Pacific Rim Coal Prices Continue to Tumble

Coal exporters are seeing red...and red latest price drops.
This post is 24 in the series: Coal Exports: Caveat Investor
Newcastle coal futures prices, August 2014 contract.

Newcastle coal futures prices, August 2014 contract.

In case you don’t check the coal futures markets every day, you may have missed the news that international coal prices recently reached a multi-year low. To understand just how dramatic the decline has been, all you need to do is look at the chart of futures prices for coal at Newcastle, Australia, one of the key pricing points for Pacific Rim coal markets.

If you’re a coal buyer in Korea or Japan you’re probably applauding the ongoing price collapse, because it means that you can buy a ton of coal for a lot less than you used to. But if you’re in the business of selling coal on the seaborne coal markets, the trends have been nothing short of a financial catastrophe.

When Pacific Rim coal prices shot up in 2009 through 2011, mining firms throughout the Pacific Rim invested tens of billions of dollars in new mines and export facilities, expecting a sure payoff. China’s demand looked like it was skyrocketing, and many market observers were convinced that prices would stay high indefinitely—leading many coal companies to lock themselves into long-term contracts with rail and port companies that required them to export coal, or else pay a stiff penalty.

Those long-term coal contracts turned out to be the financial equivalent of a poison pill. The flood of new coal throughout the Pacific Rim sent prices tumbling, even as China started to tap the brakes on its coal consumption, driven by high prices, a cooling economy, and terrible urban air quality.

Yet even though Pacific coal prices have fallen through the floor, those long term export contracts force many coal companies to keep selling coal at a loss. Sure, they’re losing money shipping coal overseas, but if they stopped exporting, they’d lose even more money from the contractual penalties with port and rail operators. This dynamic helps keep the coal flowing, driving prices lower and lower.

If you’re wondering whether these trends spell bad news for coal exports from the Pacific Northwest, the answer is simple: YES.

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Why Washington State Should Adopt a BC-style Carbon Tax

My personal prescription.
This post is 11 in the series: Cashing In Our Carbon

Editor’s Note: Washington’s Carbon Emissions Reduction Taskforce is on the job, weighing alternative carbon-pricing proposals. Some members of the panel have asked what our ideal policy would be for Washington State. Yoram Bauman shares his thoughts today. Alan Durning will share his argument for a California-style cap-and-trade system, with key modifications, another day.

If I had my druthers, Washington State would push for a BC-style revenue-neutral carbon tax. Full disclosure: I’m part of the campaign to put just such a policy on the ballot in Washington State in 2016. In this article you’ll find information on the latest iteration of the CarbonWA policy proposal.

The BC approach

The basic idea behind the BC approach is to phase in a carbon tax on fossil fuels and pair it with broad-based tax reductions that benefit most households and businesses—which BC does by reducing personal and corporate income taxes—plus targeted tax reductions that focus on communities that may be disproportionately affected by the carbon tax, such as low-income households. (To match the language I’ve used in previous posts, the broad-based tax reduction is the entrée and the targeted benefits are the side dishes.)

Cumulative BC Carbon Tax Revenues and Tax Cuts 2008-2014

Chart by BC Budgets 2008-2013 (Used with permission.)

Adapting the BC approach for Washington State

Something very much like the BC approach might work in Oregon, which, like BC, has an income tax. But Washington State has no income tax, so the CarbonWA proposal is for the entrée to be a reduction in the state sales tax, which generates revenue from just about all of the state’s households, businesses, and organizations, and for the side dishes to be targeted benefits for low-income households, manufacturers, and small businesses. Read more »


Weekend Reading 7/25/14

A Tesla road trip via GoPro, an alarming industry cover-up, and more.
This post is 164 in the series: Weekend Reading
Original illustration by Nina Montenegro of


Oregonians will vote in November on whether to adopt open, top-two primaries like California and Washington. Here’s the pro argument, from US Senator Chuck Schumer.

“Honk if you’re horny” and other creative signs from a pro-choice couple who stand side by side with abortion clinic blockaders to leaven their messages with humor and perspective.

Did you take a big road trip in your college days? My nephew and niece just did. In a Tesla. With a GoPro. Here’s the video.


Construction in Seattle continues apace, and daily it seems like hulking cranes multiply, filling the skies with mechanical songs. If every projected development is finished, the Seattle skyline is set to see great expansion.

