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Can the Current Two-Front War Allow Coal to Survive?

December 24th, 2013 | by Morris Beschloss | Comments

As domestic coal usage continues its downhill slide in electrical utilities usage, it is now fighting a two-front war, especially in the Marcellus Range mining area, which includes West Virginia, Virginia, Kentucky, Pennsylvania, upstate New York, and Eastern Ohio.

As the anti-coal frontal war was waged by the Environmental Protection Agency, with its hostile regulations, thermal coal for conversion of iron ore to steel has also found its worldwide usage dropping to what is hopefully a temporary lull in its export of thermal coal, downgraded by a global shortfall in steel demand.

But the unexpected “side swipe,” not even anticipated a few months ago, has been the hugely expanding surplus of unused natural gas made available through the awesome shale production of the “Marcellus Shale.” This broad-base oil preserve is second only to the Bakken Belt, in volume and subsequent price reduction per one million British thermal units— natural gas’s global price measuring stick.

This unexpected hyper-volume in natural gas production in mid-Appalachia has further undermined coal usage by increasingly lower pricing in that area for electrical utilities. Coal was already battling restrictive new EPA regulations scheduled to be imposed on new power stations already under construction. With 12 liquid natural gas production and terminals being built for exports, coal’s survival will be under severe pricing pressure in the interim before meaningful volumes of LNG exports to Japan, the United Kingdom, and Central Europe can get underway.

While natural gas, conjoined with oil shale mining, had been previously flared off, it is now being stored in anticipation of increased exports of liquid natural gas made available globally by the second half of next year. But holding up enough shipments making trillions of thermal units available worldwide and as a replacement of fossil fuels, will be progress in the installation of pipelines. These must be in close conjunction with the oil shale production sites, whose distribution pipelines are out of whack. This is due to delays in pipeline infrastructure upgrades that have been totally ignored by a succession of Presidents. They put foreign policy initiatives and confusing healthcare schemes before the critical necessities of a national infrastructure.

This combination of urgent task upgrading not only robs the U.S. of employment and revenue opportunities, but puts the critical needs of the U.S. electrical utility upgrading in jeopardy, as coal fights for usage and price survival through the end of 2014.

On the other hand, these critical problems put America’s everyday energy needs and realistic pricing in jeopardy. Washington, D.C.’s policy-making government will have to stumble its way through this combination of hurdles, before it succeeds in generating a booming 2014 economy, unfortunately delayed at a time when crisis-led leadership becomes imperative. With this unresolved outlook anticipated, will public opinion force the U.S. leadership to become more realistic?

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