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Coal's crisis is driving Wyoming's upcoming federal elections


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Coal's crisis is driving Wyoming's upcoming federal elections

Facinga disastrous industry downturn, Wyoming is heading into this November'selection with coal emerging as a pivotal campaign issue, with candidates onboth sides of the aisle bracing for and expecting further declines.

Whileneither of Wyoming's U.S. senators are facing elections this year, the statewill host two federal level contests this November, with presidential and U.S.House candidates embracing the state's ailing coal industry.

Withlittle more than half a million residents, Wyoming is home to just one U.S.representative, which will be up for grabs in November after incumbentRepublican Cynthia Lummis announced her retirement.

Thevacancy has already attracted almost a dozen Republican challengers so far toreplace the outgoing Lummis. Home to some of the country's largest mines anddeeply reliant on coal severance taxes to run the state, Wyoming hasconsistently looked to the fate of its coal industry during election season.

However,in recent months, the state's local sector has taken on new importance in therun-up to the election as a broader industry downturn has begun hit home.

Inaddition to coal, Wyoming relies heavily on tax revenues from oil and gas, bothof which have also suffered over the last year, leading to a severe budgetcrunch in the state.

Aftera series of industry setbacks and small-scale staff reductions, Wyoming saw twoof its largest producers announce large-scale layoffs last week, with and each cuttinghundreds of jobs.

Accordingto Rob Godby, director of the Center for Energy Economics and Public Policy atthe University of Wyoming, that event triggered a stark realization that thebroader industry downturn had finally reached the state's long-reliable coalindustry.

"Thesecommunities are used to the boom and bust of the oil and gas sectors, but jobcuts in coal are new to places that have relied on them for the last 40years," Godby said.

Godbysaid that while most in the state recognized the broader market and regulatorychallenges that have plagued the industry in recent years, Wyoming's localsector had remained comparatively insulated thanks to low production costs andexports.

Whilethe state's coal sector has lost about 400 jobs since 2011, that number palesin comparison to the industry's overall losses. According to the U.S.Department of Labor's Bureau of Labor Statistics, coal employment fell by about11,000 just since March 2015.

However,with Arch's Chapter 11 filing in January and speculation about Peabody'sability to stay out of bankruptcy court continuing to grow, Wyoming's coal industry appears morethreatened than ever before.

Forthose hoping to fill Lummis' seat, this meant catching up on energy issues and,so far, pledging to do whatever is possible to ensure the commodity's future issecure.

Onthe Republican side, candidates including state Rep. Tim Stubson, veterinarianRex Rammell, state Sen. Leland Christensen and Liz Cheney have all voicedstrong support for rolling back Obama administration environmental regulationsand sustaining coal demand through exports and carbon capture and storagetechnology.

"TheRepublican candidates are all on record saying that they will do whatever ittakes to save coal," Godby said. "Roll back the [U.S. EPA's CleanPower Plan], carbon capture and storage — all that stuff."

Theseefforts largely echo the efforts of Wyoming's Republican Gov. Matt Mead, whohas pushed forfunding for coalexport projects in Washington and won legislative approval to support theconstruction of anIntegrated Test Center near Gillette, Wyo.

Thecenter is intended to provide research space to develop commercially viableoptions for carbon dioxide for emissions from coal-fired power plants.

Theseefforts also reflect the broader response from the industry and its politicaladvocates, including current members of Congress and the Republicanpresidential field.

Whilethe state does have one notable Democratic challenger for the House seat inRyan Greene, he will face stiff competition in a state that has traditionallychosen Republicans to fill its federal elected offices.

Planning for the long term

Accordingto Godby, few have offered plans for how to prepare coal communities for whathe argues will likely be a prolonged downturn. According to Godby, last week'slayoffs are likely to be followed by further reductions in mine staff ifproduction from state mines continues to fall.

"Ifyou look at the projections for this year, you're looking at about a 60million-ton drop in coal output from the Powder River Basin," Godby said,suggesting that the expected fall could result in several hundred more jobslost in the months ahead, citing a U.S. Energy Information Administrationforecast from March 8. "That's going to leave another shoe to drop."

Inaddition to coal job losses, the state is also facing a downstream effect ofthe slowdown, including BNSFRailway Co.'s announcement that it had cut about 4,600 jobs inrecent months around the same time as the Peabody and Arch layoffs were madepublic. On the same day, PacifiCorp announced that it may its Wyoming-based coal-fired powerplant, saying that it would be more economical than converting the facility tonatural gas.

Godbydid cite one candidate that has focused on preparing coal communities for alonger term decline, telling S&P Global Market Intelligence that Democraticfrontrunner Hillary Clinton dispatched members of her campaign to the state asearly as last summer to meet with local officials.

SNL Image

Democratic candidates Sen. Bernie Sanders and Hillary Clinton

Source: SNL Energy

Theresult, he said, was Clinton's $30 billion aid aimed at providing services tocoal communities impacted by the industry slowdown. Introduced in November2015, the three-tiered plan seeks to protect health and retirements benefitsfor coal workers, develop new industries in coal-dependent towns and providefunding for education, job training and other services for communities hit bythe industry downturn.

TheClinton campaign recently followed up with a visit from former President BillClinton on April 4, offering support for the state's industry and its continueduse in the country's energy mix.

"Inthe end, we're going to be phasing into a new energy future," Clintonsaid, according to local media reports. "It's going to be a long time, andWyoming has the most efficient and lowest sulfur (coal) in the world."

However,regardless of her campaign's stated support, Hillary Clinton is likely to facea challenging environment in a coal state like Wyoming due to her connectionsto the Obama administration and recent comments about coal mine closures thatopponents have seizedon.

Thecomments in question occurred during a CNN town hall event when Clinton wasspeaking about the need for further funding to assist those communities mostdamaged by federal environmental and energy policies.

"I'mthe only candidate which has a policy about how to bring economic opportunityusing clean renewable energy as the key into coal country, because we're goingto put a lot of coal miners and coal companies out of business, right? . . .,and we're going to make it clear that we don't want to forget thosepeople," Clinton said in response to an audience member.

WhileClinton went on to outline her financial support package, the comments resultedin a sharp backlash from coal state political and industry leaders, withWyoming no exception, according to Godby.

Sandersis scheduled to visit Wyoming as well, with a speech planned for April 5.

Lummis'office did not respond to request for comment on the House race. Neither of thestate's U.S. senators has endorsed a candidate to replace Lummis.