Future of the Coal Industry

The Coal Industry Isn’t Coming Back

By MICHAEL E. WEBBER NOV. 15, 2016

Austin, Tex. — Donald J. Trump made many important campaign promises on his way to victory. But saving coal is one promise he won’t be able to keep.

Many in Appalachia and other coal-mining regions believe that President Obama’s supposed war on coal caused a steep decline in the industry’s fortunes. But coal’s struggles to compete are caused by cheap natural gas, cheap renewables, air-quality regulations that got their start in the George W. Bush administration and weaker-than-expected demand for coal in Asia.

Nationwide, coal employment peaked in the 1920s. The more recent decline in Appalachian coal employment started in the 1980s during the administration of Ronald Reagan because of the role that automation and mechanization played in replacing miners with machines, especially in mountaintop removal mining. Job losses in Appalachia were compounded by deregulation of the railroads. Freight prices for trains dropped as a result, which meant that Western coal — which is much cleaner and cheaper than Eastern coal — could be sold to markets far away, cutting into the market share of Appalachian mines. These market forces recently drove six publicly traded coal producers into bankruptcy in the span of a year.

Mr. Trump cannot reverse these trends.

For Mr. Trump to improve coal’s fate would require enormous market intervention like direct mandates to consume coal or significant tax breaks to coal’s benefit. These are the exact types of interventions that conflict with decades of Republican orthodoxy supporting competitive markets. Another approach, which appears to be gaining popularity, is to open up more federal lands and waters to oil, gas and coal production.

Doing so would only exacerbate coal’s challenges, as it would add to the oversupply of energy, lowering the price of coal, which makes it even harder for coal companies to stay profitable. Those same policy actions would also lead to more gas production, depressing natural gas prices further, which would outcompete coal. Instead of being a virtuous cycle for coal, it looks more like a death spiral. And this is all without environmental regulations related to reducing carbon dioxide emissions, which aren’t even scheduled to kick in for several years.

Even if the president-elect tried to make these moves, surprising opponents might step in his way. Natural gas companies are the primary beneficiaries of, and now defenders of, clean air and low carbon regulations. They include Exxon Mobil, the world’s largest publicly traded international oil and gas company, which operates in a lot of countries that care about reducing carbon emissions. The company issued a public statement in support of the Paris climate agreement on Nov. 4, the day it took effect. Shutting down coal in favor of natural gas, which is cleaner and emits much less carbon, is a big business opportunity for companies like Exxon Mobil.

In the battle between coal companies and major oil and gas producers, I expect the latter will be victorious.

The rapid uptake of cheap renewables is also a contributor to coal’s demise. Mr. Trump made campaign comments suggesting the end of support for renewable energy technologies. But his recent statements call for supporting all energy forms, including renewables, suggesting he won’t target them after all.

Even if he did, what are his options? Their tax subsidies are already scheduled to expire or shrink. Plus, wind and solar farms are usually installed in rural Republican districts, which explains why they get so much Republican support in the first place. All those rural districts in America’s wind corridor might not be thrilled if their preferred candidate seeks to undermine one of their most important sources of economic growth.

The saving grace for coal production in the United States may be exports to Europe or China. But Europe’s demand for coal is waning. And Mr. Trump seems to be marching us toward a trade war with China. Doing so means the Chinese could retaliate by not buying our coal. And even if a trade war is avoided, cheap coal is readily available from nearby Australia.

What does this mean for the average American? More of the same when it comes to energy, which is a good thing. Energy prices will stay low and our air quality will keep improving. And both will help the economy grow.

Any way you slice it, coal’s struggles are real and hard to mitigate. No matter how much Mr. Trump tries to protect coal from market competition, doing so will be hard to execute and will get him crosswise with important Republican stakeholders and long-held Republican policy priorities.

www.nytimes.com/2016/11/16/opinion/the-coal-industry-isnt-coming-back.html

Report: Ohio coal production falls again in 2015


www.dispatch.com/content/stories/business/2016/11/25/report-ohio-coal-production-falls-again-in-2015.html

Trump’s vow to revive coal country is met with measured hope

By MICHAEL VIRTANEN and MATTHEW BROWN Associated Press
 
Updated Nov 21, 2016


Former miner, Greg Blankenship, talks about mining in Williamson , W.Va., Friday, Nov. 11, 2016. The hard-eyed view along the Tug Fork River in coal country is that Donald Trump has to prove he’ll help Appalachian mining like he promised. Photo: Steve Helber, AP


Coal cars fill a rail yard in Williamson , W.Va., Friday, Nov. 11, 2016. The hard-eyed view along the Tug Fork River in coal country is that Donald Trump has to prove he’ll help Appalachian mining like he promised.

