is to direct spending and development, in addition to raising revenue.

This would be hard to do, but you could put in place a Raw Products Tax to attempt to encourage local infrastructure in this are. But you'd have to be careful doing it so as to not end up deterring production, and that would be tricky.

And that's not going to happen either.

So, what's the point?

Well, just this.  In the major healthy extractive industry, oil and gas production, there's actually next to nothing that the Governor or our Congressional representation can do to impact it positively or negatively.  It's all pricing.  And that price isn't determined here.  Habits of consumption aren't either.

So the only opportunity is in the end product end.

But nobody is talking about that, and nobody is going to either.

So this gets back to this.  If this is an area of our economy that we largely can't do anything to influence, other than those things which have already been done, why do we keep kicking it around as though there's a political issue here to be discussed.  The economics of the extractive industries are economic realities that can only be influenced around the margins.  We can impact those margins to greater or lesser degrees through policies or direct actions, but big actions in this area would require big, and radical, efforts that we're not about to undertake.

So, dare we say, perhaps the topic of Wyoming's economic situation ought to just flat out skip over this area.

Addendum

Some times this morning, well after I posted this, I received an email from candidate Mark Gordon that sort of freakishly relates to the topics here.  It reads:

Wyoming’s energy industry has long been the backbone of our economy and has served our state, people, communities, businesses, and schools tremendously well. As the industry and markets change, so must our approach to protecting and promoting our natural resources!My new Power WYO Forward platform will foster and grow our state’s energy sector.The 6-point plan is simple:

• Building Infrastructure to Export Wyoming Resources - I’ll pursue opportunities with other sovereign funds, including the Alaska Permanent Fund and the Alberta Investment Management Corporation, to explore building infrastructure to export Wyoming’s high-quality minerals. Investing in private-sector endeavors or supporting them with bonds to do just that is a win-win.

• Driving Advanced Energy Technologies - I’ll work to position Wyoming as the leader in advanced energy technologies including Carbon Capture and Storage (CCS), Enhanced Oil Recovery (EOR) and new carbon-to-product markets. We’re seeing promising research come out every day that shows the potential for turning carbon into marketable products we can make money off of – like petrochemicals, asphalt and plastics.

• Streamlining Regulations - I’ll drive a shift on the state and federal level towards regulations that reward people for doing a better job – be it through expedited permitting, faster response times, or other incentives. The free market can, and will, address many of the environmental concerns that come with energy production, but we have to give them reasonable room to do so.  

• Localizing Decision Making – Working with Federal Agencies - Wyoming people, Wyoming leaders need to be empowered to make decisions. It is critical for the next Governor to leverage action with a strong relationship with the BLM and other federal agencies to expedite processes and keep projects moving.

• Streamlining & Aligning State Energy Resources - Streamlining and better aligning Wyoming’s energy agencies and resources will not only better serve taxpayers, but business – energy producers, innovators and those adding value to the chain. I’m committed to ensuring the state does more with less to direct people and companies to the resources Wyoming already has in place.

• All of the Above Energy Policy – There is Room for It All - Be it oil, gas, coal, uranium or wind, when it comes to natural resources, Wyoming has it all. As a lifelong conservative, I strongly believe that the market should pick winners and losers when it comes to energy sources – not government.

A person can take this for what it is worth, of course.  The thing I think is interesting about it is that it obviously advocates for the use of state funds in regards to the oil industry.  An irony of this is that the use of state money for private enterprise is generally not supposed to be a Republican thing, but apparently here it is.  Another factor to be considered, or that perhaps should be, is that some of the targets for state money under this type of program would seem to be areas that, if they are viable, the largest sector of our economy would invest in itself.

Other things go back o regulations although not in a way that's stated radically.

Anyhow, I'm not opining on the outline above in any fashion, just keeping this newly posted post, somewhat contemporary with the campaign.