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Life Health > Annuities

The problem with coal

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No one wants coal miners in West Virginia, Kentucky and southwestern Pennsylvania to be out of work, but the lumpy black stuff is in trouble. Part of the “coal problem” is the cheapness of natural gas (up some in price recently, due the bitter national cold weather; if you participate in natural gas programs, you gotta pray for cold winters, right?

Even so, aside from the temporary uptick, natural gas is cheap and the low price is in part is due to the crazy U.S. oil boom, where domestic production for both oil and gas is up, up, up).  

And, of course, the right blames the demise of coal on the administration. I seem to remember, though, that the conservatives took the president to task in the beginning of his first term because he had too many White House visitors from the coal industry. It is hard to have it both ways: (1) He is a friend of coal and they helped elect him and visit him too much, or (2) Obama hates coal). 

Coal got hit by the freight train of the new oil and natural gas boom. If natural gas burns clean and the price is right, no one wants coal. It’s as if the bituminous and anthracite black stuff is tied to the train tracks, like Pauline in the silent films, waiting to be rescued by a hero.

Miners like to work and–having grown up some in southwestern Pennsylvania, just a few miles from West Virginia–I feel for them. Over the next 10 years, I can see gasoline getting cheaper, and natural gas staying fairly cost efficient (they are burning the stuff off in the Bakken in North Dakota—producers are producing so much that they can’t get it to market; lots is wasted).

Cheap now, natural gas seems to cycle. When we have back-to-back cold winters, investors line up for the tax advantages; over 10 years, though, there are liable to be as many warm as cold winters and the last few years have been dismal for natural gas investors. But, for oil and natural gas, cycles may go on hiatus; it’s basic economics—the more we produce, the lower the price. 

Have a wonderful week, pray for a miracle for the coal miners (but maybe short coal), okay?


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