Coal news and updates

The election of Donald Trump as President of the United States has a lot of implications for a lot of different segments of the economy – coal may not be one of them. The uphill battle for coal in the U.S. appears to be getting even steeper with Western States starting to increasingly look to natural gas and renewable energy for power consumption rather than coal. Moreover, the change is being driven by economics rather than regulatory requirements or concern over the environment.

 

President Trump will have a lot of power – power to enact new rules, power to push new legislation, and power to remove old regulations. None of that will help to change the fundamental economics of coal which are increasingly pointing to more mine closures. Renewable power is consistently becoming cheaper, and the glut of natural gas continues to make it one of the most affordable power generation sources available.

 

Appalachian coal has been in trouble for years because it is relatively expensive to extract that coal from the ground. In comparison, the Powder River Basin coal in Wyoming is comparatively cheap to mine. Wyoming has vast deposits of easily accessible, low-sulfur coal, and that has historically been a significant source of power generation for many of the Mountain West states. In 2015 for instance, roughly half the region’s power generation was coal-fired. A decade ago, those states got nearly two-thirds of their power from coal.

Now to be fair to coal, it may be dying, but it is still a powerful dying giant. Today coal is still responsible for nearly 33 percent of energy production. Wyoming in particular is still a major producer, and it has closed fewer mines than West Virginia or Kentucky. In 2014, Wyoming produced 40 percent of the nation’s coal. In contrast, the entire Appalachian region produced only 27 percent of the country’s coal. That’s largely because of low mining costs – Powder River Basin coal sells for roughly $10 per short ton compared to $45 per short ton for coal from places like KY and WV.

 

Yet at the same time, the fact that so much economic angst has come from the shrinking size of coal should be frightening. Coal has only lost a small part of its dominance – it has ceded perhaps 20 percent-30 percent of its generation share. That means that if the black rock continues to lose ground, 70 percent to 80 percent of the pain is still to come.

SOurce: Oil Price.com