WILLIAMSON, W.Va. (AP) — The hard-eyed view along the Tug Fork River in West Virginia coal country is that President-elect Donald Trump has something to prove: that he’ll help bring back Appalachian mining, as he promised time and again on the campaign trail. Nobody thinks he can revive it entirely — not economists, not ex-miners, not even those recently called back to work.

But for the first time in years, coal towns are seeing a commodity that had grown scarcer than the coal trains that used to rumble through around the clock: hope.

Around here that hope is measured. Still, most voters saw Trump as the only choice for president. He vowed to undo looming federal rules and said President Barack Obama had been “ridiculous” to the industry. Trump told miners in Charleston: “We’re going to take care of years of horrible abuse. I guarantee it.”

West Virginians went all in, backing Trump and electing a coal mine-owning billionaire, Democrat Jim Justice, as governor.

But a lot of people had gone under already.

“Lost my home, vehicle, everything,” said Roger Prater. Wearing the miner’s telltale blue pants with reflective strips on the legs, Prater would be heading underground that night. He’d been laid off for 20 months but now benefits from a small hiring surge that started before the election.

At 31, Prater said he can get everything back, but he’s uncertain for how long.

“In Trump’s term, I feel we’ll do good, but after that who’s to say?” he said.

That skepticism is supported by industry analysts, who say any recovery won’t be centered in the eastern coalfields of Kentucky and West Virginia and will never bring U.S. coal back to what it once was.

Last year, the nation had about 66,000 coal mining jobs — the lowest since the U.S. Energy Information Administration began counting in 1978. That’s down 20,000 since a high point in 2008, and preliminary data show 10,000 more lost this year.

Mines out west stand to gain the most under Trump because of the huge reserves beneath public lands in Wyoming, Montana, Colorado and Utah.

At the Wolf Mountain Coal company near Decker, Montana, superintendent Dave Bettcher said he’s been praying Trump can do just that.

Such proposals would “level the playing field for coal,” allowing it to better compete with natural gas and renewable energies, said coal analyst Andy Roberts with the firm Wood Mackenzie.

Yet industry executives expect that pressure to reduce carbon dioxide emissions will continue.

“It can’t just be, ‘We’re going to get rid of these regulations, and you guys can party until the next administration comes,’” Cloud Peak Energy Vice President Richard Reavey said. “There are serious global concerns about climate emissions. We have to recognize that’s a political reality and work within that framework.”

Owners of more than 200 coal plants, almost half the nation’s total, plan to retire the facilities by 2025, said Mary Ann Hitt, director of the Sierra Club’s anti-coal campaign. That trend is unlikely to be reversed, she said, with wind and solar power becoming more cost effective and natural gas offering a cheap alternative.

But Hitt said environmentalists would be naive to think they’ve won.

“The coal industry is going to have friends in high places,” she said.

In West Virginia, Justice reopened four of his mines this month, saying they’ll provide 375 jobs, before being elected governor. They produce metallurgical coal for making steel; its price has risen sharply with lower Chinese production. Justice acknowledged during campaigning that the coal business is tough — mining jobs in the state fell to about 15,000 last year, with 7,000 gone since 2008 — but said he believes it will help power the U.S. economy and West Virginia’s future.

“You’re going to see more miners go back to work in West Virginia to some level,” he said.

On Saturday, Justice said he and Trump talked for 15 minutes about efforts to put miners back to work. He didn’t disclose specifics.

For now, Williamson resembles the small Rust Belt cities of the North after factories closed, leaving empty storefronts and sidewalks. On a recent afternoon, a young man stood on the city bridge over the Tug Fork, which mostly separates southern West Virginia from Kentucky, holding a sign asking for help.

Greg Blankenship from Pike County, Kentucky, across the river, lost his $50,000-a-year mining job in 2009 and got a lower-paying county job months later. His father made a good living as a miner and raised three kids. At 44, Blankenship hopes Trump’s election means he’ll be able to go back but says he knows “the president can’t do everything.”

He’s right: Trump won’t control the economics of low natural gas prices or slow global growth, two big factors hurting coal demand, said John Deskins, director of the West Virginia University Bureau of Business and Economic Research. Trump will have some control over environmental regulation, but it’s not clear how much.

Gary Chapman, 25, has worked right along for almost eight years, surviving seven layoffs, though he’d been down to four shifts a week. He returned to five or six shifts, including overtime, days before the election.

“I believe they’ll bring a lot of it back,” he said. “Do I believe it will be what it used to be? No. It’ll never be that again.”
___
Brown reported from Montana.

http://bismarcktribune.com/business/trump-s-vow-to-revive-coal-country-is-met-with/article_465b37eb-a106-550c-9afa-bba488540d1f.html

Future of the Coal Industry


About Jerry Frey

Born 1953. Vietnam Veteran. Graduated Ohio State 1980. Have 5 published books. In the Woods Before Dawn; Grandpa's Gone; Longstreet's Assault; Pioneer of Salvation; Three Quarter Cadillac
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