Coal Industry

Regulations are killing the coal industry.  They are destroying jobs.  They destroy who communities and a way of life.  Obama declared war on the coal industry. I dig coal.

This is of course not my opinion.  It’s the opinion of  Trump and EPA director, Scott Pruitt.   I think the recent Frontline show, War on EPA, provides the viewpoints of both Trump supporters and opponents.  You can see the entire program online:

http://www.pbs.org/wgbh/frontline/film/war-on-the-epa/

About 50 minutes into the program, there is this wonderful quote from Betsy Sutherland, who  was the Director of the Office of Science and Technology until Sept 2017,  about working with Scott Pruitt, “He just doesn’t ask any questions.”  Bob Murray, COE of Murray Coal was quite candid about his influence on the Trump administration: “I gave Mr. Trump what I call an action plan very early on.  It’s about 3 1/2 pages long.  He’s wiped out [completed] page one.

As very briefly mentioned in the program, it is not just about carbon emission, but a long range of regulations on harmful pollutants that Scott Pruitt is rolling back.  These regulation range from the reporting of methane emissions from the natural gas industry to the banning of harmful pesticides.  Another words, what industry wants is exactly what industry gets.  You can’t be sued for methane emissions if nobody knows how much was released.

And one would think that the fossil fuel industry would be soaring on the news that the Clean Power Act is about to be repealed by the EPA.  This is hardly the case.  I can’t say how Murray Coal is reacting to Trump’s agenda because it is a private company.  However, the stock price of the  world’s largest coal company with a market cap of around 3 billion dollars, Peabody Energy (BTU), continued it’s downward decline, with a stock price of around $28/shr, far below its Nov 2012 price of $377/shr.The coal industry has been in a long term decline.  What is killing the coal industry is automation in the mines, and low cost natural gas, not regulation.  The lack of enthusiasm from the stock market on coal stocks pretty well proves this point.

The benefits of the Clean Power Plan Act were far reaching, and included economic, climate and health benefits.  When Scott Pruitt was asked about the relationship between the recent series of hurricane and warming waters due to climate change, he said this was not the appropriate time to consider this subject.  I consider it highly appropriate time to recognize climate change is a factor in the intensity of hurricanes.

Related Links:

https://en.wikipedia.org/wiki/Clean_Power_Plan

Fareed Zakarian, columnist for the Washington Post, really got it right!

China is winning the Future

Stay tuned,

Dave

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The leaked DOE Report

The Secretary of Energy, Rick Perry, issued a memorandum on April 14, 2017 directing  preparation of a study that examines whether recent problems associated with baseload power plants may be putting the nations’s energy security and reliability at risk.

It was to be a 3 month study.   A June 26, 2017 draft was leaked and posted to the internet.  The leaked draft report is provided below. It is long detailed technical analysis.

353980477-DOE-Reliability-and-Baseload-Report-Draft-June-26

Many fear that the report would try to blame the government subsidies for alternative energy sources, including wind and solar,  for the decline in the coal use.  The study clearly points out that fossil fuel and nuclear plants also benefit from government subsidies.

Oil is generally not used as a fuel for power plants.  The main fuels are natural gas, coal, nuclear, hydroelectric, solar and wind power, with the latter 3 considered renewables.

What will be interesting, is whether the Secretary will accept the findings of his Department, or attempt to reformulate the report.  It is due to be released next week, so we will know for sure, if the official study is much different from this draft.

Stay tuned,

Dave

 

How much of Trump’s speech on exiting the Paris Accords was true?

It was an amazing concoction of false statements and misleading or invalid statistics.   Of course, this is Trump’s style.  The transcript of the speech is shown below:

Transcript of the speech

In fact, it is hard to find anything remotely honest in the entire speech.  All the dire economic consequences of the Accords were from an outside consulting study (NERA)  based on  highly unrealistic set of assumptions. The NERA study had other scenarios with more realistic assumptions.  It was produced in March 2017 and paid for by a conservative political organization.    None of the economic projections were  based on EPA studies.  Other studies  have repeatedly shown many positives to our economy, including  investments in clean energy will  create many high paying jobs.

It would have been a simple  2 minute speech if it were a honest one, as it would read, “Steve Bannon and the extreme conservatives don’t like the accord, because like the UN itself, we spend money to help solve the world’s problem.  Plus, global warming isn’t like crime in the streets; it doesn’t make big headlines in the news.”

Trump began his speech by mentioning the  casino attack in the Philippines as  a terrorist attack.  It was a botched robbery according to police.  But, at the time of the speech, ISIS had claimed responsibility, as they are prone to do with almost  any mass killings.  So, Trump has as supporting evidence, only ISIS.

Trump mentioned a long list of achievements, which really overlap with the Obama administration.    The job increase was really inline with gains in employment seen from about October 2016 until now.  Nothing remarkable.

