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Stripping Coal From The Prairie Economy

Wyodak Coal Mine.
Wyodak Coal Mine, near Gillette, Wyoming (detail). Photo by James St. John.

In the predawn blackness of New Year’s Day 1977, with the temperature around zero Fahrenheit and a fine snow swirling in the headlight beams, I swung a Buick Brontosaurus sedan into an empty rest area, pulled into a parking space and stopped in front of a rusting spigot. The last thing I saw before I closed my eyes for a brief nap was a skull and crossbones sign warning travelers not to drink whatever might issue from that pipe.

This was my first journey through the Powder River country of northeastern Wyoming. I was a student at the University of Montana, which was still 500 miles farther down Interstate 90 amid the forested slopes of the northern Rockies. A relative in New Jersey had given me the old Buick, my first car; I enlisted my close friend Larry to help me drive it across the country. We had about two days to make the trip during the coldest Arctic outbreak of that season.

Those Wyoming plains are a very different place from Missoula, Montana. Apart from Devils Tower, a nearby butte made famous in the film “Close Encounters of the Third Kind,” it is a region of rolling grassland and snow-fed river valleys, technically semiarid but more arid than semi. Livestock can scrounge enough grass to live in the warm months, but wheat and other crops are an iffy proposition. It is not a place that seemed destined to be rich – except for the coal.

The basin, stretching across the state line into southeastern Montana, is the biggest coal-producing region in the country – bigger than Appalachia – and has some of the largest coal reserves in the world. Economically, it was just coming into its own in the 1970s. Gillette, Wyoming, was then the sort of boom town that exists today in the Bakken oil fields of North Dakota. The Arab oil embargo of 1973-74 had generated a push for American energy independence. Coal was by far the largest available domestic energy resource, and Powder River coal – lower in sulfur than Appalachian competitors, and thus easier to scrub to meet new sulfur dioxide emissions requirements – was the belle of the energy ball.

Limited amounts of coal had been mined in the region for decades, mostly to power the locomotives that lumbered across the Plains. Many of the mines had closed when diesel power displaced coal on the railroads. Now, in the 1970s, coal was being strip-mined from the plains at rates never before seen. The old railroad town of Colstrip, Montana, named for the mining process of “stripping” overlying rock and soil to get at the coal seams below, was enjoying its own boom. Not only were the nearby mines hiring, but two new coal-fired generator units had recently opened to send juice to the power-hungry cities and smelters of the Pacific Northwest, which was outgrowing its supply of cheap hydroelectricity.

I returned to the region a few years later as a reporter for The Associated Press. I toured Colstrip Units 1 and 2 in an outing organized by its operator, the Montana Power Co., which was leading a consortium that sought to build two even larger generators, the Colstrip 3 and 4 plants. Utility public relations staff wanted to show off the scrubbers that would take the worst pollutants out of the discharge, and the tall stacks that would disperse mostly harmless carbon dioxide high into the prairie wind, to be carried safely away. Back in the state capital of Helena, I could see 100-car coal trains winding their way toward the Continental Divide, bound for export terminals on the Pacific coast. There the coal not burned at the mine mouth could be sold to Asian buyers, mainly the rising economic powers of Japan and South Korea. China was still too poor and too isolated to be a big consumer of American coal.

Times were different back then, to say the least.

Even today, Wyoming has no income tax, and Montana has no general sales tax. Revenue from the two states’ coal and other mineral resources is a big part of the reason why. But nothing lasts forever – not coal, nor the political and economic circumstances that gave rise to its boom in the Powder River country. And now that boom is beginning to wind down.

On my more recent trips to Montana, I have seen many trains carrying oil from the Bakken to the West Coast, in place of the coal trains. Two of the Gillette coal mines shut down this summer when their operator filed for bankruptcy. The operators of Colstrip Units 1 and 2 announced they would shut down this year, rather than the previously scheduled date in 2022, because power buyers on the coasts want energy from renewable sources rather than coal. Robert Godby, director of the University of Wyoming’s Center for Energy Economics & Public Policy, told The Wall Street Journal that coal production in the Powder River Basin declined 19% from 2015 to the end of 2018.

This is apt to be a jarring transition for coal country, especially in Wyoming. It is the country’s least populated state, with fewer than 600,000 residents – fewer even than Alaska. Like much of the West, a lot of Wyoming is federal land, but it does not have the timber resources of moister regions closer to the coast. It has Yellowstone and Grand Teton National Parks, which are spectacular, but otherwise it is of limited interest to vacationers. It has an oil and gas industry, but not one as vibrant as in Montana or North Dakota, nor are most of its farms as productive.

Montana is marginally better situated, with slightly more than 1 million residents, along with Glacier National Park, three of Yellowstone’s five entrances, and Flathead Lake, the largest body of fresh water west of the Mississippi. In both states, however, most of the population and attractions are far from coal country.

Both states offer abundant beauty, outdoor recreation and solitude, for those who crave such things. Few Americans seek out life on the Great Plains these days. Most of those who do are flocking to more vibrant cities such as Denver; Omaha, Nebraska; and Sioux Falls, South Dakota. Wyoming has the slowest rate of growth in the region, and Montana the next lowest. Both states’ main growth drivers are far from the Powder River region.

In one sense, time is simply catching up to northeastern Wyoming and southeastern Montana. Rural regions all over the Plains have bled population and economic vitality for decades, as farms and ranches consolidate and agriculture-centered towns shrink. The local coal boom held off that larger trend for a while. Now, the semiarid prairie is reverting to economic type.

It is a harsh place, not all that much different today from the days when the Army confronted the Lakota, the bison still roamed the grasslands and optimistic settlers first busted the sod. It takes a hardy sort to get along out there. If you find yourself in the area, look around carefully or ask before you drink from a local well.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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