The Obama Administration’s Clean Power Plan, unveiled in June, requires every state to reduce greenhouse-gas emissions from power plants. But some states have tougher assignments than others. On paper, Kentucky’s target is among the most lenient. However, the state’s near-total reliance on coal means it may be hit especially hard by the plan’s costs.
Robert “R.J.” Dyrdek is energy manager at the army base, which has cut its energy use by 51 percent. He shows off a solar array, a geothermal pond — which prompts an unusual boast: "We have the best dirt," he says. "Simply put, it exchanges energy very well." — and a base-wide smart-thermostat system. Technicians monitor temperature and energy performance in every room on base, and tweak them in real time.
But Fort Knox has advantages that the rest of Kentucky can’t match. As Dyrdek says, "If you don’t have the dirt and the facilities, you can’t do it." Kentucky has the dirt, but not a completely planned, centralized, and self-contained economy and infrastructure.
Instead, Kentucky has politics — and the image of whole communities making a living from coal-mining has iconic power. So, coal has been a hot issue in Kentucky's senate race, which could make or break longtime Republican leader Mitch McConnell.
Here’s one of his ads:
His Democratic opponent has also taken a pro-coal stance — including a radio ad that hammers President Obama’s Clean Power Plan.
But the loss of coal jobs isn’t necessarily the big economic threat. Kentucky only has about 12,000 coal-mining jobs left. Manufacturing provides more than 220,000.
"Most often what you hear about jobs in Kentucky are the loss of the mining jobs," says John Lyons, the state’s assistant secretary for climate policy. "But these manufacturing jobs — the reason we have the manufacturing jobs we do is because of our low electricity rates."
Kentucky has some big auto, stainless steel, and aluminum plants — all of which take a lot of electricity. Thanks to cheap coal power, Kentucky’s electric rates are among the lowest in the country.
"That why those facilities come here, and they bring very good paying jobs with them," says Lyons. Complying with the clean power plan will likely force those rates up. And Lyons thinks some of the jobs may then go away.
Corporate earnings reports for the spring quarter are mostly in by the first week in August. Overall, they paint a pretty rosy picture for America, Inc., as Bloomberg predicts profits at S&P 500 companies rose nearly 9.5 percent; sales rose more than 4 percent. So far, 75 percent of companies that have reported earned more than equity analysts predicted.
“The results have been really solid,” said chief economic strategist John Canally at LPL Financial in Boston. He said the results bode well for the second half of 2014, especially since GDP growth has picked up since the winter reversal.
Canally said companies are mostly plowing their profits back into the company; not adding to their payrolls, or investing in new plant and equipment.
“It’s mergers and acquisitions, increasing dividends, share buybacks,” Canally said. “Companies are doing what companies normally do: trying to boost share price for their shareholders. They’re just not doing a lot of hiring right now.”
Paul Ashworth, chief U.S. economist at Capital Economics in Toronto, said U.S. companies have increasing worries overseas — where a lot of their profits are earned — due to geopolitical and economic crises in Russia-Ukraine, Iraq-Syria, Israel-Palestine, Argentina, and Europe.
“Some of those geopolitical events have made people rethink how optimistic they are about the world economy over the next 12 months,” said Ashworth — Which, he said, explains some of the stock market's recent slump.