Coal Tattoo

Coal industry decline: What about the people?

This morning, CONSOL Energy is reporting a net loss for the 3rd quarter of 2012 of $11 million, compared to a net income during the previous quarter of $167 million. The company explained:

The loss was due to a series of planned and unplanned idlings, as the company scaled back production to meet a weaker market, which will also have a residual impact during the fourth quarter.

Now, part of the problem for CONSOL is that two new conveyor belts that move coal at its huge Enlow Fork and Bailey mines in western Pennsylvania collapsed back in July:

This incident caused a total of four longwalls to be idled for approximately three weeks, at which point one rebuilt conveyor belt was re-started. Production from these mines was at approximately 60% of normal for most of the remainder of the third quarter. The company’s third quarter net income would have been an estimated $53 million higher, had the conveyor belt incident not occurred.

But here’s the other thing:

Much lower sales from the company’s flagship low-vol Buchanan Mine also reduced third quarter profitability, as the company chose not to sell into a market that was experiencing an inventory de-stocking.

Now keep in mind, then CONSOL announced in early September that it was temporarily idling the Buchanan Mine, a southwestern Virginia congressman held up the move as evidence that the Obama administration’s “war on coal” was destroying the industry:

Incumbent Republican U.S. Rep. Morgan Griffith blamed President Barack Obama, the U.S. Environmental Protection Agency, and activist groups for attacking the coal industry.

“With current policies, the down economy is not going to improve soon,” Griffith said in a written statement issued Tuesday. “Obviously, this means that construction, including items built with steel, have been put on hold.

“President Obama, his Administration, and his allies – like and the Sierra Club – are all very clear about their agenda – make using coal history,” Griffith said. “Today’s news is just the latest demonstration that this agenda is making gains. … I believe the administrative branch of the federal government and its leaders are arbitrarily and capriciously targeting this profession.”

CONSOL, of course, said nothing of the kind. It said the Buchanan idling was simply a response “to weak market conditions throughout its export markets in Asia, Europe and South America.”

By the way, the announcement of the Buchanan idling also included a similar move at CONSOL’s Amonate complex in McDowell County, W.Va.  The Friends of Coal over at West Virginia MetroNews reported on that at the time, as did the Bluefield paper, which also dutifully repeated Rep. Griffith’s statement blaming the move on President Obama and his “war on coal.”

But guess what? Here’s what CONSOL mentioned in this morning’s earnings release:

The Buchanan Mine is expected to restart the week of November 5 with a five-day work week schedule, while Amonate is likely to remain idled for the remainder of 2012.

So one of these two operations is going to reopen. Why? Well, it’s the market. CONSOL CEO Brett Harvey explains his company’s big-picture this way:

CONSOL is serious about maintaining market discipline. Our premium low-vol coal is a scarce resource. When temporary market imbalances occur as they did this quarter with our overseas customers, we choose to idle our mine rather than force tons into the market.  Our actions, as well as the actions of others, should enable the metallurgical coal market to come into balance faster. We have a strong balance sheet with a high level of liquidity, which allows us to exercise production discipline.

 Over at the great Climate Progress blog, Stephen Lacey wrote this about the CONSOL moves and coal market changes in general:

At no point did the company blame EPA regulations in its announcement. Rather, Consol pointed to weak demand for metallurgical coal, which is used for iron and steel production, not power production.

Consol idled two other mines earlier this year for 1-2 weeks due to weakening demand for thermal coal used in power plants. But this has mostly to do with natural gas eating into the competitiveness of coal — a trend Republicans have held up as a miracle of the free market. At no point did Consol blame EPA regulations for those brief closures either.

According to the Analysis Group, an economic consulting firm, most of the coal plants that are set for retirement would retire without any new air pollution rules from the EPA. That’s because our coal fleet is pretty old — the median age of U.S. facilities is 46 years. It’s also because a lot of coal plants are switching to natural gas.

The Brattle Group, another consulting firm, also recently issued an analysis of coal plant closures, concluding that there are “somewhat more retirements are likely (about 25 GW) than we foresaw in late 2010. However, that change is primarily due to changing market conditions, not environmental rule revisions, which have trended towards more lenient requirements and schedules.”

