Feds Lease Lots of Wyoming Coal & Grossly Inflate Projected Revenue From It


photo: Doc Searls/Creative Commons

Last week US Secretary of Interior Ken Salazar announced that a large swath of land in Wyoming's Powder River Basin was up for lease for coal production, enough in fact to expand the nation's greatest coal producing region's output by 758 million tons. Salazar said the coal would add somewhere between $13.4 and $21.3 billion to federal coffers.

Except that it won't: Not only will most of the money go to Wyoming, but at minimum 6.7 times less money will be taken in.Calculations by trib.com reveal the error:

Salazar's numbers would mean the government would get $17 to $28 per ton of the newly available coal. But that number is considerably higher than the current spot sale price for a ton of coal. A ton of 8,800 British Thermal Unit coal from the Powder River Basin sells for $13.65, according to the Energy Department's Energy Information Administration, and government gains are only a fraction of that total.

As the original article points out, $2 billion is still a lot of money, and 49% of it still goes to the state of Wyoming, but it all does make you wonder how and perhaps why the error was made. Interior hasn't respond to trib.com for comment other than to say it's looking into the numbers.

Provided this isn't just a case of a top-level administrator touting bad info from subordinates, considering the bad rap coal gets outside of places economically dependent on it I wonder if there isn't a bit of inflation going on to quiet objections--'see, we're getting so much money from this in a time of economic hardship, that more coal is worth it' or 'unlike past leases with oil companies where revenues have been lower than expected, we're making a lot of money off this mining'. Admittedly just speculating, but certainly possible if it's not an error in arithmetic.


map: Wikipedia
UPDATE: The Bureau of Land Management has clarified how it got the original revenue figure, it all hinges on future potential sales of 1.6 billions tons of coal:

That 1.6 billion tons of additional coal lies under 13,966 acres of land in the Powder River Basin and is part of four other leases still under consideration by the BLM, which is expected to reach a key decision within the next several months on the environmental impact of mining the leases.

More on Coal:
Coal Costs US Public Up To $500 Billion Annually: Harvard Study
New 'Green Coal' Company Names Itself After the Lorax Without Permission

Tags: Coal | United States