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Asia coal export boom brings no bonus for U.S. taxpayers

WASHINGTON (Reuters) - U.S. miners who are booking big profits on coal sales to Asia are enjoying an accounting windfall to boot.

By valuing coal at low domestic prices rather than the much higher price fetched overseas, coal producers can dodge the larger royalty payout when mining federal land.

The practice stands to pad the bottom line for the mining sector if Asian exports surge in coming years as the industry hopes, a Reuters investigation has found.

The big coal companies simply created a bunch of shell companies to "sell" their coal to before exporting it. They claim they did nothing wrong.
But Asian economies rely on coal to sustain growth, so the ton worth about $13 near the Powder River Basin mines last year fetched roughly 10 times that in China.
Extended to the last few years of increased Asian demand, that total could exceed $100 million in forgone royalties. The sum could balloon into billions of dollars if mining giants are allowed to ship 150 million tons of coal a year or more through the Pacific Northwest, as the industry wants.
The piece goes on to explain that the courts have already ruled against a similar practice in a case from the 1970s.
In the late 1970s, Marathon Petroleum Corp used a similar accounting system to settle royalties on natural gas that was produced in Alaska but sold to Japan.

A federal court eventually told Marathon to pay out royalties based on the overseas value. Officials leveled a $10 million fine against Marathon.

(Reporting by Patrick Rucker; editing by Jonathan Leff and Prudence Crowther)

Big Coal has its hands in the federal cookie jar at a time when the politicians are looking everywhere for cuts including some areas of the budget that should be out of the question.

Yesterday also saw two hearings on Big Coal's plans to ship vast quantities of Powder River Basin coal through the Pacific Northwest by train and then onto a flotilla of bulk carrier ships bound for Asia.  The biggest one was in Spokane.

NW coal port hearing draws 800 at fairgrounds

By Patrick Rucker

Eight hundred people poured into Spokane County Fair and Expo Center on Tuesday afternoon to debate a proposed coal port facility in northwest Washington.

Proponents stressed jobs; environmentalists talked about risks, including global warming from expanding coal consumption in Asia.

People lined up early to secure a limited number of speaking spots handed out to those first in line.

A trade organization promoting coal shipments hired about 30 temporary workers to stand in line from 8 a.m. until 3:45 p.m. to get speaking spots for their representatives.

Environmentalists arrived early as well to ensure that people traveling from communities near the coal fields of Montana and Wyoming would get a chance to speak.

“My land is beautiful. The river is clean,” said Alaina Buffalo Spirit, a member of the North Cheyenne Tribe living near Colstrip, Mont. “I would like to see it stay that way.”

Hundreds Attend Coal Train Hearing In Spokane

The next Pacific Gateway Scoping Hearing is on 12/12/12  in Vancouver Washington.

Please take the time to attend one of upcoming five Scoping Hearings if you can.

Vancouver, WA 12/12/12 – At Clark College, Graiser Student Center, 1933 Fort Vancouver Way, 98663 from 4pm-7pm

Seattle 12/13/12 – 4-7 p.m. Thursday, Washington State Convention Center, Ballroom 6F

You can also submit as many comments as you want on aspects of the project that are a concern to you HERE

There was also another hearing on one of Big Coal's tentacles planned embrace the region in Boardman Oregon, this time on a proposed coal barge port to barge coal down the Columbia River passing Portland to a terminal at Clatskanie Oregon.

Columbia River Coal Plan Gets First Hearing In Boardman

Oregon’s Department of Environmental Quality hosted the meeting to take comments and answer questions about permits required for the proposed Morrow Pacific Project. It would transport coal by train to the eastern Oregon port city. Then coal would then be barged down the Columbia River and eventually shipped to Asia.

Around 200 people came with questions for department officials.

The Department of Environmental Quality will hold two more meetings this week: One Wednesday in Clatskanie and one Thursday in Portland.
CLATSKANIE: Wednesday, December 5th, 6 pm, rally at 5:30 pm: Clatskanie High School. Meet at Portland Sierra Club office at 3 pm.

PORTLAND: Thursday, December 6th, 6 pm, rally at 5 pm: Ambridge Event Center, 1333 NE MLK Blvd. NOTE: Location has changed from University of Portland. Buses leaving from Salem and Hood River.

