Goverment tends to ignore, or be ignorant of marginal value, and regulate based on average prices. When long term contracts obscured Powder River Basin production costs, railroads, utilities, and regulators were played off the State of Wyoming, and coal operators. Wyoming lost the coal upgrading plants, being developed by the oil industry.

When Big Oil sold out to Midwestern coal producers, Wyoming did not adopt their strategy to account for the defensive nature of the Midwest coal investment. Arch Mineral, Alpha/Contura, and Peabody never wanted PRB coal in their home markets, but they didn’t want competitors to have the production cost advantage.

Wyoming seems not to have appreciated the market dynamics. Misunderstanding has proved costly.