In Wyoming, Hard Times Return as Energy Prices Slump
Source: By JACK HEALY, New York Times • Posted: Wednesday, April 13, 2016
Oil pumps on the outskirts of Wright, Wyo. The town, which is dependent on the energy industry, is struggling to support its ailing economy. Credit Nick Cote for The New York Times
WRIGHT, Wyo. — For 17 years, Scott Pearce worked as a mechanic here in the Powder River Basin, a Saudi Arabia of Western coal deposits. But about a week ago, he became a casualty of the declining local economy, one of nearly 500 people laid off from the Black Thunder and North Antelope Rochelle mines. It was among the latest and worst rounds of job losses to hit Wyoming.
Elsewhere, the American economy is posting steady gains and adding jobs. But here in the nation’s least populated state, the recession is returning.
Hard times have come crashing back on energy-reliant towns like this one in northern Wyoming, where lives and fortunes hinge on the coal, oil and gas buried beneath the rolling plains.
Tumbling prices for oil and gas, along with bankruptcies in the coal industry, have pummeled Wyoming’s energy-dependent economy and eroded a thin safety net for poor and older residents. Energy development helped Wyoming weather the nation’s thin years seven or eight years ago, but now officials estimate that energy companies have shed some 5,500 jobs — a huge number in a state with 580,000 residents.
A church in Gillette, about 40 miles north, held a prayer vigil for laid-off miners last week, and state officials were scrambling to find them seasonal work with state parks or jobs as prison guards. But U-Haul vans and trailers are already starting to carry people away from Wright, a town of 1,800 that sprouted up in the 1980s to serve the mines. Mr. Pearce, 52, is leaving for Alaska to chase work with his brother in the gold mines.
“I’ll have to turn my house back in to the bank. We’re not going to be able to sell,” he said one afternoon last week as he watched television at a friend’s electronics shop. “This is a sinking ship.”
Bankruptcies in the coal industry and a slowdown in oil drilling have sown economic pain and budget shortfalls from Appalachia to Alaska, but the effects have been especially concentrated in Wyoming.
The state’s unemployment rate has climbed by 1.2 percentage points over the past year, more than in any other state. While Wyoming’s overall jobless rate is about even with the national average, 5 percent, the layoffs in mining country have created pockets of a new recession, raising fears that rural economies here are veering away from the rest of the country’s economic progress.
“It is, no question, a hard time for the state,” Gov. Matt Mead said in a telephone interview. “As difficult as it is now, I think it can get worse. If these people pack up and leave, the local restaurant won’t even get that occasional business. It’s heartbreaking to see.”
The layoffs have forced an economic reckoning in a state where oil, gas, coal and uranium provide 60 to 70 percent of revenue. Tourists and second-home buyers are still flocking to Jackson Hole, wind turbines are blooming along the plains and Microsoft is expanding a data center in Cheyenne. But those pale in comparison with the shadow that energy extraction — much of it on federal lands — casts across the economy.
“We’ve got to diversify the economy,” Mr. Mead said.
Falling tax revenue forced deep budget cuts this year and prompted lawmakers to draw $180 million from the state’s rainy-day fund. The budget crunch also intensified a debate within the Republican-dominated state government over whether to expand Medicaid under President Obama’s health care law.
Mr. Mead, a Republican, opposed the Affordable Care Act, but in 2014 started urging the Republican-controlled State Legislature to accept the Medicaid expansion, saying it would bring in about $268 million in federal dollars and cover about 20,000 low-income people. But the Legislature balked, saying it would force Wyoming to shoulder a huge government expansion with an unknown price tag down the line.
“We care about our people,” said Phil Nicholas, the State Senate president. “But we also believe you can create problems by creating straight-out entitlements without any obligation or effort to improve your situation.”
Democrats said the budget cuts and Medicaid rejection ended up heaping most of the pain on Wyoming’s poor. A literacy program that helped people earn high school equivalency degrees was eliminated, as were programs that provided dental care and property-tax rebates to low-income old people.
Mary Throne, the Democratic minority floor leader in the State House of Representatives, said the Medicaid expansion could have helped the families of laid-off miners.
“As people lose benefits and they don’t have access to health insurance, we’re going to need a safety net,” she said. “We made very bad choices. We panicked. And we really should have been thoughtful and deliberate.”
If jobs are scarce around here, blame is not. Some conservative lawmakers and laid-off workers seethed at the Obama administration’s carbon regulations and its halt on coal leasing on public lands. But others said that coal was struggling to compete against cheap, plentiful natural gas, and that oil and gas drilling would rebound once prices did.
In Casper, Eric Kraft, 30, sat down at a computer terminal at a packed work force resource center and started filling out a résumé. He said he had been a month shy of his 10th year at the Black Thunder mine when his supervisors gathered everyone in the break room and started handing out letters. Some had good news. Not his.
“Mine said they appreciated your service, and there was a bus to haul me home,” Mr. Kraft said. “It was more of a relief — the biggest part of it was the waiting, knowing it’s coming.”
Towns like Wright are still bracing for the worst. It survived a bust in the mid-1980s just after it incorporated from an outpost of trailers into a real town. It survived a tornado that killed two people and destroyed 90 homes.
The apartment complexes in town once had waiting lists, and one of the town’s biggest headaches was coping with all of the tractor-trailers parked on the streets, said Brandi Harlow, the town’s economic development coordinator. Now, Ms. Harlow said, she was working to bring in experts from the community college to counsel residents on how to refinance their mortgages, navigate a job search and apply for food stamps.
The town of Wright’s $3 million budget is already down about 30 percent. And as workers in the area brace for the possibility of more layoffs, they said they were still unsure where the bottom might lie.
“Reminds me of going to a funeral,” said the mayor, Ralph Kingan. “I don’t know what’s happening to my town.”
An earlier version of a picture caption with this article misidentified the structures on the outskirts of Wright, Wyo. They are oil pumps, not oil derricks.