Letter: A cautionary tale
I read with interest a recent article in Vox entitled “Coal left Appalachia devastated. Now it’s doing the same to Wyoming.” Subtitled “Vulture capitalists are sucking value from a dying industry.”
At the beginning of the Wyoming coal boom, politicians and local leaders were supposed to have taken lessons from Appalachia’s boom and bust cycle and prepare for coal’s eventual demise. Apparently, Wyoming was caught unawares in the decline in demand for coal. While part of that decline is driven by competition from cheaper energy sources such as natural gas, most of the decline is actually due to the coal operators betting heavily that the demand for their coal from China would be insatiable. It wasn’t.
In a devil’s bargain to keep the mines active, authorities let the coal companies slide on BLM royalty payments and property taxes. Now those coal companies are selling off their assets to fly-by-night companies that extract some value and then declare bankruptcy allowing them to walk away from debt for vendor goods and services, property taxes, BLM royalty payments, wage tax deductions, and most alarmingly pension and benefits to the miners. These debts are in the tens if not hundreds of millions. Meanwhile the local employment agencies are overwhelmed with suddenly unemployed workers with no immediate prospect of jobs. Finally, the stock holders are left in the lurch as well, as their stock becomes worthless. The only people making it out whole are the coal company executives who are given “retention” packages.
While the companies have “performance” bonds for the required cleanup work when coal mining operations cease, it’s not clear if those performance bonds are adequate or viable (can actually be cashed).
This is known as the “resource curse,” where companies come in and extract resources (coal, gas, gold, etc.) and then when the inevitable bust comes, leave someone else holding the bag for debt and cleanup. That someone else is usually the local community.
I’m not arguing that we need to cease all resource extractions. as we need those resources to keep our economy running. I’m just saying that we need to enter into any resource extraction compact with our eyes wide open as to the true cost of that extraction (including social and environmental costs) and hold the extraction companies fully responsible for those costs.
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