1/29/01
KUFM / KGPR
T. M. Power
Making the
Electrical Situation Worse:
Special Interests
Exploit the Mess They Made
“Accountability” has become the mantra of both reformers and critics of government. When it comes to electric industry deregulation, however, that concept appears to have been firmly rejected. Montanan’s Governor, in an effort to fend off the economic catastrophe with which electric deregulation threatens us, has gathered around her the very people who wrote the legislation that created the current fiasco. Rather than humble mea culpas from these architects of disaster, we get only bizarre posturing that offers little confidence that their judgment has improved.
The original authors of electric industry deregulation now fall into three camps: the true believers, the neo-socialists, and those old reliable opportunists. The true believers have a near religious faith in the market and an equally irrational distrust in government. To them, if there are problems associated with deregulation, they must be due to not having deregulated enough. For instance, we temporarily protected households and small businesses from the rising electric costs that are now shutting down our heavy industry. That, apparently, is the source of the problem; if everyone were going bankrupt together, things would be better. If a lot of deregulation did not work, a hell of a lot will do the trick! Trust me, as I cast my spells.
Other authors of deregulation have swung from being free marketeers to being neo-socialists: Now they believe in even more government intervention in the electric industry that we had before this grand experiment started. They want the government sponsoring, subsidizing, or, even, owning electric generation and transmission.
Finally there are those who simply see profitable opportunities in the pain and trauma they have crafted for the rest of us. Our electric energy problems are not, they boldly assert, due to deregulation but due to environmental radicals and greedy tax-and- spend liberals who have used environmental regulation and taxes to block more electricity development in the state. They ignore the fact that in Wyoming where coal taxes have always been lower and where environmental regulation is nearly non-existent, no new coal-fired plants were built either. In a bold jujitsu move that is breathtaking in its cynicism, they blame the developing shutdown of the Montana’s industrial base, which they themselves crafted through electric deregulation, on those who opposed electric deregulation.
If we had mined more coal and built more coal-fired electric generation, they tell us, we would not now face such high electric prices. They ignore the fact that since the construction of the Colstrip complex in the early 1980s the state has had a surplus of electric generation that we have been exporting to the West Coast. That surplus generation has not saved us; more of the same will not either. More generation, like all of our current hydroelectric and coal-fired generation, will be sold into Western markets to the highest bidder, and we will have to try to bid it back from California.
These coal opportunists also promise us economic prosperity if only we would unleash our coal industry the way Wyoming has by cutting taxes and environmental regulations on the industry. They point to the much more rapid growth in Wyoming coal mining compared to Montana as evidence of the strangling impact of Montana taxes and regulations. They ignore the fact that Wyoming is several hundred miles closer to the growing markets in the Sunbelt while Montana has a transportation cost advantage only in serving the stagnating Rustbelt in the Midwest. Apparently they blame environmentalists for having put Wyoming between Montana and the Sunbelt.
The prosperity these coal bugs promise us if only we would follow Wyoming’s example also needs to be looked at a bit more closely since these coal and natural resource boosters apparently have not been to Wyoming in the last decade or so.
It is true that coal production boomed in Wyoming during the 1980s and 1990s. While Montana’s coal production increased by only about a third, Wyoming’s tripled. That is, coal production in Wyoming expanded six times as fast as it did in Montana.[1]
Did this allow Wyoming to breeze past Montana in terms of economic development? Not hardly. Compared to Wyoming, Montana’s population increased nine times as fast, real income increased five times as fast, real per capital income increased four times as fast, and total jobs increased three times as fast. Wyoming’s economy almost completely stalled for two decades as its coal production boomed.
The boom in Wyoming coal production was not even good for coal miners. While coal production was tripling, coalmines were laying off 1,400 mineworkers, a quarter of them. That is, the payoff in Wyoming from boosting coal production was a massive loss of jobs. Should Montanans be wringing their hands that they too could not have enjoyed that sort of economic disruption? Real pay per job in Wyoming also plunged almost 25 percent during the same period, a problem shared with Montana, but Wyoming’s plunge was twice as great. In terms of state average income rankings, something Montana has been very sensitive about since it fell 13 places between 1980 and 1998, Wyoming fell a whopping 28 places, tumbling over twice as far as Montana did.
Wyoming does represent a rather unique model for economic development. It has stayed focused almost exclusively on natural resource extraction and has been willing to systematically sacrifice its natural environment in the process. The economic payoff associated with this path has been disastrous, almost complete stagnation for two full decades.
This is the model that our coal bugs and the electric deregulation advocates want Montana to follow. That’s quite a vision. Maybe, at the very least, we should demand that they correct their medication before we join the Governor and put them at the state’s economic steering wheel. Until they can control their irrational passions, their unstable beliefs, and their wild fantasies, they are dangerous to Montana’s future.
[1] 1980-1998, US Department of Energy, EIA, Historical Coal Production:
http://www.eia.doe.gov/cneaf/coal/statepro/imagemap/mt.htm and /wy.htm
Other data from US Dept. of Commerce, REIS, 1980-1998.