For more information see: Beyond Coal Oregon

Finally there's some really good news to share Canadian Pacific Railroad is essentially walking away from a $180 million dollar investment in a billion dollar plan to extend their rail network by building a new 260 miles of new track to the Powder River coal mines, providing a third rail route from the PRB (Powder River Basin) to the Pacific Coast for export.

Citing coal weakness, Canadian Pacific shelves expansion into western coal country

By Adam Belz

CP said it will “defer indefinitely plans to extend its rail network” into the Powder River Basin, a swath of land between the Black Hills and the Big Horn Mountains that contains one of the largest coal deposits in the world. The railroad company — Canada’s second-largest — is also taking a loss on $180 million associated with the cost of the project, which never got off the ground.

Railroad investors have cooled to the prospect of deep investment in coal and CP is being realistic, said Dave Fellon, president of Progressive Rail, a short line owner and operator based in Lakeville.

When you do an investment like that, you’ve got to be looking out 20 years, and I don’t know that there’s the stability for that right now,” Fellon said. “They’re smart people at CP. They’ve got good intelligence on markets.”
Stopping these coal export ports is a very important fight to win for the future of our planet.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Also see:

Big Coal packs 4th scoping hearing for export maga-terminal in Ferndale

57 NW Tribes join call for Programmatic Environmental Impact Statement on Coal Ports

They've got the money. We've got the humans!

Seattle Mayor McGinn takes on Big Coal & Global Warming + Burlington Scoping draws big crowd

Photo Diary: Scoping the Coal MegaPort's ugliness in the jewels of the San Juan Islands

In tears she said she was sorry about coming to comment

Originally posted to Lefty Coaster on Wed Dec 05, 2012 at 04:18 PM PST.

Also republished by PacNW Kossacks, Climate Hawks, and DK GreenRoots.

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Comment Preferences

  •  Coal is best left in the ground (35+ / 0-)

    “The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.” ~ John Kenneth Galbraith

    by Lefty Coaster on Wed Dec 05, 2012 at 04:14:50 PM PST

    •  LC - why would anyone sell coal for $13/ton (2+ / 0-)
      Recommended by:
      johnny wurster, virginislandsguy

      domestically if they could sell the same coal for more than $100/ton. Many markets have a price arbitrage, and shipping costs are a real issue, but few market have an order of magnitude difference. Putting Shell aside for the moment why would the two markets, US and China, be so far apart on price?

      "let's talk about that"

      by VClib on Wed Dec 05, 2012 at 05:17:59 PM PST

      [ Parent ]

      •  OT, was LC saying shell companies or Shell? And (0+ / 0-)

        if I'm reading properly, I think the originators are selling low to themselves, (the shell corps), in order to game the royalty payments and resell though other subsidiaries at the higher price.

        Maybe I'm understanding it incorrectly?

        Information is abundant, wisdom is scarce. The Druid

        by FarWestGirl on Wed Dec 05, 2012 at 08:23:59 PM PST

        [ Parent ]

        •  FWG - not sure about the shell part (0+ / 0-)

          There clearly was the point that the exporters were selling to themselves to minimize royalties. However, why would the local price be $13/ton if the price in Asia is ten times as high? No markets have spreads that large. Either the local market is higher than $13 or the Asian market is lower, but after subtracting transportation costs (which are high) the prices should be close.

          "let's talk about that"

          by VClib on Wed Dec 05, 2012 at 08:29:20 PM PST

          [ Parent ]

  •  The extraction industries (7+ / 0-)

    will do whatever they can to extract the last erg of energy from the planet - destroy pristine environments, blow the top off of mountains, pollute millions of acres of ocean,  endanger the largest fresh water aquifer in the US, pump millions of gallons of toxic chemicals into the earth to free up the gas within the rock.  They care only for the financial bottom line – environmental concerns are just obstacles to get around – politicians to buy and multimillion dollar ad campaigns to convince the public how “green” is their valley and what stalwart stewards  of the environment they are.
    Mindless players promoting the destruction of  the biosphere so the next quarter looks good to the investors It's the scummy bottom of capitalism.

