View Full Version : Economics Coal industry has had a rough go... will probably get rougher.

05-31-2012, 09:49 AM
As the times change...

Anybody here on the Planet work in coal? Would be interesting to get an insider's opinion.

This is Part 1 of the story. Part 2 (http://www.nytimes.com/2012/05/30/business/energy-environment/even-in-kentucky-coal-industry-is-under-siege.html?pagewanted=2&_r=1) and Part 3 (http://www.nytimes.com/2012/05/30/business/energy-environment/even-in-kentucky-coal-industry-is-under-siege.html?pagewanted=3&_r=1) are linked here.


Even in Coal Country, the Fight for an Industry
Published: May 29, 2012

LOUISA, Ky. — For generations, coal has been king in this Appalachian town. It provided heat, light and jobs for the hundreds of people who worked in the nearby coal mines and the smoke-coughing Big Sandy power plant that burned their black bounty.

But now, coal is in a corner. Across the United States, the industry is under siege, threatened by new regulations from Washington, environmentalists fortified by money from Michael R. Bloomberg, the billionaire mayor of New York City, and natural gas companies intent on capturing much of the nation’s energy market.

So when the operator of the Big Sandy plant announced last year that it would be switching from coal to cleaner, cheaper natural gas, people here took it as the worst betrayal imaginable.

“Have you lost your mind?” State Representative Rocky Adkins, a Democrat and one of Kentucky’s most powerful politicians, thundered at Michael G. Morris, the chairman of the plant’s operator, American Electric Power, during an encounter last summer. “You cannot wave the white flag and let the environmentalists and regulators declare victory here in the heart of coal country.”

Coal and electric utilities, long allied, are beginning to split. More than 100 of the 500 or so coal-burning power plants in the United States are expected to be shut down in the next few years. While coal still provides about a third of the nation’s power, just four years ago it was providing nearly half.

The decline is largely because new pollution rules have made coal plants more costly, while a surge in production of natural gas through the process of hydraulic fracturing, known as fracking, has sent gas prices plummeting. Together, the economics of coal have been transformed after a century of dominance in Washington, state capitals and the board rooms of electric utilities.

“The math screams at you to do gas,” said Mr. Morris, whose company is the nation’s largest consumer of coal.

Environmental groups, after years of targeting coal plants as leading sources of air pollution, have moved in for the kill. “We never thought we would get to a place where coal plants are falling so fast,” said Bruce Nilles, the director of the Sierra Club’s Beyond Coal initiative. It has been aided by $50 million from Mr. Bloomberg, who views the campaign as part of a public health effort, and $26 million from an odd bedfellow: the top official of a natural gas company.

The environmentalists figure that if they can shut down a third of the nation’s coal burning plants by 2020, emissions of greenhouse gases in the United States could be cut at least as much as they would have under a landmark 2009 climate bill that died in Congress.

But the coal industry is mustering all the weapons it can: lobbying, legislation, litigation and a multimillion-dollar advertising campaign trumpeting the benefits of “clean coal.” The fight has even become an issue in the presidential campaign, with the industry blaming President Obama and the Environmental Protection Agency for the onslaught, and Mitt Romney, the presumptive Republican nominee, hinting that he would roll back some of the rules.

Here in Kentucky, the intervention by Mr. Adkins and other coal industry advocates has saved coal at Big Sandy, at least temporarily. American Electric Power, which is based in Columbus, Ohio, is proposing a $1 billion retrofit to allow the plant to continue burning coal and has asked Kentucky regulators to approve a 30 percent increase in electricity rates to pay for the work.

But that request, which will come up for a vote by the state’s utility commission within the next week, has inspired resistance from some residents, large industrial companies that consume much of Kentucky’s electricity and even the state attorney general’s office.

Pressured on the domestic front, some giant American coal producers, like Arch Coal and Peabody Energy, are shifting their attention to markets overseas, where coal-fired power plants are being built faster than they are being abandoned in the United States.

