Herbert: Free Market Will Save State’s Coal Economy

Utah Gov. Gary Herbert 11/12/2015
Utah Gov. Gary Herbert 11/12/2015

On Thursday the Dow Jones industrial average fell off another 254 points, continuing a decline that analysts say is the result of weak energy and oil markets. That same day Utah Governor, Gary Herbert, defended his state’s economic record by citing Forbes and the U.S. Chamber of Commerce accolades about his Beehive state’s management. Almost simultaneously and in response to numerous U.S. communities reeling from mine closures, power plant retirements and oil field layoffs, Hillary Clinton’s presidential campaign team released a statement outlining a transitionary management plan for “coal country.”

The Clinton campaign described a $30 billion plan to allow economic and governmental adaptation by communities hard hit by emerging climate change policies. Herbert was quick to dismiss interference by Washington in this regard.

“I’m reluctant to allow Washington to come in here and help us. Why don’t we just allow the marketplace to do what the marketplace does?” Herbert asked. But Utah’s coal marketplace is having to render some solutions that many indicate are extraordinary and possibly even illegal. The “Four Counties” (referring to central Utah’s “coal counties” Carbon, Emory, Sevier, and Sanpete) solution that would involve $53 million of Community Impact Board monies is only one of the current controversies within the state’s “energy exporting” economy. It is among several complex and bureaucratically intricate solutions providing market intervention instead of natural market influences centered upon supply and demand.

In central Utah, Sevier County has recently had to revise the tax burden on its 20,000 residents when decades of coal revenues finally (and perhaps irrevocably) shifted away. Whether Governor Herbert would rely upon marketplace solutions is often described as irrelevant to those facing a 70 percent property tax increase.

“In this world today,” Herbert continued, “the facts are that carbon-based and nuclear fuels will provide the [electricity] baseload for a generation to come.” He may be right as long as natural gas supplies continue to strangle coal prices into secondary and offshore markets. In a world where voices are literally gathering to address climate change solutions, these market opportunities may or may not materialize for Utah. Governor Herbert went on to cite record natural gas production via hydraulic fracturing (or “fracking”) as providing a marketplace “innovation.” Many would would describe it as a marketplace “intervention,” instead, and a deadly one at that.

Utah’s coal counties have expressed their desire to ship bulk commodities through Oakland and the San Francisco Bay to the Pacific Rim. Even if China’s government routinely under-reports its coal consumption (as is alleged by some industry analysts), the world’s largest coal consumer has evidenced declining coal imports since 2013.

Additionally, the Oakland city council will meet on December 8 to discuss and vote about the commodities that may be shipped from a terminal there. No funding has been secured by the developer of the Oakland project at present and no environmental impact analysis on a coal loading terminal has commenced. Given weak energy markets and the current regulatory climate, shipping Utah coal from Oakland is still a concept that is not yet close to a reality.

As the world struggles to achieve a balance between its environmental quality and its need for affordable energy, the marketplace solutions so revered by small-government conservatives like Utah’s Governor are still in transition themselves. And the rest of #Utah with the world wait for the outcome.

Twitter: @michaelorton @UtPolCapitol

One Reply to “Herbert: Free Market Will Save State’s Coal Economy”

  1. Yo Gary, That corporate socialism, that’s not the free market, free market is run an ipo or even crowd funding. not using my tax $$ on a gamble.

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