Economic and Fiscal Impacts of Coal Development: Northern Great Plains

Abstract

We reviewed the sources of potential new energy supplies assuming a commitment both to full employment and to developing a measure of independence from insecure sources of oil. Looking at the available options, the ease or difficulty with which they might be brought on line within a decade or so, and the extramarket elements of their costs, we have concluded that increased mining of coal to substitute a large extent for petroleum in the production of electrical energy would contribute most significantly toward a short-run solution to the energy problem. The enormous capital and environmental costs of obtaining shale oil under present technology suggest that it is not presently, nor will it in the near term, be an alternative to the more traditional source of hydrocarbons required for transportation purposes. Substitution of coal for oil in production of electrical energy is likely to release additional transportation fuels in an economically more efficient manner than would the conversion of oil shale to petroleum products. It should be obvious that while this study has been devoted to the intricacies of state and local fiscal issues for the state of Montana and two of its eastern coal counties, its implications are of muchmore » wider significance. Among other things, we are speaking of a level of coal expansion which in the limit represents a quarter of the total increment in production for the nation proposed by the recent (spring 1977) presidential energy program. But aside from this, we are dealing with an area of state, local, and by implication federal, fiscal relations that has been surfacing in much the same form, not only in other western coal-producing states, but also in coastal states facing a rapid buildup of infrastructure to exploit offshore oil occurrences.« less