Friday, 03 March 2017

Coal Making a Comeback, Thanks to Trump

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The coal comeback in Appalachia appears to be significant, according to Fox News’ Johnny Giles, following interviews with miners in Wise County, Virginia, the very heart of Appalachian coal country. He observed, “The past month has seen a resurgence of the coal industry that once formed the backbone of the region’s economy, and locals credit President Trump’s aggressive, pro-energy agenda.

Early in his campaign, Trump made a promise that some wrote off as campaign rhetoric. Now 40-plus days into his administration, it’s clear that he intends to keep, as far as we can tell, many of those promises. He stated:

Here is my 100-day action plan:

We’re going to rescind all the job-destroying Obama executive actions including the Climate Action Plan and the Waters of the U.S. rule.

We’re going to save the coal industry and other industries threatened by Hillary Clinton’s extremist agenda.

I’m going to ask Trans Canada to renew its permit application for the Keystone Pipeline.

We’re going to lift moratoriums on energy production in federal areas.

We’re going to revoke policies that impose unwarranted restrictions on new drilling technologies. These technologies create millions of jobs with a smaller footprint than ever before.

We’re going to cancel the Paris Climate Agreement and stop all payments of U.S. tax dollars to U.N. global warming programs.

Any regulation that is outdated, unnecessary, bad for workers, or contrary to the national interest will be scrapped. We will also eliminate duplication, provide regulatory certainty, and trust local officials and local residents.

Any future regulation will go through a simple test: is this regulation good for the American worker? If it doesn’t pass this test, the rule will not be approved.

Coal miners took heart over Trump's promise to save the coal industry. The price of “met coal” — coal that is used to make steel — is twice what it was a year ago, turning the coal industry around in Appalachia. A long-time supervisor told Giles: “We load coal every day for the power plant in Virginia City. There’s one shipment a week for Georgia Power, and one for Tennessee Eastman [Eastman Chemical Company headquartered in Kingsport, Tennessee].” Wrote Giles, "Trucks are running again. Miners working seven days a week cannot keep up with current demand. Coal mines, long dormant after the industry’s collapse, are now buzzing again with antlike activity."

Ramasco Resources opened a new mine in December and announced the opening of two more later this year. Corsa Coal said it would begin mining operations in May in Pennsylvania. One of the miners told Giles that workers “were told they would have work for the next four years.”

There are significant tailwinds helping to resurrect the industry. Trump signed into law a bill rejecting the EPA’s “clean stream rule” which would have further burdened the coal industry. In addition, early in 2016 China’s central planning agency, its National Energy Administration, curbed construction of new coal-fired power plants, and then in January it cancelled the construction of another 103 coal-fired power plants. This translates into reduced coal supply and demand globally in the face of a U.S. economy that is surging, increasing its demand for energy. The latest report from the Institute for Supply Management (ISM), issued this week, showed that 33 of the 36 major industries tracked by the group expanded in February, the most in almost three years.

There are headwinds as well, including the continuing conversion of U.S. power plants from coal to less expensive and cleaner natural gas. But advances in coal liquefaction, called coal-to-liquids, or CTL, continues apace, making it competitive with oil at prices only slightly higher than today.

As Giles concluded, “It’s too early to tell whether or not coal will be king again. But with the stranglehold of regulations on its way out, many in the area say they hope to see a full comeback.”

 

An Ivy League graduate and former investment advisor, Bob is a regular contributor to The New American magazine and blogs frequently at LightFromTheRight.com, primarily on economics and politics. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

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