A new report from Moody's says Wyoming counties that are dependenton coal are likely to weather record declines better than peers in and Kentucky.
According to the report, Wyoming's coal-producing countiesdemonstrate healthier income and poverty levels and local governments are lessdependent on state distributions of coal severance tax revenues. The reportalso touts Wyoming's lower production costs because of a focus on surfacemining larger coal seams.
"Wyoming relies on less-expensive surface coal mining,which leads to higher productivity," Lauren Kim, a Moody's associateanalyst, said in a release accompanying the report. "Given the differencesin coal from Wyoming and Appalachia, the two regions are in different ways in terms ofmarkets, industrial organization and scale, and transportation."
Wealth levels in Wyoming's Campbell County, for example, are134% of the U.S. level, while Perry County, Ky. and Boone County, W.Va.wealth levels are at 63% and 83% of the U.S. level, respectively. According to the report, from2011 to 2015, West Virginia and Kentucky coal counties' severance revenuesdeclined by 29% and 49%, respectively. Meanwhile, Wyoming's total amount ofstate distributions to local governments is capped at approximately $20.3million a year.
"Wyomingcoal severance revenues allocated to coal counties are capped, relativelyindependent of coal production, and minimal in comparison to the size ofgeneral fund revenues," says Kim. "This will help protect Wyomingcoal county budgets from fluctuating revenues as the market downturn continues."
Despitethe advantages of surface mining in the Powder River Basin, many large Wyomingproducers such as Peabody EnergyCorp., Arch CoalInc. and AlphaNatural Resources Inc. resorted to bankruptcy reorganizations inthe recent market downturn.