Behind Coal’s Comeback

“The headwinds we faced in recent years have now filled our sails.” That was Hal Quinn’s succinct description of the change in coal’s prospects last year. At USEA’s Annual Energy Forum last week, NMA’s CEO spelled out the winds of change that today are not only favorable but, equally importantly, have reversed.

Start with government’s view of hydrocarbons. An administration that saw this enormous storehouse of energy as a “problem” to be rid of was replaced by an administration that views them as an asset. That’s the sharpest contrast between two presidents imaginable – especially as the two served back-to-back.

From this dramatic change followed equally contrasting policies. Regulations meant to curb coal were lifted. “What can we regulate today?” is out, “what regulations can we replace?” is in. New tax cuts and pro-growth policies encourage mining and other natural resource industries.

“Energy dominance” – as much an exhortation as a specific policy – inherently favors all energy sources. That’s another striking change from recent years when government decided what fuels were best and “dominance” better described government’s preferred relationship to the energy market. We can’t “dominate” a global market, powerfully shaped by OPEC plus Russia, with wind turbines and solar panels alone.

Obviously, there was more behind coal’s revival than a sharp reversal in government policy. Markets improved over this past year, too. Coal production was up 6 percent in 2017.

So, yes, markets improved. But this begs the question whether the industry would have been as capable of exploiting the market opening if policies to keep coal in the ground had prevailed. Coal would not have generated 35 percent of PJM’s electricity in that frigid week this month had a hostile government forced its remaining coal plants off line. Other exporting countries and their workforce, not ours, would have been the beneficiaries if government had aided activists in shutting down coal terminals.

Then there is employment. Eleven coal producing states added jobs last year. In fact, the industry added jobs in each of the last three quarters of 2017. The total number of contract workers on site who’re directly employed by the mine, together with the miners themselves, climbed by 15 percent from the end of the first quarter of 2017 to year’s end. Press reports suggesting lower job growth fail to include contract workers, who typically comprise a third of direct mining employment.

These men and women are earning more than $82,000 annually with good benefits. In a different election outcome, it’s likely many if not all of them would eventually be in a government-funded job training program promising a career doing something, sometime, someplace.

Point is, government policy matters, too. It did when it was bad for coal, it does now when it’s good.