Connecting The Dots In The War On Coal -- December 3, 2015

Updates

December 4, 2015: I don't understand anything about coal leasing and I have no plans to get into that arena. However, a very knowledgeable reader has sent me a long note explaining that a single bidder in a coal basin is not necessarily nefarious. It may simply mean good management. That's extremely important. The writer in the New Yorker article below certainly implied that a single bidder represented something that might be considered nefarious. That may not be accurate at all. 
 

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I don't agree with the editorializing, but, assuming the facts are facts as stated in the op-ed, this helps me understand the Power River Basin a whole lot better. What confuses me: how and by whom was the winner (Wyoming) picked and the loser (West Virginia) picked?  From The New Yorker, December 7, 2015:

Consider, for instance, the Powder River Basin—an immense area of northeastern Wyoming and southeastern Montana, which contains the richest coal deposits in the U.S.

In the past few decades, Powder River has become our most important coal-producing region. More than forty per cent of the coal we burn is mined there—nearly five hundred million tons every year.

Unlike the Appalachian coal fields back East, almost the entire basin belongs to the government, which leases the coal rights to mining companies. You might think that regulators would manage this land with an eye toward the coal’s impact on the environment in the U.S., or at least would insure that the government was getting a fair price for its assets. But you’d be wrong.

Back in 1990, the Bureau of Land Management declared that the Powder River Basin was not a “federal coal-production region.” That decertification meant that, instead of the government’s picking which tracts of land it would lease and then putting them up for bid, coal companies could effectively do the picking themselves.

As Mark Squillace, a professor of natural-resources law at the University of Colorado, told me, “This turned a program that was supposed to be proactively managed by the government into one that is entirely reactive to the demands of the coal industry.”

And while the law stipulates that all mining leases are subject to competitive bidding, the Center for American Progress found that, since 1990, nearly ninety per cent of federal coal leases have had just one bidder. That’s held down the price of leases, in effect handing the coal industry a giant subsidy. A study released in September by a coalition of research groups found that production subsidies in the basin amount to nearly three billion dollars a year.

One bidder? Peabody Energy? One bidder on anything starts to suggest a monopoly of sorts. And who knows best how to take advantage of a monopoly? GS. No, not Goldman Sachs, but George Soros. Soros is now called the "new" king of coal with his financial interest in Peabody. I was aware of two of the three dots. The New Yorker connected the third dot. I find it interesting that James Surowiecki, the writer of that New Yorker op-ed did not mention the third dot. But if one connects the fourth dot, it all makes sense.

16 Tons, Tennessee Ernie Ford