But is it truly the sort of expansion that makes Seattle a more affordable and livable environment? The Stranger cheered one recent victory for affordable housing proponents, but the victory is a costly one. The Squire Park Plaza, located in the Central District, is a 60-unit subsidized apartment complex built in 2006 with $9.7 million in public financing. Presently owned by a nonprofit group, it was to be sold to a for-profit developer that was likely to raise rents. That deal is off. What is not being discussed is the cost to the public for what is, admittedly, a very small number of housing units. At a unit cost of nearly $160,000, filling the city with similar projects would be a terribly costly venture. Read more »

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Coal Exports: Unfair Market Value

By ignoring exports, BLM underprices federal coal.
This post is 23 in the series: Coal Exports: Caveat Investor

Today, Sightline is releasing a new report on the US Bureau of Land Management’s coal leasing programs: Unfair Market Value: By Ignoring Exports, BLM Underprices Federal Coal. As the report documents, coal companies operating in the western United States are buying coal from the American public with the explicit goal of shipping that coal overseas…yet the BLM is ignoring the potential profits from coal exports when setting its prices. As a result, the agency is giving away publicly owned coal for a song—boosting coal company profits, while denying the American public of millions of dollars of revenue each year. For details, read on…

Perhaps you may have seen some of the mile-long coal trains that are now plying the rails in the Pacific Northwest, carrying coal to export terminals to be shipped to Asia. And perhaps you’ve even paused to wonder how those companies got hold of all of that exportable coal in the first place.

As it turns out, there’s a simple answer to that: if you’re a US citizen, they got that coal from you.

The American public, you see, owns vast deposits of coal throughout the western United States. Most of the coal in the Powder River Basin, for example, is owned in common by all Americans. The same is true for major coal deposits in Colorado, Utah, New Mexico, and other states. The coal companies don’t own it: you do.

If coal companies want to mine that coal, they’ve got to go through the US Bureau of Land Management’s (BLM) coal “leasing” program, which gives private companies access to public coal in exchange for leasing payments, royalty payments, and compliance with some basic environmental requirements.

But here’s the thing: the BLM gives away federal coal for a song—sometimes just pennies per ton. And what’s worse—as documented by Sightline’s latest report, Unfair Market ValueBLM almost completely ignores the potential profits from coal exports when deciding on the minimum price it will accept for federal coal.

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Oil Train Derails in Seattle

Loaded train off the rails under Magnolia Bridge.
This post is 43 in the series: The Northwest's Pipeline on Rails

Multiple news accounts reported just now that a loaded oil train derailed under the Magnolia Bridge, about a mile north of downtown Seattle. Joel Connelly’s account here. Many others here. The derailment apparently happened at slow speeds; no fuel spilled and no fire resulted.

Here are some important resources on oil trains:


Global Warming and Monster Wildfires

The fingerprints of climate change are all over "monster" wildfire crime scenes.
This post is part of the research project: Flashcards

This week, the LA Times reported on the wildfire raging in Washington State, describing “tornadoes of fire” engulfing a small town. It’s a scary picture and a bleak reminder that global warming is amplifying certain kinds of destruction here, now, right in our backyard:

The Carlton Complex fire will probably go down as the biggest conflagration in Washington state history, torching about 240,000 acres and counting. Pateros, one of Washington’s littlest towns, was no match for its fury. An estimated 20% of the buildings in the city, population 600 or so, have been destroyed. There is no electricity, no drinking water.

Speaking about the fire, President Obama said, “A lot of it has to do with drought, a lot of it has to do with changing precipitation patterns and a lot of that has to do with climate change.”

Climate change is making for wildfires in the American West that are more severe and more difficult to fight. Some are calling the new climate-fueled wildfires “monster” or “mega” fires. It’s important to put wildfires into context the way Obama has. So, we’re reissuing our talking points on global warming and wildfires.

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American Mom and Pops Want Climate Fixes

Poll: American small business owners favor climate action.

American small business owners. When it comes to politics, they’re portrayed as mythic heroes of the American economy, the salt-of-the-earth “mom and pops,” the real job creators, a constituency to be catered to, a force to be reckoned with. Like apple pie. And conventional wisdom would have it that this powerful, Republican-leaning slice of the electorate would fall in with the far-right when it comes to climate attitudes.

But a June 2014 survey of small business owners across the US conducted by the American Sustainable Business Council this month found that the nation’s local, bedrock employers support action on climate change.

And significantly, these views cut across party lines. A plurality of those surveyed (43 percent) self-identified as either Republican or Republican-leaning Independent. These scientific survey results counter the argument that the business community generally resists action on climate change. It found the opposite, with small business owners particularly concerned about climate change’s impact on their bottom line.

The national phone survey of 555 owners of small businesses (2 to 99 employees) found that clear majorities of small business owners are concerned about how climate change will affect their companies, including its impact on energy costs, health care costs and the infrastructure they depend on.

In fact, survey respondents voiced strong support for government action to address climate change, specifically, efforts to limit carbon pollution from power plants.

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Back to the Future

Modernizing regulation, reimbursement, and care for our teens.
This post is 6 in the series: Teen Pregnancy: Going... Going...

