Page 26 - Flathead Beacon // 9.24.14

26 | SEPTEMBER 24, 2014
OPINION
LETTERS
ECONOMICS OF THE TIMBER INDUSTRY
Your cover story (Sept. 10 Beacon: “The Trials of Montana Timber”) gives a good picture of how the timber industry has evolved domestically. The sidebar to the story says it all, the rapid shift in two years, 1985-1987, when the move to cutting timber on private land jumped 51 percent. This was the start of the period when companies like Georgia-Pacific and Weyerhauser moved out of harvesting on public land to private land, and with good reason. At that time the public was first being made aware that many of the timber sales made on public lands during the boom years in were being made below cost. The U.S. Forest Service was losing money throughout the Pacific Northwest with taxpayers picking up the tab, i.e. socialized logging. Few if any want to talk about this aspect of the decline of timber harvest on public land.
Then there is the rise of timber producers throughout the world that had little effect on the global lumber market in the 1980s and 1990s, but now do. Now they can grow marketable timber faster, with cheaper labor costs than any place in the U.S. In a world market, investment capital flows in the direction where goods can be produced faster and cheaper, hence little new investment in states dependent on public lands for timber.
Finally, the question to the domestic timber industry puzzle no one, not even those currently in or gunning for public office, wants to ask or answer in today’s world timber market: What would happen to the price of lumber if all that talk to bring timber harvests on public land back to the boom year levels becomes reality? Smart money says lumber prices would get hammered with only the cheapest producers surviving, none of which are in Montana.
John Marshall Hot Springs
MONTANANS SHOULD EMBRACE REAL ID
The article “Montana, Other States Oppose Federal ID Rules as Deadlines Loom” (Sept. 17 Beacon) is inaccurate.
Justin Franz incorrectly states that the REAL ID Act requires “states maintain databases with information the federal government can access.” No such provision exists in the REAL ID Act or in its final rule. REAL ID does not give the federal government the authority to access motor vehicle databases.
It also states that Kentucky, New Jersey and New Mexico are among the states that are, “resist[ing] the REAL ID regulations.” Since the Department of Homeland Security announced that it would be enforcing the REAL ID Act, five
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additional jurisdictions have received extensions, including Kentucky, New Jersey and New Mexico. Currently, 46 jurisdictions (states and territories) have met or plan to meet the REAL ID standards.
As noted by the article, Attorney General Tim Fox and Gov. Steve Bullock have both stated that Montana will continue to “resist the [the REAL ID Act] regulations,” while at the same time touting the security of Montana’s driver’s license. But there’s a discrepancy there. The improvements Fox and Bullock are talking about are in fact REAL ID requirements. In January, Bullock sent a letter to DHS that detailed all the things Montana has done to increase the security of the driver’s licenses, “independent of federal mandate.” All of the improvements are REAL ID Act requirements. What a coincidence.
In a time when identity theft and fraud is increasingly common, Montanans should welcome the REAL ID Act standard. It increases the safeguards against a data breach, leak or hack by requiring the Montana Division of Motor Vehicles to better protect and secure the personal data of Montana driver’s license and identification card holders. Montanans, including Bullock and Fox, should encourage adherence to the REAL ID standard because it increases privacy protections.
Andrew Meehan, policy director Coalition for a Secure Driver’s License
BUILDING MONTANA ECONOMY AROUND COAL EXPORTS NOT A PRODUCTIVE STRATEGY
State Sen. Alan Olson in his recent guest column on coal exports (Sept. 10 Beacon: “Asian Coal Demand Will be Supplied, Why Not by Us?”) talks a lot about how powerful the “free market” is in motivating businesses to supply existing demands. In the process he makes the same erroneous assertions that coal companies have made about the impact of opening Asian markets to massive shipments of Montana and Wyoming Powder River Basin coal.
According to the coal companies and Olson, Asian demand for coal will increase at a pre-set high rate no matter what because the energy needs of billions of Asians have to be met. If Montana coal does not help meet that demand, then Canadian coal or coal from other countries will. Because of that, whether Montana coal is exported or not, we are told, the same amount of coal will be burned worldwide.
That is not how markets work. Coal demand, like all economic demand, is not a fixed immutable number. It is strongly affected by price. “Free markets” are built around suppliers competing with each other to serve demand. That competition involves alternative coal suppliers seeking to undercut each other by offering a somewhat lower price or a type of coal that can be used at a lower cost. Montana
coal would have to successfully compete not only with Canadian coal but also other U.S. coal sources, Chinese domestic coal and coal from Australia, Indonesia, Mongolia, and Russia, to name a few.
Olson’s enthusiasm for the “free market” is shared by most economists because competition among suppliers tends to drive down the price that customers have to pay for products, including coal. Lower coal costs, however, will encourage higher levels of coal consumption and reduced investments to improve energy efficiency. Coal-fired electric generators have extremely long lives. New coal-burning generators brought on line now and in the near future, partially because of lower coal prices, represent a 50-plus-year commitment to burning coal.
The Powder River Basin is the source of one of the largest and cheapest coal resources in the world. The net impact of joining other American and foreign coal suppliers in a competitive free-for-all in Asia will not be zero. Carbon pollution levels from the burning of coal will rise above what they otherwise would have been.
Senator Olson sees an incredible boom in jobs and payroll for Montana in the coal industry. He promises that “we’ll add literally thousands of new, high- wage jobs in our state.” But the number of workers employed in coal mining in Montana in 2013 was approximately 1,200. That was about the same as the number of Montanans employed in coal mining 35 years ago. Over that time period, however, annual coal production in Montana rose 50 percent, from about 30 million tons per year to about 45 million tons in 2008 before the Great Recession struck the economy.
That relatively static number of coal mining jobs in Montana can be contrasted with the ongoing growth in total Montana jobs. Currently there are about 650,000 jobs in the Montana economy, 250,000 more than there were in 1980. That is a 63 percent increase, a quarter of a million new jobs added to the Montana economy while coal mining jobs hardly increased at all despite significant increases in Montana coal production. Those 1,200 coal mining jobs currently represent two- tenths of one percent of total Montana jobs. Olson would have Montana hitch its economic future to this non-growing slim reed and turn its back on the industries that have been the actual source of job growth in Montana. In the process, Olson would have the nation walk away from any effort to slow or reduce the carbon pollution unavoidably associated with the burning of coal. That is not a positive strategy for either Montana or the world.
Thomas M. Power Professor Emeritus in the Economics Department University of Montana Donovan S. Power Geologist and Principal in Power Consulting, Inc. Missoula
LETTERS
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CORRECTIONS
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