Even if Big Sandy continues to eat up 90 rail cars of coal a day, the industry’s decline is evident here. Sales to Midwestern power plants have slumped, as has the market price of coal, dropping so suddenly that many local mines are cutting back hours or closing. A warm winter, decreasing demand, only made matters worse.

“I call it the imperfect storm,” Mr. Adkins said. “And it is breaking the back of our local economy.”

A Coordinated Effort

The anger toward Washington is palpable in this impoverished corner of Eastern Kentucky, where miners display bumper stickers or license plates on their pickup trucks with slogans like “Coal Keeps the Lights On” or “If Obama Is the Answer, How Stupid Was the Question?”

It is hard to find anyone here who does not feel affected by the fate of Big Sandy. Just as the smokestack at the plant towers over the countryside, Big Sandy dominates much of life here.

Danny Sartin, 61, a barrel-chested heavy equipment operator at the plant, said his father, grandfathers and uncles all worked in local mines that feed Big Sandy. “Coal and the coal mining industry, it’s all we have ever known,” Mr. Sartin said.

Some of that coal comes from the Licking River mine, about 50 miles south of Big Sandy, where miners rip apart hillsides to reach vast seams just below the surface.

Chris Lacy, 41, an executive at Licking River Resources Inc., said layoffs among his 350 miners — in Magoffin County, where unemployment is already 17.5 percent — are inevitable if the coal furnaces at Big Sandy go cold. Even the garden supply company that Mr. Lacy’s father-in-law owns and where his two sons work indirectly relies on Big Sandy, because mines are required to plant grass over the scarred earth they leave behind. “It is the ripple effect that comes right through us,” Mr. Lacy said.

06-12-2012, 11:05 AM

EPA chief says agency rules not to blame for problems facing coal industry
By Ben Geman
06/11/12 09:18 AM ET

Environmental Protection Agency Administrator Lisa Jackson says that her policies aren’t the cause of stiff headwinds facing the coal industry.

“[I]n my opinion the problem for coal right now is entirely economic,” Jackson tells the Guardian in an interview published Monday.

The comments come as the Senate prepares to vote as soon as this week on Sen. James Inhofe’s (R-Okla.) proposal to overturn EPA rules that require cuts in mercury and other pollutants from coal-fired power plants.

Coal remains the nation’s largest source of electric power, but its share is declining.

Industry officials and many Republicans say a pair of rules forcing cuts in toxic and smog-forming pollutants from existing coal plants and separate regulations setting carbon dioxide standards for new plants pose an existential threat to coal.

But while EPA rules create new costs, Jackson argues that low natural-gas prices and booming gas production are coal’s real challenge.

“The natural gas that this country has and is continuing to develop is cheaper right now on average. And so people who are making investment decisions are not unmindful of that — how could you expect them to be? It just happens that at the same time, these rules are coming in place that make it clear that you cannot continue to operate a 30-, 40- or 50-year-old plant and not control the pollution that comes with it,” she tells the British paper.

Coal once provided over 50 percent of U.S. electric power but its share has been declining, hastened along by natural-gas prices that have recently been at 10-year-lows.

The numbers move around for various reasons, but in March coal’s share fell to 34 percent, according to the federal Energy Information Administration, which is the lowest level since at least 1973.

Jackson, in the Guardian interview, also has some tough words for the press, and says that Washington, D.C. isn’t a hospitable place for scientific information.

“Inside the Washington Beltway I'm not sure whether facts always matter, and that's a sad thing for our country. But oftentimes EPA's work is peer-reviewed and then peer-reviewed again — and yet it will be challenged by some report that hasn't been peer-reviewed at all,” she said.

Saul Good
06-12-2012, 11:07 AM
I was just thinking we needed a few more threads from D. Maybe HCF will start posting some, too.

06-12-2012, 12:29 PM
I was just thinking we needed a few more threads from D. Maybe HCF will start posting some, too.

Old D is doing the heavy lifting at this point. Between Obama and his gaffe machine last couple weeks, his surrogates coming out on opposite sides of Obamas issues, and posts on such things as Obama/Global warming, how well the stimulus worked, The Obot machine cannot be improved upon.