‘The Bottom Has Just Dropped Out Of The Market': Government’s Latest Coal Auction Attracts Lowest Bid In 15 Years
"‘The Bottom Has Just Dropped Out Of The Market': Government’s Latest Coal Auction Attracts Lowest Bid In 15 Years"
On Wednesday, the Department of the Interior’s Bureau of Land Management held a competitive lease sale for the Hay Creek II coal lease tract in Wyoming. The 1,254-acre area contained approximately 167 million tons of coal, which were put up for sale at an auction. But the agency rejected the only bid that it received, which was $35 million from Kiewit Mining (only $0.21 per mineable ton).
As further evidence of the rapidly declining value of coal, last month — for the first time ever in Wyoming — the BLM did not receive a single bid on a different coal lease sale, even from the company that requested the area be leased. Cloud Peak Energy cited “market conditions” and “uncertainty caused by the current political and regulatory environment.” As Mark Northam of the University of Wyoming’s School of Energy Resources said of yesterday’s lease sale:
“The bottom has just dropped out of the market … This represents a high degree of uncertainty about whether coal will stay robust in the future.”
The BLM’s coal leasing program has come under significant criticism in recent months for shortchanging U.S. taxpayers. Adding fuel to the fire, the taxpayer advocacy group Taxpayers for Common Sense released a report on Wednesday stating explicitly that the coal leasing process “does not obtain fair market value for taxpayers.”
The report outlines several recommendations for rectifying the problem, but also wrote that “no pending or new leases sales should be completed until ongoing investigations are finished and all recommendations are considered and implemented…”
In addition to the questionable benefit for taxpayers, mining and burning coal from public lands has major climate impacts. Climate Progress determined that had the August and September lease sales gone through, the 316 million tons of coal could have resulted in the release 523,524,951 tons of carbon dioxide when burned — equivalent to the emissions from about 109 million passenger vehicles every year.
As domestic consumption of coal declines, companies are increasingly looking to ship coal from American public lands to Asia, which has drawn the ire of ranchers, communities along the train routes, and residents of Washington and Oregon where the three remaining U.S. West Coast export terminals are proposed.
In addition to the environmental and health issues that coal exports pose, Taxpayers for Common Sense notes that “additional and potentially larger [taxpayer]losses may be in store if certain current leasing practices continue and markets for exported federal coal expand.”
Currently the BLM in Wyoming has approximately 3.4 billion tons of coal in the queue pending sale.
Jessica is the Manager of Research and Outreach for the Public Lands Project at the Center for American Progress.