Market Forces
Old King Coal Won’t Retake His Throne

American coal use last month saw a record year-over-year increase, according to one of the industry’s key metrics. This will undoubtedly read by some as evidence of President Trump following through on his campaign promise to revive the struggling coal industry, but the fossil fuel’s stellar February was the result of market economics, not federal policy. Reuters reports:

The Association of American Railroads (AAR) said on Wednesday that the number of rail cars loaded with coal in February increased over 19 percent compared with the same month in 2016, the biggest percentage gain on record, according to AAR data to 1988. […]

Gas prices rose in late December, and analysts have been predicting an improved outlook for 2017 for coal, as higher gas prices make coal the cheaper fuel for some power generators, according to analysts and government studies.

There are a few things to parse here. First, coal sales rose because the its chief competitor—natural gas—got more expensive. So while the coal industry heralded the Trump presidency as “a great day for coal miners and their families,” the president can’t take credit for this bounce.

Second, this was only an historic moment on relative terms. AAR Senior vice president of policy and economics John Gray explained to Reuters that “[while] it’s an impressive gain, February 2017 was, unfortunately, also the second worst February in absolute terms for coal since sometime before 1988.” In other words, coal couldn’t have risen so much last month if it hadn’t fallen so far in recent years.

Finally, let’s acknowledge that it was cheap shale gas that knocked coal off of its perch as America’s go-to source for power generation, not overregulation by President Obama. Trump is going to try to roll back regulations on the coal industry to make it easier for these companies to compete with upstart shale producers, but he’s not going to hamstring our fracking revolution to save coal country. To the extent that reduced regulations help boost coal firms’ bottom lines, we can also expect similar gains for tight oil and shale gas companies.

Donald Trump won’t be able to revive coal because that sooty rock is going up against what is perhaps the most dynamic energy juggernaut in the world today: the shale boom. Natural gas prices have dropped 30 percent over the past three months as burgeoning domestic supplies continue to flood the American energy marketplace. Coal may have had a good February, but its longer term outlook hasn’t gotten any better.

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