Before Murray Energy’s Chief Executive released
156 people from his Ohio-based coal operations, he
blamed the Obama administration’s “war on coal.” He
went on to say a public prayer, bemoaning that
America’s young people would not know the country in
which he grew up.
But what Robert E. Murray failed to mention is that
the federal regulations started by the 1990 Clean
Air Act under President George Bush I are only part
of the mosaic. The other parts include a dark
recession that repressed electricity demand along
with a boom in unconventional natural gas, or shale
gas. And he did not mention that he has been a
fierce partisan, able to give some $1.4 million in
contributions since 2007, say news reports.
“My regret, Lord, is that our young people,
including those in my own family, never will know
what America was like or might have been,” Murray
says, in a publicly released prayer published by the
Washington Post. “They will pay the price in
their reduced standard of living and, most
especially, reduced freedom.”
Murray, who employs roughly 3,000 people and
produces about 30 million tons of bituminous coal a
year, according to the Post story, is most assuredly
dealing with a White House that favors cleaner
energies. But, from the vantage point of the Obama
administration and its supporters, regulators are
carrying out the will of lawmakers who passed
legislation signed by the elder Bush in 1990.
Recently, though, carbon dioxide was included as an
emission under that law.
Sadly, Patriot Coal Co. filed for bankruptcy in
July. Meantime, Alpha Natural Resources has said it
will stop production at four Kentucky-based mines
while laying off 150 employees. The major coal
companies, which also include Peabody Energy,
Console Energy and Walter Energy, took hits to their
stock values a day after the election.
“A regulatory environment that puts coal at a
disadvantage along with low natural gas prices have
led many utilities to increase or accelerate their
scheduled coal-plant retirements,” says Anna
Zubets-Anderson, an analyst with Moody’s Investor
Services that has a “negative” outlook for the coal
sector. “In addition, newly proposed U.S. carbon
dioxide regulations would effectively prohibit new
coal plants by requiring new projects to adopt
technology that is not yet economically feasible.”
Shale competition
The coal lobby has spent a lot of money trying to
beat back some of the regulations by supporting
political candidates sympathetic to its cause and by
funding legal battles to turn back the regulatory
clock. But it has been the onslaught of shale gas
development that has stung the worst. Right now,
those prices are comparable to coal and they are not
expected to rise much in the coming years.
The result has been that coal used for electric
generation is falling and is now about 45 percent of
that market while natural gas' share is increasing,
and fast. It is expected to go from about 25 percent
today to as much as half in two decades. In April
2012, the
U.S. Energy Information Administration reported
that coal and natural gas each supplied 32 percent
of the utility market in that month alone.
“Natural gas used to generate power has half the
carbon dioxide emissions of conventional coal power
generation and near zero sulphur emissions,” says
BP’s Energy Outlook. “Gas is expected to
displace coal in power generation across the
(developed world) due to rising carbon prices,
permitting constraints for new plants and mandates.”
But will natural gas prices remain low, which is
giving it the boost it needs to win favor among
utilities? The basic fundamentals would suggest that
such prices will eventually rise. That’s because as
more utilities demand natural gas, it would then put
upward pressure on prices. It’s especially true if
the United States would become a net exporter of
that fuel to Asia and to Europe where such prices
are much higher than those we pay here.
Richard Goodwin, an energy analyst in Florida,
says that natural gas would have to rise to about $6
per million Btus before utilities would consider
switching to a different base-load fuel such as
coal. At present, the cost is about $3.60 per
million Btus.
At some point, that is going to happen. But coal is
not the only fuel that wants a greater piece of that
pie. So do nuclear, wind and solar. The coal
industry will therefore have to invest in new
technologies so that it can step it up a notch, and
the federal government has shown itself to be a
willing participant. It is helping to fund “clean
coal” projects by Duke Energy and Southern Company.
Sanctimony won’t help. But coal’s leaders can
promote their cause by joining these discussions and
becoming part of the solution.
EnergyBiz Insider has been awarded the Gold for
Original Web Commentary presented by the American
Society of Business Press Editors. The column is
also the Winner of the 2011 Online Column category
awarded by Media Industry News, MIN. Ken Silverstein
has been honored as one of MIN’s Most Intriguing
People in Media.
Twitter: @Ken_Silverstein
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