Salazar appears to have vastly overstated coal money

2011-03-24T23:45:00Z 2011-03-25T17:42:48Z Salazar appears to have vastly overstated coal money

By JEREMY FUGLEBERG

Casper Star-Tribune ‌

The Billings Gazette

CASPER, Wyo. — Interior Secretary Ken Salazar apparently vastly overstated the economic benefits of coal lease sales announced earlier this week.

On Tuesday Salazar announced lease sales of 758 million tons of Powder River Basin coal and said the sales would add between $13.4 billion and $21.3 billion to government coffers over the life of the leases — numbers repeated by media outlets worldwide.

The likely total is far lower, or the amount you get if you move the decimal point over one spot to the left.

“That was off by a factor of 10,” said Marion Loomis, executive director of the Wyoming Mining Association.

Loomis said he also accepted the Salazar numbers at face value until they struck him as wildly inaccurate.

He said the proceeds from 758 million tons of coal would more likely produce approximately $2 billion, nearly half of which flows to state coffers.

Simple math illustrates 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.

The calculated total includes bonus bids and royalty payments over the life of the leases as well as severance taxes, ad valorum taxes and Abandoned Mine Lands, or money collected through a federal program to reduce or eliminate the pollution and safety problems of old and abandoned mines.

Loomis said $2 billion is still a lot of money, but Salazar and the news reports about his announcement apparently included a decimal-shift of an error.

“It’s a shame, because the number’s still huge,” Loomis said. “Two billion dollars of revenue, a billion that comes to Wyoming from bonus bids and royalties, that’s huge.”

The government take from the mining of the new coal wasn’t the only thing wrong in Salazar’s announcement. On Thursday the Interior Department tweaked the announcement’s media release on its website to adjust the percentage of money that goes to Wyoming from 48 to 49 percent.

An Interior Department representative referred the Star-Tribune to a Bureau of Land Management spokesman, who didn’t respond to several calls Thursday. A spokeswoman for the Wyoming BLM office said the office was looking into the numbers.

The Bureau of Land Management, an agency under the Interior Department, manages federal coal leases.

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