The bankruptcy of Peabody Energy (BTU), the world’s largest private coal producer, puts an exclamation point on the industry’s struggles and their ripple effect.
“Coal companies and 29 states argue that the Clean Power Plan goes beyond the Obama administration’s authority under the 1970 Clean Air Act. The newest regulations, which were announced in the summer of 2015, would mandate a large reduction in carbon emissions from existing coal-fired power plants, effectively forcing hundreds to close.”
Hillary did say she was going to put the coal mines out of business!
The U.S. shale boom, a key contributor to the current global oil glut, flooded the market with natural gas, sending prices south. As a result, many power plants have shifted generation capacity from coal to abundant natural gas.
So is the decline of Peabody (and coal companies, in general) simply a matter of the market choosing a cheaper energy source?
Possibly cheaper prices for gas, combined with punishing EPA regulations which increased costs to coal companies. But soon we can expect EPA to overregulate gas production too.
President Obama and Hillary Clinton were not responsible for Peabody’s bankruptcy. Of course, coal producers hate any regulation, and Republicans hate Obama and Clinton, but the real culprits here are plummeting coal prices that result from low oil and natural gas prices and a slowdown in the economy of China, a big coal consumer. If you can’t sell your product at a profit, you go out of business.
Bingo. And of course fossil fuels are being increasingly supplemented by alternative sources which chip away at their bottom line as well. Not to the extent gas chips away at coal, but every little bit hurts. Coal is a 19th century fuel source that will be increasingly diminished as time goes on. Coal dependent companies like Peabody need to diversify and/or consolidate, or they’ll die.
Coal is still the lowest cost fuel source for supplying base electrical energy. However, regulations have greatly increased the up front capital costs to add capacity.
Natural gas is slowly being substituted because it has lower up front capital costs and is much better for meeting ‘on-demand’ energy requirements. As a fuel source it is more expensive though. For new construction it has a lower net or levelized cost.
And will continue to get more expensive as the law of supply &I demand catch up to the greater number of gas units being installed for all sorts of uses. But so it goes…
We have already been notified of the increased rates due to conversion, and it has been estimated that in my state total conversion to gas will raise average household rates by $1500 permanently.
And that was after Dem senator McCaskill praised Springfield City Utilities to the sky for its “clean coal” operation. Well, enough for that. Gotta convert, but the reasons are ideological, not practical. Obama bragged that he would destroy the coal industry and he’s doing it. And he promised he would make utility bills “skyrocket”, and he’s making good on that too.
In maybe ten years, perhaps sooner, we’ll be finding out what the cost of bankrupting coal companies really is. If they go bankrupt, they can’t do restoration. They can’t keep the mines from filling up with water and leaching that water out. They can’t keep fires from starting deep in the mines.
Environmentalists will be alarmed, of course. But there won’t be anybody to pay for it all except the same taxpayers who are paying more for electricity.
Obama had his “Arab Spring” and we can see what that has cost. So now, he’ll have his “coal spring” and we’ll soon find out what that costs too.
Obama’s administration has fundamentally changed America through the use of regulations. We have arrived at the “Executive Order” level now. The devil is in the details and nobody wants to have to “read the fine print” on every piece of verbiage that comes out of Washington. Did I say verbiage? I meant garbage!
As an example, have you experienced an annoying and costly regulation experience as in: HEPA! ? Has this benefited you in any way? Did you understand it? Did you care?!
This abuse of “regulations” is what has burdened the state of our country in regards to everything governmental. Out of control and downright ruinous is the truth of the matter.
The Environmental Protection Agency, the Food Safety Inspection Service, etc., etc. So many ways to abuse our tax dollars. Maybe, just maybe, the American people who suffer the loss of all these tax dollars will wake up and throw the bums out!
Maybe Canada is the answer.
I didn’t realize it was an epidemic. From your link:
“The move by Peabody, the US largest coal miner, follows on the heels of similar actions by Arch Coal, Alpha Natural Resources, Patriot Coal Corp. and Walter Energy.”
The industry is completely screwed since low prices won’t increase demand (and then prices). Coal prices won’t rise until several mines close down and stop producing.
I suspect the bottom is a long way down, because if coal use is essentially forbidden in the U.S. then coal is strictly an export commodity, U.S. coal would then be totally dependent on foreign markets that might have cheaper (and perhaps dirtier) coal resources.
Take Germany for example. Germany has learned that its reliance on “renewable energy” couldn’t keep German industry going, so they increased imports of U.S. coal. However, dirtier and less efficient “brown coal” is abundant in Germany, so Germany uses that as well. Imports from the U.S. are for those uses for which brown coal is impractical.
If the Democrats have their way, and I think they already have, then U.S. coal will lose nearly all the biggest market it had…the U.S. and be minor suppliers to foreign countries that don’t have enough of their own coal and don’t find any.
And too, some industries will have to leave the U.S. I know a guy who works in an iron foundry. According to him, you can’t cast iron without coking coal, a processed kind of coal, because no other fuel can get it hot enough. Likely any manufactory that uses iron castings will have to leave too, for some country where coal is allowed.
Probably nearly all U.S. coal mining will stop. Fifty years from now, (probably sooner) when the gas supplies start getting tight and someone goes to reopen coal mines out of necessity, they’ll find them in a terrible mess because of decades of no maintenance.
Perhaps, but what is the question? Your second link mentions that sustained low prices have forced Canadian mines to lay off workers, shelve operations and other cost-cutting measures.
There doesn’t seem to be much market in the US for Canadian coal, since the US exports far more coal than it imports.
Meanwhile, in China:
It’s not just the US. It’s far more complicated.
China’s smog is completely preventable, without stopping coal use.
Their new power plants are installed with scrubbers, but they turn them off to increase profit.
Don’t assume skeptics are against reasonable pollution regulations.