Read: new EPA regulations have had very little impact on any changes taking place within the coal industry.

But gosh, Stephen was pretty selective in his quoting of the fantastic story Vicki Smith from The Associated Press did about coal’s current troubles, including only this part of Vicki’s piece:

But what’s happening now is more than a seasonal slump or even a response to new regulations.

It’s a fundamental shift, and it’s likely permanent, as even coal executives say. When St. Louis-based Patriot Coal filed for bankruptcy in July, it didn’t mention a war. It said the industry is going through “a major correction,” a convergence of “new realities in the market.”

Environmental standards are growing tougher as Americans outside coal country demand clean air and water. Old, inefficient, coal-fired power plants are going offline or converting to natural gas, cutting into a traditional customer base. And that gas poses fierce, sustainable competition, thanks to advanced drilling technologies that make vast reserves more accessible than ever.

Even if the reviled regulations fell away, many experts say, coal’s peak has passed.

Stephen also wrote of Vicki’s story:

The AP story also points out another fact that “War on Coal” messengers are silent on: Virginia and West Virginia have supported more coal jobs in June of this year than at the same time in 2010 and 2008, according to the Bureau of Labor Statistics.

In addition, coal exports are set to hit an all-time high this year, according to the Energy Information Administration.

Climate Progress is a widely read and respected blog, and it might have done its readership some good if Stephen had quoted some other parts of Vicki’s story, like this:

The war on coal is a sound bite and a headline, perpetuated by pundits, power companies and public relations consultants who have crafted a neat label for a complex set of realities, one that compels people to choose sides.

It’s easier to call the geologic, market and environmental forces reshaping coal — cheap natural gas, harder-to-mine coal seams, slowing economies — some kind of political or cultural “war” than to acknowledge the world is changing, and leaving some people behind.

Or maybe this part:

Coal helped build America. It powered steam engines on railroads that opened up the West. It fueled homes and factories. It made a lot of people rich and others comfortable. By the early 1900s, more than 700,000 men and boys worked in the nation’s mines, many for coal barons offering opportunity and brutality in equal measure.

Or this part:

On a single day in September, Virginia-based Alpha Natural Resources closed eight mines in four states, announcing that, by early next year, about 1,200 jobs nationwide will be gone.

“That’s 1,200 people not going to the grocery store,” said Tracy Miller, a miner’s wife in Keokee, Va.

Not going to Walmart. Buying less gas. Postponing home improvements. Forgoing little luxuries like a dinner out.

Most of the first 400 cut were lucky; all but about 130 got transfers. Driving to a new job several hours away is hard, but it’s better than no job at all. For those truly out of work, options are limited. Logging, maybe. More likely, something in the service sector.

“But if there’s no coal mines,” Miller said, “there’s not going to be a dollar store, either.”

Coal remains the economic pillar of many Appalachian communities, the foundation of a mono-economy that political leaders have for generations lacked either the will or the ability to diversify.

Without coal, families can’t put food on the table or pay for the roofs over their heads.

The specter of losing it creates fear, frustration and anger.

“I’ve done a lot of praying, and my family’s done a lot of praying. We’ve literally been scared to death,” said Shana Lucas, whose husband, Trent, was among the lucky ones, transferred when the layoffs hit Wise, Va.

“I don’t think people understand the lack of job opportunities here,” she said. “Coal is the only thing we have here besides fast-food restaurants.”

The miners who resisted exploitation helped shape the principles of modern labor law: Pay by the hour. A week that lasts five days, not seven. Black men and white men paid the same.

Small towns sprang up along railroads and rivers that shipped the coal out. Miners were proud of their work, and still are. Today, though, fewer than 100,000 remain. Machines replaced many, while other jobs vanished as the fat, easily mined seams played out.

It’s wrong for the coal industry and its political supporters to make out like today’s coal industry decline is all caused by President Obama and the EPA. But it’s just as wrong for the good folks who rightly argue the nation needs to take action on global warming and work toward a cleaner energy system to ignore or try to downplay the real impacts that the changing energy markets and the decline of the coal industry are having in places like Southern West Virginia. It’s true that coal jobs were on the rise in our part of the world for the first three years of President Obama’s term. But it’s also true that there have been a series of significant layoffs — producing a net loss of 1,300 jobs in West Virginia so far. That number is likely to go higher when full 3rd quarter figures are released.

