Coal Production Drop Hurts Other Industries
By Jonathan Gallardo
January 5, 2021 - The year-over-year decline in taxable sales in the third quarter in Campbell County, Wyoming was the largest in four years, and the Energy Capital of the Nation is recovering more slowly than the rest of the state.
July through September, there was $20.45 million in taxable sales in the county, a 32.5% drop, or nearly $10 million, from the third quarter of 2019, when it was $30.3 million.
Nearly half of that decline was from the mining industry, which brought in $4.69 million less for a 54.8% decrease over the same time last year.
Operations continue at Dry Fork Station in Gillette in August.
Photo: Cayla Nimmo, Star-Tribune
Wenlin Liu, chief economist with the Wyoming Economic Analysis Division, said the large drop led to steep declines in other industries that are closely linked to mining, such as construction, wholesale trade, manufacturing and transportation.
Manufacturing dropped 49%, wholesale trade decreased 44% and construction declined by 39%.
Financial activities, which includes vehicle and equipment rentals and leasing, dropped by 28%. And the category “Other Services,” which includes equipment repairs, was down 45%.
The year-over-year drop is nearly identical to the third quarter of 2016, Liu said. Then, the drop was 32.7%, mainly due to a big dip in coal production after hundreds of mine workers were laid off in April 2016.
There were some industries that showed a slighter decrease, but Campbell County still lagged behind the state. Retail trade dropped 13.4%, compared to a 2% decrease statewide. And public administration, which reflects vehicle sales, dropped 2.3% in Campbell County, while it increased by double digits statewide.
The decrease in mining was somewhat offset by wind power in southeastern Wyoming. Carbon, Albany and Laramie counties saw increases of 95.3%, 46.5% and 26.1%, respectively.
Converse County declined 27%, but Liu said that if it weren’t for wind power projects, it could be looking at a 54% decline.
Moving forward, Liu expects the fourth quarter to be similar to the third with little to no improvement.
“Coal production is probably going to continue to shrink. We’re just not sure how fast,” he said.
If there is one bright spot, it’s that natural gas prices are expected to increase next year, which bodes well for coal, Liu said.
With a president that looks to be far less friendly to fossil fuels than Donald Trump has been, restrictions on new leasing and fracking are a concern, Liu said. But it won’t happen immediately.
However, the wind projects in southern Wyoming are promising, Liu added, and the whole state has potential for both wind and solar power.
Still, it will be a while before the economy starts looking up again, Liu said.
“Probably we’ll have to wait until the second half of 2021 before things really improve,” he said.