Can the New President
Reverse the Coal Industry's Decline?
BY MARK WELCH, CTP, PARTNER, MORRISANDERSON
Since 2007 coal consumption in the United States has declined 29 percent,
1 and the cost per ton of
thermal coal has declined from $140
to as low as $40 in 2016. Peabody
Energy, Arch Coal, and Alpha Natural
Resource, the top coal producers in
the United States, have all filed for
Chapter 11 bankruptcy protection.
What is causing such a catastrophic
decline in an American industry that
holds more than a quarter of the total
proven coal reserves in the world?
The answer is multidimensional and
includes competition, regulatory
pressures, political considerations,
and technological advancements
in energy production.
Competition. Advancements in
horizontal drilling and hydraulic
fracturing have generated an
abundant volume of natural gas,
which accelerated its increasing
share of total energy generation from
15 percent in 2000 to 33 percent in
2016. During the same period, coal’s
share of energy generation declined
from 52 percent to 33 percent.
Increased natural gas supplies also
caused prices to fall from a high
of $12.69 mmbtu in 2008 to the
current price of $3.30 mmbtu.
only constraints to further growth
in the use of natural gas is pipeline
capacity. The Northeast and West are
facing pipeline capacity constraint
issues, while opponents citing