The word “Global Warming” was not in Trump’s speech, nor is there any admission of a problem of our carbon emission.  His line, “I was elected to represent the citizens of Pittsburgh not Paris” received applause from those gathered in the Rose Garden.   The Paris Accord is a world agreement of 193 counties which could have been agreed upon in Pittsburgh.

It is a voluntary agreement, where each country makes pledges or commitments to reduce their own emissions.  Some environmentalists were disappointed at how low the targets were, but at least there were these basic elements (1) Admission that a global problem exists (2) Carbon emissions by the 193 countries can be monitored and reported to the United Nations (3) Each country is free to determine how they will reduce their emissions and (4) Developed countries will each set up a “Green Fund” to assist undeveloped countries in developing technology and programs to produce clean energy.

The citizens of Pittsburgh will pay more for food,  along with the rest of the US, as flooding and violent storms increases due to global warming. To keep our farms functioning,  taxpayers will continue to subsidize crop insurance, right now about 26 billion dollars.  It’s going to get a whole lot worse.  Sea levels will rise and places like Florida will have a difficult time with their fresh water supply.

With the dismantling of the Clean Power Act, solar energy investments will slow and jobs will be lost.  Coal employment (~60,000 employees) is not going to recover because power plants will use natural gas.   A good example is Cloud Peak Energy, which had a market cap of 500 million on November 7, 2016, now is reduced in half to 250 million.   Peabody Coal came out of bankruptcy on April 10, 2017 and so far has lost about 10% in market value  (market cap losses = 235 million dollars).

I saw on the news last night, a wonderful woman from West Virginia saying, “I’m not a climate change denier.”

Now the fact checking:

Factcheck.org

Politifact.com

The  economic statistics were generated in March 2017 by a consulting firm, which Trump pulled some statistics based on some extreme assumptions.

The Paris Accords were terribly miss  characterized by Trump.  Each country has pledged targets for carbon emissions and it is up to each country to develop programs or technologies to achieve these goals. Some countries are doing well in achieving their target goals.

I like how Politifact.com described the economic statistics:

Trump cited a number of negative statistics about the predicted economic impact from the climate deal, including a $3 trillion drop in gross domestic product, 6.5 million industrial sector jobs lost and 86 percent reduction in coal production, all by 2040.

Take these statistics with a grain of salt.

It’s just more BS, to be honest.

Politifact.com  and factcheck.org  websites found very similar dishonest statements.

Economic statistics:  Based on a flawed study

The statement, “China will be allowed to build hundreds of additional coal plants. But, we can’t build the plants, but they can, according to this agreement.”  is not in the agreement.

Statement, “At 3-4% growth, as I expect, we will need all forms of American energy, or our country will be at grave risk of brownouts and blackouts.”

A growth rate of 3 to 4% hasn’t happened in the last 12 years.  The red hot economy of 2005 ended with the collapse of housing market in 2007, and the recession lasting through 2009.  What seems immensely absent in the speech, is that fossil fuels are non-renewable fuels. Their extraction is becoming more expensive not because of regulation, but because we have used up so much of the easy to extract fossil fuels.

Global warming needs carbon emissions monitoring and goal setting.  Obama set this in motion.  Trump just denies the problem exists.  Trump is not making the country great.  He is making China great by sacrificing our technological leadership in clean energy.   June 1, 2017 was a disgraceful day, as we exited the world accord on global warming with a speech with a rapid fire series of flawed statistics and dishonest conclusions.

Stay tuned,

Dave

 

 

 

 

 

 

 

 

The Paris Accords Exit

The announcement will be made at 3:00 pm today (June 1, 2017).    It has been widely rumored that Trump will pull out of the Accords.  The Agreement was a very major step forward in acceptance of a global problem.

CNN outlined three options that Trump has: (1) The Normal Exit- by withdrawing from the Accords by 2020 (2) The Radical  Exit- by withdrawing from the UN organization (UNFCCC) under which the Accords were agreed upon and (3) The non-exit, which Trump simply ignores the provisions of the Accords.

The radical exit is the one supported by conservative groups,  such as the Heritage group.  The coal companies such as Peabody and Cloud Peak Coal, want Trump not to exit the Accords, as this puts the EU in a leadership role in setting targets.

Options

A final option (“death in the legislature” option)  is for Trump to  state the Accord is really a treaty, which must be ratified by 2/3 of the Senate.  With the Republican controlled Senate, the treaty would be “dead on arrival.”   This would change the issue to one of Obama overstepping his authority, and Trump might just go for it.

The Paris Agreement is more of an “agreement in principal”  rather than a treaty, as it lacks any penalties for countries who do not reduce their carbon emissions. It is an important first step as it is an  agreement of mutual commitment  to a global problem.   As it is structured,  the US could stay in the Accords,  do nothing to reduce these emissions and not be sanctioned by the UN.

Obama signed the agreement as an Executive Order.  Trump can legally exit the agreement, but has to comply with the set schedule if he wants to do the normal exit.

