The War on Appalachian Coal

There does appear to be a war on Appalachian coal, but the enemy isn’t the EPA.  For the last few years, Ken Ward over at Coal Tattoo has been covering issues related to the decline of coal mining and the use of coal as a fuel.  Go to Coal Tattoo and click on Ken’s “peak coal” tag to see the basic thread of his posts.

The decline of the central Appalachian coal resource is one of the main topics that Ken has covered.  As with other peaking natural resources, the best, cheapest to mine coal in central Appalachia, including all of WV, is now gone.  What is left is more and more expensive.  Here is a link to one of Ken’s posts that focuses on this issue.  Be sure to read the comments as well.

Central Appalachian coal is simply being priced out of the market, because it is so expensive to produce, relative to other domestic alternatives.  The WV coal industry (and its pet WV political class) blames federal pollution and mine safety regulations.  Many others point to low natural gas prices.  But WV coal competes first with coal from other areas of the US.

By far, WV’s biggest competitor in US steam coal markets is coal from the Powder River basin in Montana and Wyoming.  This competition does not refer to coal companies, because the three biggest coal companies in Powder River mining are three of the biggest companies in the WV mining business: Arch Coal, Alpha Natural Resources and Peabody Coal.  The companies could care less about WV and WV miners.  They are making more money per ton no matter where the coal is mined.  If Arch and Alpha close mines in Appalachia, their production doesn’t suffer, because they just ramp up mining at their western operations.

Now, we have this fascinating article in the Washington Post.  It turns out that there is a federal agency that is at war with WV coal mining, but it ain’t the EPA.  It’s the Bureau of Land Management, which is essentially giving away mining rights on federal land in the Powder River basin.

The government’s longtime practice of auctioning coal mining rights to a single bidder may have cost taxpayers as much as $28.9 billion over the past 30 years, according to an analysis to be released Monday by the Institute for Energy Economics and Financial Analysis, a Cambridge, Mass.-based think tank.

The non-competitive nature of the federal leasing program is being reviewed by the Interior Department’s inspector general and also will be the subject of an audit by the Government Accountability Office, according to officials at the Bureau of Land Management, which oversees the leasing program.

The phenomenon — in which a mining company draws up a proposed area for leasing, and the Interior Department’s BLM auctions it off to that same firm — is the rule rather than the exception in the country’s single biggest coal producing region. In the 26 coal leases the federal government has awarded in southeastern Montana and northeastern Wyoming since 1991, 22 have gone to a single bidder. In the other four instances, there were only two bidders involved.

That’s right.  The Bureau of Land Management has probably given the coal industry, in many cases the same companies that mine coal in WV,  “$28.9 billion over the past 30 years” in subsidies from non-competitive bidding for OUR COAL.  That is coal that could have been kept in the ground for use by our grandchildren, except it has gone to pay bonuses for Alpha Resources CEO Kevin Crutchfield and other coal operators.

I just had an email discussion with an opponent of wind power who tried to tell me that US wind farm development wouldn’t be viable without federal subsidies.  Has the US wind industry collected anything like $28.9 billion over the last 30 years?  And that was just for coal’s federal mineral rights.

I’ll leave you with this fact from the WaPo story:

On Thursday, the BLM will auction off the right to extract 721.2 million tons of coal from Wyoming’s North Porcupine tract in a region known as the Powder River Basin. Barring an unforeseen development, there will be one bidder for the lease: Peabody Energy, which bought the lease to mine 402 million tons on the adjacent tract in May.

When you hear war on WV coal, don’t think EPA, think BLM.

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