Wednesday, June 18, 2014

Blame the Coal Companies and Geology for Loss of Coal Jobs- Not Environmentalists!

The Repukes are currently in fine fettle trying to stoke the fires to blame Obama for loss of coal miners' jobs if his EPA mandate is allowed to go through. The coal lobbyists and their ilk are also firing up the bullshit before the Kentucky Senate elections, insisting hundreds of coal jobs will be lost if any kind of 'green' candidate trumps Mitch McConnell. See e.g.

This same theme is playing out in other coal-connected jurisdictions, including North Carolina.

But let's be clear that the coal lobbies' exploitation of job loss is both patently false and deplorably cynical.

Fact 1: The top three U.S. coal companies are currently running in the red and reporting large losses. As an example, for 2013, Peabody, the No. 1 U.S. coal producer reported a loss of $286 million from its continued operations. Meanwhile, Arch Coal, the 2nd biggest coal producer reported a loss of $641 million and No. 3 producer, Alpha Natural Resources, reported losses totaling $1 billion.

Fact 2: Coal company stock prices have plummeted in recent years and the top three coal companies had already lost 80-97 percent of their stock value (compared to the 2008 highs), even before the EPA announced regulations on carbon pollution from existing coal plants. Hence, there is no connection between the latter and any loss of coal jobs.

Fact 3: U.S. coal production is at its lowest in 20 years. The actual peak of coal production (not the PR version) likely actually occurred in 2008 with 1.17 billion tons of coal. In 2013, U.S. production fell below 1.00 billion tons for the first time since 1993. Projections are for the largest U.S. coal mines to begin playing out over the next decade or two. In other words, analogous to Peak Oil (which occurred in 2005) we are now also past Peak Coal. (Here in Colorado, coal production has dropped from a peak of 40 million tons in 2004, to 24 million tons in 2013.)

What is behind all this? You can blame 'geology' in the first instance, as you can blame it for humans grabbing 'easy' to drill oil first.  Geological processes are responsible for situating any fossil fuel where it is initially most accessible. For example, in the case of oil found in areas of Louisiana (Plaquemines Parish in the 1960s), one would use geological cross sections to locate salt domes near the surface and oil often nearby.   Thus, in the case of either non-renewable energy source, it is inevitable that the easy access stuff is the first to go. While the rest is not yet 'dregs' (though kerogen, i.e. shale oil, comes close) it doesn't deliver the bang for the buck the more accessible sources did.  In the case of coal, we've been mining it relentlessly for the past 150 years - and usage really took off with the advent of the coal-fired plants, such as we have here in COS. The reason? The delivery of lower fuel prices for residents.

But the trouble is, as nice as the lower costs are, the carbon loads (as well as mercury) delivered to the atmosphere are not. Further, the planet isn't generating any more coal on any time scale useful to humans. In other words, we better find alternative energy sources as we ought to do for oil. (In the case of oil the situation is a bit different in that we can't afford to drill ALL the oil in the ground or under the sea. We need to leave two-thirds where it is or send our planet hurtling into a runaway greenhouse hell.)

The other element, as highlighted in facts (1) and (2) is that the major coal companies have been in financial distress for years. This provides a disincentive to keep operating and also a major incentive to dump jobs (especially with the onus of benefits) and replace workers with automation. It is true that coal prices to electric utilities (like Colorado Springs Utilities) has increased but this has been nowhere near enough to retain acceptable profit margins.

A recent 'Market Watch' account noted that of the 13 coal company bonds rated by Moody's all 13 were below investment grade. Jeebus, this is almost as bad as Barbados'  bonds which barely 3 weeks ago saw its bonds "triple degraded" from BA3 to BA2 to BA. 

According to one industry observer,  Bill Koch, quoted in the Denver Post ('Perspective', p. 4E, Sunday) after the closing of the Oxbow's Elk Creek mine here in Colorado:

"The coal business in the United States has kind of died, so we are out of it now."

This will also be the likely refrain of all coal companies very soon. But before they all die, they need to for once come clean and admit that THEY are the ones responsible for dumping workers to try to stay ahead of the game. To that end they need to rope in their lobbyists and tell them to cease playing the "blame the greenies" card for job loss.

See also:

No comments: