U.S. coal producers are staggering under Environmental Protection Agency regulations and low natural gas prices. Now the ObamaAdministration is giving the industry its last rites by halting new coal leases on federal lands where mining is still profitable.
Interior Secretary Sally Jewell has declared a three-year moratorium on coal leases pending an agency review to “ensure the federal coal program delivers a fair return to American taxpayers and takes into account its impacts on climate change.” Interior may raise coal’s 12.5% royalty payment, which is the same rate as oil and natural gas. About 40% of coal is mined on federal land, mostly in Wyoming’s rich Powder River Basin, Utah and Colorado.
The plunging price of natural gas and EPA regulations on power-plant emissions have punished the domestic coal market. U.S. coal production and electric generation have declined by about 20% since 2008, and a half dozen coal companies have filed for bankruptcy in the last year, including Arch Coal this month. Yet mining in the thick-seamed Powder River Basin remains economical due to its geology. Its coal is also low in sulfur and thus cleaner. Wyoming produces twice as much coal as West Virginia and Kentucky and sells it at an 80% lower price.
Powder River Basin exports to Asia can out-compete coal from China, Indonesia and Australia despite higher transportation costs. Yet less than 5% of Powder River Basin coal is exported due to inadequate infrastructure. Climate activists are trying to obstruct new coal terminals in Washington and Oregon that could expand export capacity.
The Administration’s moratorium also targets exports. Higher royalty payments will reduce profitability, and Ms. Jewell is setting up a Democratic successor to make the shutdown permanent. Once current leases expire in 20 years or so, U.S. coal mining would cease. So much for the claims that coal’s troubles are solely due to market forces.
Hillary Clinton has proposed paying reparations to ravaged coal communities for worker retraining and public works. About 10,000 coal jobs—some 10% of the industry workforce—were lost in 2013, according to the Energy Information Administration’s most recent data.
Democrats may not care about their destructive regulatory footprint because there aren’t many electoral votes for them in West Virginia and Wyoming, and three-quarters of the remaining coal jobs are non-union. Thus is another industry unpopular with progressives targeted for political extinction.
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- On January 23, 2016