The war in Iran has shaken up a lot in the global economy, including energy prices and natural resource extraction. That’s somewhat the case in Wyoming, where fuel prices are high and industry is bracing for potential impacts.
Oil and gas
On its surface, the recent surge in oil prices may seem great for Wyoming producers. But industry reps say it’s more complex.
Since the joint U.S.-Israeli strikes on Iran started on Feb. 28, the price of oil has jumped from about $70 a barrel to around $100. High oil prices can mean more money for operators and higher revenues for the state through taxes, but this abrupt swing is “a lot of upheaval,” said Petroleum Association of Wyoming’s (PAW) Ryan McConnaughey.
“That creates uncertainty, both for consumers and producers,” he said.
McConnaughey said the industry likes long-term stability, even if that means lower oil prices. They’d like to see about $80 a barrel, which “incentivizes new drilling while not triggering big drains on the economy through things like higher fuel prices.”
Those higher fuel prices can make production more expensive for operators. It also means fewer people using their product, like gas.
“People are taking fewer flights or driving less miles in a car, and those things could all reduce demand for the product as well,” McConnaughey said.
McConnaughey said so far, the surge in oil prices isn’t encouraging more development in Wyoming. Many see this as a “short-term blip in oil markets.”
“We're talking, especially on federal lands here in Wyoming, often decades to get the planning process done, the drilling to happen, and then the production of that well,” he said. “Our producers are looking at a longer time horizon for the profitability.”
Coal
While oil prices remain high and liquid natural gas (LNG) continues to be tied up in the Strait of Hormuz, it’s possible for other energy sources to have a moment. In Wyoming, the hope is that it’s coal.
“What we are noticing is increased interest in coal from other nations,” said Travis Deti, Wyoming Mining Association’s executive director. “The war in Iran has obviously caused some concern about reliable energy and how countries power themselves.”
Wyoming is the U.S.’s top producer of coal. However, the industry has steadily declined for almost two decades as environmental impact concerns grow and the cost of other fuel sources decrease.
But Deti said Wyoming’s coal becomes more competitive in the power market when natural gas prices go up.
Lately, natural gas prices are hovering around $2.90 MMBtu (one million British thermal units).
“This is not bad for Wyoming coal,” Deti said.
He added that Wyoming’s higher energy content coal is competitive when natural gas is around $2.75 MMBtu. That number needs to be closer to $3.00 for the majority of the state’s coal to compete.
Similar to PAW’s concerns, Deti noted that the higher fuel costs will “drive up the cost of production of all of our minerals across the board.”
Trona and soda ash
Wyoming’s largest export is actually a different mined mineral: trona. It’s processed into soda ash and used in everyday things like baking soda and glass. Impacts from the Iran war to the southwest Wyoming industry are still unclear.
“It is not a positive development but definitive impacts on the industry are not definable at present,” said Jon Conrad, Tata Chemicals’ governmental affairs consultant. Tata Chemicals is one of the top trona producers in Wyoming.
This is on top of what Conrad said is already a “depressed” market for soda ash. He said that’s because of a “significant global oversupply, largely driven by expanded production capacity in China and Turkey, which has outpaced demand.
Conrad added sluggish demand for flat construction glass, paired with high inventory levels, are combining to drive down current prices and restrict market growth.
Helium
NPR reported that helium is at risk given escalating tensions in the Middle East. Qatar is the world’s second top producer, and Iran’s attack on the country’s natural gas export facility, where helium is produced, threatens that entire market. That’s caused helium prices to jump as much as 50%.
The gas is used in healthcare, defense, semiconductors and artificial intelligence.
The Uinta County Herald reported that those needing helium could set their sights on Wyoming.
Southwest Wyoming is already responsible for about 20% of the world’s supply.
However, the New York Times reported that shifting the supply chain from one country to another isn’t so simple. Transporting the gas is very difficult, expensive and sometimes dangerous.
