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One State is the Center of War Between Natural Gas and Coal

 

 

By Steve Forbes


January 4, 2019 - President Trump has made it abundantly clear by word and by deed that the war on coal launched by President Obama is coming to an end. The announcement last year that the Environmental Protection Agency would replace the Clean Power Plan signaled the demise of crushing ideological regulation and Tony Soprano style pressure on electricity utilities to shut down coal fired plants. But that does not mean this war is over just yet.


In Indiana, the beleaguered but still critical coal industry is under attack by a natural gas provider and utility owner that wants to close down coal electricity generating plants and replace them with a new electricity utility station that would use natural gas piped in from Texas. Vectren, the company requesting approval of the station, is currently being acquired by Center Point Energy, the natural gas provider and utility owner based in Texas. If the Indiana Utility Regulatory Commission approves the deal, natural gas produced by Center Point Energy would be piped up into Indiana to generate electricity at its own brand new $780 million plant.


The downside? The plant would be financed by raising electricity rates on Indiana consumers, who will have little choice when it comes to their utility provider. The deal effectively creates a new tax through higher rates. Those costs will inevitably be passed on to consumers in Indiana and other states who buy the cars, corn, medical devices, and other products made in the Hoosier State. It will also factor into future capital investment decisions in which energy costs are significantly considered.


Proponents of natural gas like to point to its low cost as a benefit, but prices are artificially low in the United States at the moment because there are not enough liquified natural gas facilities to export our surplus supplies to Europe and Asia. Natural gas in the United States today sells for around $3 or so for a thousand cubic feet. That is less than half the market rate of about $7 in Europe, where prices have been as high as $10.


As American exports grow, natural gas prices here will rise, putting an even greater burden on consumers and businesses that have been forced to trade coal for natural gas. Meanwhile, Indiana has abundant supplies of coal with 17 billion tons ready to be mined. It would not be prudent to let this rich asset sit unused. The same holds true for our entire nation. Even Obama, like practically every other politician who has ever talked about energy, repeatedly stressed his support for an “all of the above” strategy to meet the needs of American families and businesses. It only makes sense that the mix of resources in that energy supply includes clean coal.


According to the Energy Information Administration, the United States has 262 billion tons of recoverable coal for a supply lasting 235 years. Coal accounts for a third of total American energy production and generates half of our electricity supply. It is an fuel that has historically averaged less than a quarter of the price of petroleum or natural gas. Across the nation, the coal mining industry supports nearly 134,000 American jobs, with each coal job generating more than three additional jobs in the economy.

 

It would be foolish to ignore this bountiful, cost effective, economy stimulating, environmentally responsible energy reserve. Modern clean coal can play a key role in meeting American energy demand as we continue the process of transitioning to newer technologies. Consumers should not be subject to higher utility bills when coal can provide options that other fuels cannot. Indiana has a diverse energy formula that has greatly benefited its workers, families, and employers. It should continue to use it in the future so that other states have an effective playbook to draw from on how to establish a growing and prosperous economy.