I predict that many countries will be looking more at the “non-exit” or “non-compliance” option, which means climate change is something leaders of the countries are concerned about, but  nobody does much about it.

This will leave the US as the only one of 193 countries to exit the Accord.

Stay tuned,

Dave

A Seat at the Table for the Devil

The Paris Climate Agreement was considered a major breakthrough by most environmentalists.  The US was e in a leadership role recognizing  carbon emissions reductions requires international agreements, particularly from Brazil, India and China.

Trump vigorously campaigned against the Paris  Climate Agreement.   He said repeatedly the Agreement  was against our national interest, and was a job killing/ coal industry destruction plan.  The Democrats were trying to put the coal industry out of business.

Now, two of the largest coal companies,  Peabody and Cloud Peak are urging Trump to break his promises and stay in the Paris Climate Agreement.     Murray Energy,  a private company which bills itself as America’s largest coal company, wants Trump to pull out.  Robert Murray was at the signing of the Executive Orders to rescind the Clean Power regulations.

The reasons to stay in, is to keep EU leaders from taking control and setting tight international  environmental standards on the burning of coal.    This would hurt US export of coal, which declined by 23% in 2015.  The 2016 figures have not yet been released, but I don’t expect any better numbers. Our exports are around 74 million short tons.  Major declines in exports were from UK, Italy and South Korea in 2015.

It is also quoted in the article below that pulling out of the Accords might affect World Bank funding for international coal projects, which would hurt only the very large coal companies. Most of the coal companies operate only in the US.   Peabody coal owns coal  mines in Australia.  It may be there is concern with World Bank financing new coal generating plants.  Being part of the Accords can give the major platform to promote “clean coal technology.”

US Coal Companies ask Trump to stick with Paris Climate Deal

Trump’s campaign rode on Republican rhetoric and the highly simplistic theme of  America First.   The most pro-coal industry president we ever had, may end up doing more harm than good to his supporters.

Stay tuned,

Dave

 

 

 

 

 

Coal Companies and Jobs

For those who watch Jim Cramer’s Mad Money show, one might thing the coal producers would be the perfect “Trump stock” as the EPA is set to reverse course on air pollution standard regulations, enacted during the Obama era.

But coal stocks are not doing well at least in the last 3 months.  Since the beginning of 2017, Arch Coal (ARCH) is down 16% and Cloud Peak Energy (CLD) is down 27%.

We have plenty of coal resources, but declining demand.  See prior post, “Coal Craziness” for more details with links.   The decline in employment over the last 70 years or so, is due to a high level of mechanization in the mines as well as less demand for coal.  The electric producers will use the lowest cost fuel, and natural gas is a very competitive alternative to coal.

I suggested in my last post, that coal miners might be able to retrain for the more lucrative area of the manufacturing of  solar energy photo-voltaic panels.  A recent university study suggests this is possible, and the benefits would be enormous:

Coal to solar transition

The coal industry is not disappearing (sorry Al Gore) but the solar energy industry is likely to be booming in the next 5 to 10 years.

Investing in solar energy has been a bumpy ride.   I would never think “green energy” and Trump policies go together.  But based on  year to date, investing in a solar power fund  (KWT)  would have made about 10%, better than the market average of 6%.    Pulling out the international agreements to reduce fossil fuel emissions, and subsidies for the solar industry are among the worst plans of the Trump administration.

Stay tuned,

Dave

 

 

 

Coal Craziness

One of President Trump’s promises was to bring back coal mining jobs.   The total mine workers in the coal industry is around 65,000 employees.down from peak of around 80,000 employees in 2011.

EIA website statistics

The production and  consumption over the last 15 years look pretty similar- a rising trend then a declining trend beginning in 2008.

The Energy Information Agency of the US Department of Energy, provides a comprehensive report each year.  A link to the 2016 report is provided below:

EIA Report on coal

There are really no encouraging statistics within this report.  Coal prices are down significantly.  Virginia’s coal prices were down 20%.   Productive capacity, or how much the US could produce, is definitely in decline.  There is a 5% increase in productivity,  or the tons of coal produced per employee- which might help the bottom line of mining companies, but further reduces employment.

US coal is used to produce electricity.  The reason for the decline in coal prices, production, consumption and employment is cheaper natural gas.

EIA Update on Natural Gas Prices

The trend to more power plants using natural gas is likely to continue.  The warm winter likely means less energy use.  Both natural gas and coal consumption are likely to decline in the next few months.

Deregulation is likely not to change much of the basic economics. See link:

Deregulation won’t work

Note that in the above article, they cite 200,000 jobs lost in 2 years and I state it is closer to 15,000 jobs since 2011.  My figures are strictly workers in mines, while some of the larger coal mining companies have gone out of business causing much larger job loss.

Hopefully, the employees with jobs less connected to the coal industry, can find other opportunities. Maybe in the booming solar industry- who knows

Stay tuned,

Dave