What is driving the decline of the U.S. coal industry? Most of the blame has gone either to Obama’s “war on coal” (EPA regulations) or to cheap natural gas. But there’s a third factor at work, which has gotten much less press:
Coal is getting more expensive to produce.
Why? First, the easiest-to-reach coal has been mined, which means coal companies have to dig deeper and go after thinner seams and smaller deposits. That costs more, in both energy and money. And second, transportation costs, mainly the cost of the diesel fuel that runs the trains that carry the coal, are rising.
It has gotten the point where, in some areas, profit margins have flipped: coal is now selling for less than it costs to produce. In other areas, that flip appears to be perilously close. Never mind EPA or natural gas or Obama or anything else: If it isn’t profitable to mine coal, it won’t be mined, not for long.
Stephen Mufson of The Washington Post wrote a broad overview of this subject last week. Let’s dig a little deeper and look at a few data points.
via Big Coal in big trouble as coal production costs rise | Grist.
Categories: Electricity, Energy