There are things in life that make no sense when exposed to the light of day. Many of these are offered by charlatans selling items like cattle magnets to improve gas mileage and some of them are foisted on the American public by the very “military-industrial complex” Dwight Eisenhower once warned us about. Perfect examples of the latter are the proliferation of coal port proposals being jammed down our throats in the Pacific Northwest.
These projects are generally sold on the two points of private investment and jobs. Project proponents often intone: Private investments in the half-billion dollar range are so rare…we cannot afford to ignore this opportunity to put people back to work. Anyone brave enough to ask questions about this equation are immediately branded job-killers and even communists by folks who buy into this hogwash.
But what is really going on here? To truly understand this dynamic you have to ask yourself why Asian countries like China and Korea want to by our low BTU, thermal coal regardless of the transport costs when there are much closer and higher BTU coal reserves in Asia and Malaysia? The answer is simple: Our federal government is willing to sell our shared natural resources way too cheaply.
The “why “to this is complicated however. Back in the early 1990s no one wanted to buy the low BTU coal from the federal lands in the Powder River Basin of Montana and Wyoming. As a consequence, George H.W. Bush de-certified the Powder River Basin as a coal producing region. This arcane procedure was designed to make it more attractive—from financial and environmental compliance perspectives—for coal companies to buy and mine coal in the region. But what made sense more than twenty years ago to develop a market for PRB coal does not make sense today now that 41% of our domestic coal comes from the PRB.
Now as world coal prices hover in the $110-$120/per ton range, this de-certification situation is leading to coal leases in the 25 cent to $1/ton range. As citizens we hope that the federal government is doing all that they can to get fair market value for our shared natural resources—particularly when they are for export—but here they are likely missing the amount by more than $4/ton.
Four dollars a ton does not sound like much until you look at projects such as the Coos Bay Coal port and apply this across 10 million tons a year. Then it constitutes a $40 million annual gift from the American public to the coal industry and their partners. Project proponents will argue that the subsidy makes perfect sense when you consider the jobs created. Really?
A casual look at the projected employment numbers for the Coos Bay Coal project indicates that when they are running at 10 million tons per year that the project will support 165 jobs and yield $24.2 million in pay. If we accept those figures then we are giving up $40 million dollars in assets annually to create roughly half that number in yearly salaries. But there are good reasons not to accept those figures.
The Cherry Point Coal Terminal near Bellingham, Washington is projected to ship 54 million tons of materials including 48 million tons of coal and create 430 direct jobs. That means that they will produce about 8 jobs for every million tons shipped. In contrast, the Coos Bay proposal is projecting 165 jobs for 10 million tons or more than twice the direct jobs per million tons shipped. Both projections were calculated using “industry standards” so why the 100% discrepancy? Of interest also is that the Cherry Point projections are considered by many to be too high and include significant numbers of non-local jobs.
If you think it is hard to find the “good deal” in here for the American people of taking 40 million out of savings each year to provide half that much in salaries that “needle in the haystack” becomes even more elusive when it is realized that massive federal investments in rail infrastructure all along the delivery route are also required to accommodate these mile and third long, 17,500 ton trains. This latter could mean hundreds of millions of dollars of increased tax payer debts. The job news only gets worse when you consider that selling discounted raw materials to a competing economy only enables them to create more manufacturing jobs thus killing many more jobs in the US than this project will ever create. And then you look at the potential jobs losses associated with the business isolation and the package becomes even more grim.
Project proponents will try to portray this project as a gold-coated winner for all concerned, but please look closely at the elements and understand that we are sacrificing our collective assets, incurring debt, and suffering impacts that are way, way out of scale of any benefits we receive. This is another prime example of the few causing pain to the many to make themselves richer.
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