Trouble in the Energy Industry

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Image courtesy of dan at FreeDigitalPhotos.net

Working for an energy company based in Colorado and Wyoming, I pay very close attention to all the employment events that happen in the energy industry.

Sadly, we are currently experiencing a serious downturn in the industry.  Just recently, on 3.31.2016, two separate coal mines in Wyoming laid off a total of 465 people.  Peabody Energy cut 235 employees at their flagship North Antelope Rochelle mine, the largest coal mine in the US, and Arch Coal cut 230 employees at their Black Thunder Mine.

The reason behind the layoffs is due to three things.  First, as in most mining operations, when the price of the commodity is high, operations ramp up and production is increased.  This almost always leads to an over supply in the commodity which brings the price of the commodity down.  Right now, there is an over supply of coal in the US.  The nation’s coal fired power plants currently have approx 95 “days of burn” stockpiled which is the highest level since 2010.  The power plants are saving their coal which is reducing demand and bringing down the price.  Second, cheap natural gas is taking away from the demand for coal.  The coal in Wyoming is competitive with natural gas when gas prices are $2.25 per million BTUs.  Right now gas prices are below $2.oo and are expected to remain there through 2016.  And finally, the unseasonably warm winter has made it difficult, dropping weekly shipments from western US mines to below 7 million tons compared to 10 million tons per week last year at the same time.  Year to date, US coal production is down 30 percent compared to last year.  It all has to do with basic supply and demand economics.

These recent announcements along with a series of other layoffs in Wyoming have impacted the local economy and will continue to do so in the foreseeable future.

Colorado has also experienced a series of energy industry layoffs but they will be able to better absorb the impact since the Denver area economy is much more diverse that Wyoming’s.  Wyoming, I fear will continue to suffer.

During the summer of 2015, most of the counties in Wyoming had ridiculously low unemployment rates but now, only a few months later, the rates are significantly higher.  Wyoming is the nation’s smallest population and a sizable percentage of that population is in the energy or energy related industry. There isn’t a lot of economic diversity in the state so when the boom is on, everything is wonderful.  But when the bust is on, things get tough.  Unfortunately, I am seeing the beginnings of another bust.

Despite this dire economic news, I have to give strong kudos to Wyoming Governor, Matt Mead who quickly responded to the layoffs by deploying the Wyoming Business Council, the Wyoming Department of Insurance, the Wyoming Department of Workforce Services, and the Wyoming Community College Commission to help the people in the communities impacted by the layoffs.

These state agencies immediately partnered together and set up temporary community resource centers for the people who were laid off.  They quickly set up centers in Casper, Douglas, and Gillette and were opened from 10-7 on 4/1 through 4/4.  These resource centers were staffed with experts who assisted people with unemployment insurance, job training opportunities, health insurance, and community health services.

In addition, the Department of Workforce Services offices in the same three cities extended their hours to 8-7 on 4/1 through 4/4 where they were available to provide information on unemployment insurance enrollment, job training counseling, job search assistance, and resume preparation.

I love the fact that Governor Mead quickly responded to the situation and did what he could to provide help to all the people who lost their jobs.  I have found that Wyoming has an excellent organization in the Wyoming Workforce Services.  I have worked with these people often and have found them to be very professional and helpful in all of their services.  They are good people who have the best interests of the Wyoming workforce at the top of their priorities.

It’s good to see a state government marshal it’s workforce services so quickly when there is a crisis.  I applaud Governor Mead and all the good folks who work at the agencies for quickly stepping up and trying to help these people out.  I fear many will move out of the state in search of other work but I hope many will be able to find work in Wyoming.  It’s such a small state without the economic diversity of most other states.

We’ll see how this all shakes out and I’ll keep you updated as things continue to develop.