No wonder Romney likes coal so much.

INSIGHT-U.S. taxpayers poised to subsidize Asian coal demand

By Patrick Rucker

WASHINGTON, Oct 18 (Reuters) - Asian economies, hungry for coal, stand to gain from a U.S. program meant to keep domestic power cheap and abundant.

At issue is how much miners pay the government to tap the coal-rich Powder River Basin in eastern Montana and Wyoming. Much of the basin is on federal land.

Selling that coal cheap at a time of increasing exports across the Pacific could amount to a U.S. taxpayer subsidy for industrial rivals like China.

Federal mining policies first crafted to insure cheap domestic power, are increasingly being used to supply China's new factories with cheap dirty power, as US electric utilities move away from burning coal converting to cheaper natural gas. This amounts to American taxpayers indirectly subsidizing the off-shoring of more American industries.
"A key question is whether the taxpayer is getting a fair return on the use of those lands," said Lynn Scarlett, who served as a deputy to two Secretaries of the Interior under President George W. Bush between 2005 and 2009.

The easy-to-reach coal and sheer size of the Powder River Basin explain the region's appeal, but the leasing program also gives miners a boost, current and former officials said.

Rather than the government putting blocks of land up for auction, miners select ideal plots at will and rarely face rivals in the cash-bid process that awards new coal leases.

Using the GAO report from 1983 as a benchmark, one analyst concludes that the federal government missed out on nearly $30 billion in revenue over the last three decades through poor management of the coal lease program.
The GAO is now investigating this noncompetitive bid process used by the Interior Department. Here's more about that cozy practice favoring mining companies over taxpayers.

Are U.S. taxpayers subsidizing Asia’s coal use?

 by Brad Plumer

About 44 percent of America’s coal comes from the vast Powder River Basin that stretches across Wyoming and Montana. Much of that land is owned by the federal government, which in turn leases different regions to mining companies. In June, Peabody Energy paid $793 million for the right to mine 721 million tons of coal from Wyoming’s North Porcupine tract.

So Taxpayers are getting a paltry $1.10 for a ton of coal mined on Federal land. The current spot market price for Powder River coal in the US is about $10.25 a ton.


Part of the problem, Sanzillo argued, is that most of the government’s auctions are non-competitive, with only a single company bidding for mineral rights in 22 of the past 26 auctions since 1991. (Peabody was the sole bidder on the North Porcupine tract.)
So with only a single bidder for most coal mining leases, the Federal Government is in effect letting the big four coal companies decide what THEY want to pay for coal on Federal land in the Powder River Basin.

This noncompetitive bid process is good for the big coal exporters and their offshore consumers. But these cozy deals are bad for US Taxpayers and US Workers, not to mention bad for our planet's climate.  

A new related piece from Eugene Robinson: Why the chill on climate change?

Originally posted to Lefty Coaster on Fri Oct 19, 2012 at 11:48 AM PDT.

Also republished by DK GreenRoots and Climate Hawks.

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