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Reports of King Coal’s Death Are Greatly Exaggerated

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Peter Galuszka
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 By Peter Galuszka

It seems such a short time ago.

In the gnarled hills of Southwest Virginia’s coalfields, prominent Republicans Ken Cuccinelli, Robert F. McDonnell and others were on the stump for Mitt Romney. The key theme was how Barack Obama’s environmental rules were putting a stranglehold over the coal industry.

A little farther north in Ohio, Robert Murray, a strident conservative and head of Murray Energy,  was laying off coal miners and allegedly forcing others to attend a pro-Romney rally. It was, he said, a “drastic time” and they were in “survival mode layoffs” thanks to Obama.

Flash forward to now. While natural gas has eaten into King Coal’s share of the U.S. electricity market, the coal industry has managed to increase its exports of thermal product to Europe from 39.5 million short tons in the first months of 2011 to 51.1 million short tons in the same period of last year. The reason: while Americans enjoy cheap natural gas, Europeans are paying three times the normal rate for it.

Meanwhile, Bristol-based Alpha Natural Resources, which, to its credit, did not blame its losses last year on Obama, is expecting a bit of a recovery in the coal industry this year.

The firm lost $2.4 billion in 2012 as it suffered from big utility stockpiles thanks to a warm winter and competition from natural gas, but CEO Kevin Crutchfield expects some recovery in 2013. The firm also managed to double its exports of Eastern thermal coal to six million tons – part of the unexpected  European demand. Alpha took over troubled Massey Energy, based  in Richmond, in 2011.

As for Murray Energy, Obama must be doing a bad job at killing King Coal, because there are reports that Murray Energy is rehiring some miners.

True, there’s renewed interest in carbon dioxide rules that will impact coal and perhaps place it further out of marketability. But there export market is strong in Europe and Asian demand for coking coal may pick up.

Part of the problem, as Crutchfield notes, is that Central Appalachia, which includes Southwest Virginia, southern West Virginia and eastern Kentucky coalfields, is just too expensive for production, compared to Wyoming’s Powder River Basin or Northern Appalachia’s Pittsburgh seam.

All the complaining in the world about the EPA and Obama can’t change that.

Shameless self- promotion: My book, “Thunder on the Mountain: Death at Massey and the Dirty Secrets Behind Big Coal,” was reviewed by the New York Times Book Review on Feb. 10.

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4 responses to “Reports of King Coal’s Death Are Greatly Exaggerated”

  1. James A. Bacon Avatar
    James A. Bacon

    The wonderful thing about living in Peter World is that you never experience cognitive dissonance. One day, you can post an essay like, “Back on the Front Burner: Controlling Carbon,” excoriating the CO2 emissions of coal plants, and the very next day, you can write a piece like this one exonerating the Obama administration of any blame for the demise of the coal industry.

    Perhaps it is true that the current problems of the coal industry are primarily the result of market forces. But there is no denying that if Peter, President Obama and their buddies had their way — enacting stricter control of CO2 emissions, banning mountaintop removal, and the rest of the anti-coal agenda — the Central Appalachian coal industry would be devastated.

  2. Peter Galuszka Avatar
    Peter Galuszka

    Jim,
    Need to get out of Jim World: exports to Europe and Asia and not subject to the U.S. “anti-coal” agenda. Coal is a global business. True, we could restrict carbon and the Chinese will far more than make up for it. But should we try?

    As for mountaintop removal, I fail to see how that is the essential ingredient of a successful Central Appalachian coal industry. MTR actually employs relatively few people but its damage is immense.

    The handwriting is on the wall for the central Appalachians and has been for years.

  3. Peter Galuszka Avatar
    Peter Galuszka

    Once again, Central Appalachia has been going downhill since the early 1990s. There is some excellent coal there but its use as a viable source of electricity is being seriously challenged by other forms of energy and pollution constraints. If you want to keep using coal as an electricity source, you are going to have to come up with some kind of carbon capture technology, which is very expensive and cannot be supported right now given the way rate setting goes for utilities. You simply cannot keep 30, 40 and 50 year-old power plants running to justify some idea of “saving” Central Appalachia. As a fiscal conservative, you should understand the relationship between investment and results.
    However, U.S. rules do not apply to foreign countries and as my blog post states, a lot is going to Europe unexpectedly — something our coal industry doesn’t really say. There’s also a big and sustainable market for met or coking coal in Asia.
    Unfortunately, Jim, you see energy issues in very simple and rather unsophisticated terms. You picture the COAL INDUSTRY as being Southwest Virginia only because that is what you know. Half of U.S production has been coming from the Powder River Basin in Wyoming and Montana for about three decades now and the coal there is much easier and safer to mine.
    AT the end of the day, you have to ask yourself a question. How wedded are we to Central Appalachian coal given its diminishing prospects over the long term? How much money should we pour into making it viable? Why should we sacrifice global warming which is a reality just to keep this minority sector of our total coal production in operation?
    Your reference to my earlier blog post on carbon emissions only underlines the point. I am only talking about part of the entire coal picture there.

  4. Richard Avatar
    Richard

    Jim – I’m ok with any new coal plants and any mining activity, provided it is limited to your backyard in Henrico County, and provided you put a big plastic bubble around Richmond and Henrico County.

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