May 13, 2020 - Below is an editorial featured in Pennsylvania's Altoona Mirror.
Coal industry observers were experiencing “bad vibes” as this year began.
However, at the beginning of January, even the most pessimistic observers didn’t envision how bad 2020 might be for this once-vibrant economic mainstay.
The most important question now is whether even the most dire coal-production predictions advanced for this year underestimate the damage the industry will have incurred by the time Dec. 31 arrives.
Amid that must be the acceptance that no political promise that might be put forth during this presidential election year will, by itself, be capable of improving coal’s fortunes markedly.
Coal, victimized for more than a decade by cheap natural gas and expanded renewable energy sources, was dealt a blow by this year’s mild winter, but perhaps not as powerful of a punch as the coronavirus pandemic might deliver over the long run.
In January, analyses were projecting that coal production would drop 14 percent this year. But now, based on what COVID-19 already has inflicted, that January prediction has been upped to about 25 percent — a level not seen in 55 years.
In reality, even what is being predicted at this time could be a conservative estimate, all considered.
One recent Associated Press article described the situation this way: “The pandemic has made things worse. Lockdowns have shut off lights and computers in offices and schools, sapping demand for electricity provided by coal-fired power plants.”
The article noted that coal “companies have temporarily suspended operations at mines in Pennsylvania, Illinois and Virginia to stop the spread of the virus. Some miners are only working two or three days a week.”
Meanwhile, analysts are predicting more coal company bankruptcies as the economy continues to dive; coal-mining shares have collapsed in the past year, several being down 90 percent from the previous year.
“It will simply be that renewables and gas will keep their market, and coal, being the more expensive fuel, is going to get pushed out even more than it would,” said Seth Feaster, of the Institute for Energy Economics and Financial Analysis.
An article in the May 2-3 edition of the Wall Street Journal recalled that in 2008, coal generated half of U.S. electricity, but now it is below 20 percent for the first time in 50 years.
Still, it isn’t just the coronavirus that has many coal companies fearing what lies ahead and hoping for no small amount of federal government support. Some of the basis for the current fears rests with what, in hindsight, were serious errors by the coal companies themselves.
Back in 2017 and 2018, years that the Journal described as “pretty good ones,” because of a surprise resurgence of coal prices and a bump in exports that provided a boost to company profits, coal producers spent billions of dollars on dividends and stock buybacks to benefit their investors, rather than saving the money for tough times — times like now.
Nevertheless, those errors do not stack up against the horror and uncertainties that COVID-19 is inflicting across this country.
It can be said that an infusion of federal money would help the coal industry temporarily, but that positive impact would dissipate if COVID-19 is not eradicated.
The “bad vibes” surrounding coal are not going to go away anytime soon. Unfortunately, the rest of the country is not being spared, either.