    "If knowledge can create problems, it is not through ignorance that we can solve them. Isaac Asimov (8.25 / -5.64}

    by carver on Wed Dec 05, 2012 at 05:03:57 PM PST

  •  Good Job! Thank You. (4+ / 0-)

    Great to see the San Juan's again.

    "Something in the way, yeah." Kurt Cobain

    by The Hamlet on Wed Dec 05, 2012 at 05:21:47 PM PST

  •  They can't find actual volunteers for coal (5+ / 0-)

    So they hire people to take up spots that concerned residents should have available to provide actual EIS scoping comments.

    •  Bus full of opponents that left Billings at 4 AM (3+ / 0-)
      Recommended by:
      Cornbread Maxi, James Wells, Creosote

      didn't have that luxury.  Just regular ranchers without a lot of corporate money to spread around drumming up a few astroturfed supporters.

      “The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.” ~ John Kenneth Galbraith

      by Lefty Coaster on Wed Dec 05, 2012 at 08:34:05 PM PST

      [ Parent ]

  •  all this week Democracy Now! is broadcasting (3+ / 0-)
    Recommended by:
    James Wells, Lefty Coaster, Creosote

    from the Doha Qatar Climate Change Summit, and I don't watch the news on TV but I didn't hear about MSNBC, CNN, or even C-Span being there as part of the coverage.
     I haven't seen any links to reports by NY Times on the conference, or discussions by the continually wrong punditry in DC who aren't even taking the time to misinform the populace.

    AMY GOODMAN: Amy Goodman, Democracy Now! Civil society groups are extremely frustrated here. President Obama, in his first speech after he was elected, said that he didn’t want his—he didn’t want our children to live in an America that isn’t threatened by the destructive power of a warming planet. Yesterday, a number of civil society groups held a news conference, and they said at that news conference—Kumi Naidoo of Greenpeace International said, "Todd Stern and Jonathan Pershing have come to Doha with their needles stuck in the groove of obstructing the U.N. process, an art they have perfected." And he said that it is "disrespectful of President Obama to inflict on us two negative negotiators who act as if the comments he made after his election were never made. Obama should pick up the phone and tell his delegates to follow his lead, or, alternatively, call them back to Washington." That’s what Kumi Naidoo said. Jonathan Pershing, are you following President Obama’s wishes? And how do you respond to civil society groups who are saying that the U.S. is the lead obstructor to any kind of negotiated deal here in Doha?
    JONATHAN PERSHING: I have no comment on the first part of that. On the second piece, I think the United States’s role is very much one of engaging actively and constructively in the discussion. We are one of the significant contributors to the intellectual thinking in the process. We have been. We will continue to try to do that. It doesn’t mean that we will agree with everyone on everything. This is, after all, a negotiation. We’re looking to participate in an outcome that will lead to a reduction in global greenhouse gas emissions. We’re looking at an outcome that will be acceptable to all parties. We’re looking at an outcome that will be effective in the time frame that we’ve set for ourselves to move forward.
    RONALD JUMEAU: Yeah, I just want to make a comment. The world that President Obama doesn’t want American children to live in is already here, and it’s only going to get worse. I guess the most frustrated people on earth now must be scientists. There’s all this talk about, all this waffle about, "We have to do things according to the science," and everybody seems to—while the talks may be moving at a snail’s pace—as I said, the Doha caravan is lost in a sandstorm—everybody seems to be breaking their neck to get as far from the science as possible. So, the world is already here. And whether the U.S. or any other country, including my own, fears their children living in it, they are living in it. And I would hope maybe their kids should turn around and tell their parents, "Dad, haven’t you noticed? We’re already there."
    (all emphasis mine)
    http://www.democracynow.org/...

    Plus this interesting note...

    In a rare media appearance at the U.N. climate talks in Doha, U.S. climate negotiator Jonathan Pershing is questioned by Democracy Now! host Amy Goodman about the United States’ failure to do more to cut emissions and to save the planet from catastrophic climate change. Meanwhile, U.S. climate envoy Todd Stern has held just one press conference here in Doha. He was scheduled to hold another one today, but if you look at today’s conference list online, the event is the only one marked in red: The press conference was canceled.

    without the ants the rainforest dies

    by aliasalias on Wed Dec 05, 2012 at 09:19:30 PM PST

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