In a speech earlier this year, AFL-CIO President Richard Trumka spoke eloquently about climate change:

Today, as we meet together, scientists tell us we are headed ever more swiftly toward irreversible climate change—with catastrophic consequences for human civilization. We must have a stable climate to feed the planet, to ensure there is drinking water for our cities but not floodwaters at our doors. A stable climate is the foundation of our global civilization, of our global economy—the prerequisite for a profitable investment environment.

And to those who say climate risk is a far off problem, I can tell you that I have hunted the same woods in Western Pennsylvania my entire life and climate change is happening now—I see it in the summer droughts that kill the trees, the warm winter nights when flowers bloom in January, the snows that fall less frequently and melt more quickly.

But he also spoke some important truths about life in the coalfields:

Now, some people’s response is to demand that we end all coal production now—they say “End Coal.” Never mind that such a thing is simply not going to happen—there is no substitute now for metallurgical coal and if we stopped burning coal this afternoon and cut the power in the U.S. grid by 50 percent, as Mayor Bloomberg advocates, he’d be reading handwritten memos by candlelight this evening. Given that reality, it’s important to think about how that slogan is heard in places like my hometown of Nemacolin, Pennsylvania.

Nemacolin lives on coal—the coal mine my grandfather and my father went down to every day of their working lives, the power plant the mine feeds, the rail lines that carry coal to other plants. When these folks hear “End Coal,” it sounds like a threat to destroy the value of our homes, to shut our schools and churches, to drive us away from the place our parents and grandparents are buried, to take away the work that for more than a hundred years has made us who we are.

We’ve certainly heard little from either presidential candidate about how they would help the Appalachian coalfields get through the hard times ahead. But we seldom hear from from our friends in the environmental community about that, either. Yesterday, a bunch of young people visited Gov. Tomblin to try to encourage him to start planning. The ball is in the governor’s court. Will he at least meet with this young folks right away, and appoint the non-partisan commission they recommended?

One of the few bright spots I’ve seen in recent weeks on these issues were the comments of Anthony Flaccavento, the Democrat who is running against Rep. Griffith down in Virginia, when the temporary idling of the Buchanan Mine was announced:

“The idling of the Buchanan Mine is another sign that we need a strong, comprehensive plan to help put Southwest Virginia back to work,” Flaccavento said Tuesday. “We need to develop regulations that strike a better balance between jobs, the safety and health of miners, and protection of our neighbors’ land, air and water. We must free up the real job creators: the middle-class and working-class families who represent the majority of consumer demand, the small business owners and entrepreneurs who expand to generate the majority of new jobs, and the independent community banks that help finance that expansion.”

Flaccavento said that focusing on the region’s overall economy will increase demand for steel and other construction materials, helping to boost demand for the region’s metallurgical coal.

“As we do this, we also need to fully support laid-off miners and their families,” Flaccavento said.

The Roanoke Times endorsed Flaccavento, saying:

Flaccavento offers moderation and focuses on people, not industry. While he supports coal mining, he recognizes that it will not provide stable employment and a solid economic base for the region indefinitely, no matter what Washington does. Instead, he wants to bring home tools and investment that will allow workers to transition to new industries for long-term success.

He cites Griffith’s opposition to measures to help coal miners and their widows receive black lung benefits as emblematic of a Republican preference for companies over communities.

Indeed, Flaccavento’s sympathies have long been clear. He walked the lines with striking miners during the Pittston strikes of 1989-90.

Many residents of the 9th already know Flaccavento from his other work to help the economically distressed district. For example, he helped launch the Abingdon Farmers Market, which became the first in Virginia to accept food stamps and became a model for other communities.

Flaccavento demonstrates a thoughtful command of the issues that is unusual in a first-time candidate. On issue after issue, from health care reform to the deficit to taxes, he frames solutions in terms of what would most benefit the people of his district. That is a view that has been missing for the last two years under the tea partyer from Salem.

The United Mine Workers also endorsed him, by the way …