People in Washington state have read a lot about coal in the last couple of years, both on the news and editorial pages of papers across the state. I have found that often the facts are lost in the din over this particular natural resource.
As an economist with decades of experience in international finance and infrastructure analysis, I would like to address the realities of the one proposal — Gateway Pacific Terminal in Whatcom County — and why I believe it is advantageous for our region’s economic health.
Reality: The Pacific Northwest relies on exports, and to discourage the export of this natural resource is to endanger a proposed facility that could pave the way for the export of other commodities. In fact, in a recent white paper authored by University of Oregon Professor Phillip Romero, looking at exports in the Northwest, he found that Washington is more than twice as export-intensive as the U.S. average: In 2012, Washington exported $10,950 per capita vs. $4,938 for the U.S. as a whole. This is the second-highest of any state.
The Gateway Pacific Terminal is a proposed $665 million facility that would allow us to export from Cherry Point, just north of Bellingham. When completed, the Gateway Pacific Terminal will create a link between rail and ocean-going vessels to help producers of dry bulk commodities ship low-sulfur coal, grain and potash to world markets. The project will help our region increase its economic competitiveness in global markets and provide much needed construction and permanent jobs, added economic gains, and tax revenues for our schools, colleges, public safety and human services.
In short, the Gateway Pacific Terminal is the kind of infrastructure development the Pacific Northwest needs.
Reality: Coal has been safely transported through Washington by rail for decades on its way to terminals in Canada, and no one ever expressed concern. In fact, there were never any complaints issued to any of the state’s clean air agencies until environmental groups began protesting coal exports about three years ago, right after the Gateway Pacific Terminal filed its permit application.
Reality: Opponents are talking out of both sides of their mouths about one critical point: how much capacity exists in Canada to export coal. This is a key issue, because many believe that coal trains will come to British Columbia in larger numbers, whether or not the proposed Gateway Pacific Terminal in Whatcom County is built. So Washingtonians will see an increase in train traffic either way. For example, economist Tom Sanzillo, a New York-based consultant for conservation groups, recently went on a media tour around the Northwest with environmental groups, speaking of how British Columbia ports have extra capacity for coal, so there is no need for U.S. port infrastructure. At the same time, the Sightline Institute’s Eric de Place, another environmental activist who has attacked Northwest companies and individuals working with coal, has claimed Canadian ports are limited and cannot handle an increase in coal. How can both of these messages be consistent within the same community?
Reality: Environmental activists are not economic experts. On the other hand, firms that are “in the business of a business” seek to make prudent investments based upon the best market intelligence available, and Cloud Peak Energy of Wyoming (one of the largest U.S. coal producers) must have thought it was doing so when it paid $37 million to acquire additional export capacity for its product to move through the Westshore Terminal in Tsawwassen, B.C. The additional capacity will enable the company to further supply Asian markets from 2015 through 2024. Gateway would like some of those trains heading north to take a left-hand-turn at Cherry Point so that Washingtonians can capture the port-related jobs and taxes generated from U.S. cargo exports.
Reality: Contrary to what many believe, there is no taxpayer support of the Gateway Pacific Terminal. The reality is that the Gateway Pacific Terminal project is being proposed by an established Washington firm (founded in Bellingham in 1949) with worldwide experience in major port developments — SSA Marine. SSA Marine, a local success story, has become the largest shipping terminal operator in the Western Hemisphere. The company wants to invest more than $650 million of its own money (not tax dollars) to create a world-class port and cargo-handling facility at the most appropriate place in the Western United States: the heavy industrial zone at Cherry Point in Whatcom County.
Reality: The majority of Washingtonians support this project. In fact, for the third year in a row, a public opinion poll for National Public Radio’s “EarthFix” asked Northwest residents how they felt about transporting coal through the region. DHM Research surveyed 1,200 residents in Washington, Oregon and Idaho from June 25-30. The poll found 47 percent of Northwest residents say they support coal exports. That’s up a little bit from last year’s survey, which showed 41 percent or respondents supporting coal exports. 34 percent opposed Northwest coal exports, and 19 percent didn’t know.
Increased net energy exports boost the value of the dollar, making imports cheaper and allowing consumers to buy more and businesses to invest more for a given quantity of exports and a given amount of GDP. Washington state is driven by exports. In fact, 4 out of 10 owe their livelihoods to international trade. At the end of the day, interstate commerce drives the state economy. Nearly a third of Washington’s economic growth can be directly attributed to exports, and almost half of the new jobs created are export-related. Yet at the same time, export partners say they need more capacity at Washington ports to stay competitive.
The Gateway Pacific Terminal, which will be made possible through the export of Powder River Basin Coal, among other commodities, helps make this new capacity possible, helping families, bringing in tax dollars, and helping us rebuild our rail system.
Those are realities frequently lost in the din over coal exports. My hope is that cooler heads prevail in the months ahead.
Fred Thompson, a Public Management and Policy Analysis professor at Willamette University in Oregon since 1985, is the Director of the Willamette Center for Governance and Public Policy Research.
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