Market Forces
More Signs Coal Is Struggling

No matter where they look, American coal producers are struggling to find a market for their product. U.S. coal production tumbled 17 percent in 2016 in large part because demand for the fossil fuel is drying up. As the EIA reports, imports and exports of coal both fell last year:

The United States remained a net exporter of coal in 2016, exporting 60.3 million short tons (MMst) and importing 9.8 MMst. U.S. coal exports fell for the fourth consecutive year, down 13.7 MMst from 2015, with 2016 exports less than half of the record volume of coal exported in 2012 (125.7 MMst). Slow growth in world coal demand combined with supplier competition were the primary factors contributing to the decline in U.S. coal exports.

U.S. coal exports declined through most of 2016 despite mid-year increases in international coal prices. Lower mining costs, cheaper transportation costs, and favorable exchange rates continue to provide a market advantage to other major coal-exporting countries such as Australia, Indonesia, Colombia, Russia, and South Africa.

Coal was once king in the United States, and its dirt-cheap price helped offset its outsized environmental impacts, which included large emissions of greenhouse gases as well as more localized air pollution. But coal’s premier position has come under attack in recent years as the fracking boom has unlocked a flood of cheap, plentiful natural gas. Shale gas is beating coal at its own game by beating it on price, and nearly every metric used to assess the industry—production, consumption, imports, exports, jobs—describes an energy source in decline.

That’s an important fact for the Trump Administration to keep in mind as it crafts its America First energy policy: market forces, not overregulation, are the driving force behind this shift. Coal country is suffering because it simply can’t compete.

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