More than 80 percent of teen pregnancies are accidents. A girl with other hopes and dreams—or maybe a girl who is floundering, who hasn’t even begun to explore her hopes and dreams—finds herself unexpectedly slated for either an abortion or 4,000 diapers. Given the shame and stigma surrounding abortion in many American subcultures, that can seem like a choice between the proverbial rock and hard place. The exciting news that launched this Sightline series is that teen pregnancy is in decline across the United States and across all major ethnic groups. Fewer and fewer young women are facing hard decisions after the fact.

All the same, America continues to have the highest teen pregnancy rate of any developed country, and Canada looks stellar only when compared to the States. Even in Cascadia, which is better off than most regions, several thousand babies are born each year to girls between the ages of 15 and 17, and thousands more to young women aged 18 or 19 (e.g., Oregon 2012, Washington 2012, British Columbia 2010). Across the United States, almost 1,000 infants are born to teens each day. And approximately 30 to 50 percent of teen girls who give birth will experience a rapid repeat pregnancy within 24 months, which multiplies medical complications and the risk of lifelong poverty.

Economic Inequality

Early unplanned childbearing widens the gulf of income inequality. Pregnancy often compels girls to drop out of school, and fewer than 40 percent of those who give birth before graduating go on to complete high school by age 22. In a survey of high school dropouts aged 19–35, only 17 percent held full-time jobs, and half of those employed said they had no opportunity to advance beyond their current position. By age 25, even those who do work full time earn 30 percent less than their peers who completed high school and 60 percent less than college graduates. Their loss of productivity and income has been called a permanent recession.

Racial Justice

Early unplanned childbearing also widens racial disparities. Birthrates for black and Hispanic teens are more than double that of their white peers and quadruple the rate for Asian/Pacific Islanders. Since the birthrate is highest among Latinas, some people assume that early childbearing is simply a cultural norm. But a wide-ranging survey of US Hispanics found that Hispanic parents had other dreams for their daughters, and so did the girls who ended up pregnant. In the words of one advocate, Ruthie Flores, “There’s a big disconnect between pregnancy rates and what Latina families want and value.” Read more »

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Northwest Knows Best?

But Citizens United left us some nasty residue.
This post is 5 in the series: What Democracy Looks Like

Research by Jane Harvey

Last time, I described Buckley v Valeo, the seminal Supreme Court ruling that teed up Citizens United and that forbids caps on political spending in the United States. In that case, Chief Justice Warren Burger dissented, writing, “What remains after today’s holding leaves no more than a shadow of what Congress contemplated. I question whether the residue leaves a workable program.”

This article documents the residue—the unworkable program that attempts to regulate money in politics—in Idaho, Oregon, and Washington. What rules of disclosure, contribution limits, and public funding govern democracy in the Northwest states?


“Sunlight is . . . the best of disinfectants,” said early 20th Century Supreme Court Justice Louis Brandeis, and disclosure rules of varying stringency cover all of the Northwest. Yet loopholes puncture them, and obfuscation remains widespread. As bad, even when they work, disclosure rules mostly make public long lists of donor names and dollar amounts, leaving voters with little usable information about whom politicians listen to and why. In fact, regular media reports on fundraising totals amp up the fundraising pressure on candidates.

Federal candidates must report the contributions they receive, their expenditures, and other financial information to the Federal Election Commission seven times on specified dates during election years. Donors who give more than $200 must reveal their name, occupation, employer, and address to the campaign, which must report that information. Some independent expenditure campaigns must also disclose contributors and spending. Read more »

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Highest and Best Use…Or Not.

When NOT improving property is highly profitable.

­­With the sharp rise in Seattle real estate values over the last several years, you might assume that landowners have been champing at the bit to redevelop some of the low-value, dilapidated properties that they own in and around downtown.

Yet in many cases you’d be wrong. As it turns out, holding onto a crumbling building, and even letting it slowly deteriorate, can be a terrific business proposition. As the surrounding neighborhood develops, growing in value by attracting new residents and businesses, a rundown piece of property can skyrocket in price. Landowners themselves have done nothing to boost the value of the neighborhood; they’re just taking a free ride on the coattails of their neighbors.

The King County Department of Assessments appraises property with the express intent of reflecting property at its “highest and best use,” defined by the Assessment office as:

If improved: Based on neighborhood trends, both demographic and current development patterns, the existing buildings represent the highest and best use of most sites.

We find that the current improvements do add value to the property, in most cases, and are therefore the highest and best use of the property as improved. In those properties where the property is not at its highest and best use, a nominal value of $1,000 is assigned to the improvements.

So based on appraisal data, most assessors seem to assume that downtown properties are put to their “best” use. Yet you can find quite a few properties assigned the default value—a measly $1,000—indicating that the “improvements” on the property are virtually worthless, and would be better replaced with, well, practically anything else. At times, assessors even assign buildings a value of $0, certainly the strongest possible statement that the property is not being put to good economic use.

What does a Seattle property with improvements assessed at $1,000 look like? What about one assessed at $0? Walking through Seattle’s Central Business District, six specific sites stuck out to my eye. Read more »