Wednesday, March 9, 2016

The Real Cost of the War on Coal Part 3 of 3

In just five years, the number of coal mining jobs in Kentucky has been nearly cut in half, falling from 18,194 in 2011 to 9,493 in 2015.

“There is no questioning that it has hurt the retail and grocery business,” said Mack Townsend, who co-owns Townsend’s Food Center in Dixon with his brother Scott. “When you take money out of people’s pockets, they have to cut back on spending. There are certain things you have to allow for, such as utility and groceries, but they don’t spend money the way they did. They will buy something else where they were buying steak.”

According to a King University School of Business study published in February of 2013, every coal mining job supports 1.27 jobs in other sectors. That means a loss of 100 jobs would create the loss of 127 additional jobs in other industries for a total of 227 jobs. A loss of 600 coal jobs in Webster and Hopkins counties would amount to a loss of 1,362 jobs total by this figure.

“It all has a trickle down affect,” said Hopkins County Judge Executive Donnie Carol. “Coal miners buy cars, furniture and houses. They shop in our stores and eat in our restaurants.”
As houses go on the market, or worse, are repossessed by the bank, property values drop. That’s good for potential home buyers, but bad for everybody else.

“When you lose home values, your tax base drops,” said Mickey Dunbar, branch manager of Planters Bank in Sebree and a member of the Webster County School Board.

“Organizations like the county and the school board will lose revenue. And if we see people move out of the county, our enrollment the schools will drop, which means less money.”

Is there really a ‘war on coal?’

Despite the impact on the local economy, some still debate whether a war on coal really exists. That debate is something that State Representative Jim Gooch cannot fathom.

“A lot of people want to say its cheap natural gas that is having an effect on the coal industry,” Gooch said. “But its really a combination of EPA regulations stacked on top of each other. Coal can compete with cheap natural gas without those regulations.”
Data reported by the U.S. Energy Information Administration (EIA) would seem to back that argument.

The most recent prices reported by the EIA show that the average price of coal in the U.S. is $33.8 per ton (ranging from $48.40 to $9.55) while natural gas was selling for $2.76 per mcf (1,000 cubic feet).

It takes 0.00052 short tons of coal to produce one kWh of electricity or 0.01010 mcf of natural gas to produce the same amount of power. That means one ton of coal can produce 1904 kWh and one mcf of gas can produce 99 kWh.

That all breaks down to coal costing the power plant roughly $0.018 per kWh and natural gas running $0.027 per kWh.

“If a power plant is going to invest money into meeting regulations, they are going to do so in a way to make sure their investment can be beneficial long term,” said Gooch. “They really can’t afford to invest millions of dollars to meet a regulation when they know there is going to be a new regulation in another six months.”

According to Gooch, the EPA under the Obama Administration is on track to produce 3,500 regulations on coal powered plants during his eight years in office.

“It is unprecedented,” Gooch added. “This president is doing everything he can to kill the coal industry.”

The aftermath

As the area waits to see how things play out, the big question is ‘can it get better?’ When the Supreme Court put a freeze on EPA regulations last month, it was a step in the right direction, but it does nothing to undo the last five years of changes that have impacted the industry.

“Will the coal mines come back?” asked Jim Gooch. “I’m not sure if they will ever get back to where they were. I think the only hope we have now is a new president, and if its Bernie Sanders or Hillary Clinton we will just see more of the same.”

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