Search This Blog

Thursday, July 12, 2012

The Slow Demise of Coal

"To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it." — Thomas Jefferson

Obama stated during the 2008 presidential campaign his dislike of coal as a source of energy and his plans to destroy the coal industry. As part of his hope and change mantra he kept pushing “green energy” as part of his transforming America agenda. He said he did not care if energy costs doubled he wanted America to go green. In four years we have not even come close to going green even though the government has wasted billions of dollars on solar and wind power.

Recent news that President Obama's re-election web page on energy policy didn't include coal on the list of "all of the above" energy sources sparked outrage in coal-producing states like Kentucky, Virginia, West Virginia, Ohio and Pennsylvania. The website had listed oil, natural gas, bio-fuels, wind, solar power and nuclear power but omitted coal, a fossil fuel that left-wing environmental groups despise.

After criticism from members of Congress and conservative bloggers, the753px-2008_US_electricity_generation_by_source_v2 Obama campaign put "clean coal" back on the "all of the above" energy list. The Obama administration now says that coal is an "essential" part of the administration's energy strategy. Coal accounts for 44 percent of electricity production in the United States, and coal mining is a major source of union jobs. Even after the Obama campaign put clean coal back on the list, the attacks and controversy live on, and there is now speculation that Mr. Obama may have done his campaign real damage in battle ground states like Virginia and Ohio.

According to Wikipedia coal accounts for 44.9% of our electrical generation.

Energy Source




Natural Gas






Other Renewables




The original decision to leave coal off of the list was exposed by Ed Whitfield, the Republican congressman from Kentucky, who called it a "glaring omission" and relentlessly attacked the Obama campaign for putting coal jobs at risk. Mr. Whitfield has made the case that Mr. Obama and the Environmental Protection Agency have been engaged in a "war on coal." He remains "skeptical" that Obama will "do anything to draw on this resource" and continues to fume at new EPA regulations that threaten to put many coal-burning fire plants out of business.

The Obama campaign gaffe, if it was one, has come at the worst possible time for the president. Republicans in the Senate have been ridiculing his "none of the above" energy strategy. They point to the decision not to build the Keystone pipeline; to the reduction in Interior Department leases for oil and natural gas drilling; to Solyndra-type scandals with renewable energy grants; and to high gas prices.

Even though Obama’s campaign staff has backtracked on their stand on coal the Obama administration, through draconian regulations from the EPA, have slowly been destroying the coal industry causing our costs for electrical energy to go up and displacing thousands of workers — workers who for generations have supported their families by working in the coal industry.

According to a recent report in Bloomberg Patriot Coal, one of the largest producers of coal in the United States, has filed for bankruptcy and terminated over 1,000 jobs. The report states that two of the reasons for Patriot’s actions were the declining cost of natural gas and the increasing cost of coal due to EPA regulations. The report states:

“Patriot Coal Corp. (PCX) sought bankruptcy protection after milder winters and a shift to natural gas sent coal demand to a 24-year low.

The St. Louis-based company’s Chapter 11 petition listed $3.57 billion in assets and $3.07 billion in debts. The filing in U.S. Bankruptcy Court in Manhattan said dozens of the company’s units would join in the filing.

“The coal industry is undergoing a major transformation and Patriot’s existing capital structure prevents it from making the necessary adjustments to achieve long-term success,” Chief Executive Officer Irl F. Engelhardt said in a statement that cited lower thermal coal prices, canceled customer contracts and rising costs for environmental liabilities for increasing pressure on the company in recent months.

Patriot already has a loan to finance operations in bankruptcy and expects its mining operations and customer shipments to continue through the case, the company said in its statement. The $802 million loan, which still requires court approval, is through Citigroup Global Markets Inc., Barclays Bank Plc and Merrill Lynch, Pierce, Fenner & Smith Inc. as joint lead arrangers.

The company intends to “emerge as a viable and strong competitor in the coal industry,” Chief Financial Officer Mark Schroeder said yesterday in court papers. Patriot needs to trim labor costs because of declining prices and demand for coal, along with regulations that will require the company to spend hundreds of millions of dollars on water-treatment facilities and pension benefits in coming years, he said.

The company will also seek court approval to pay employees and continue health-care and other benefits, according to the statement.

Patriot has 13 active mining complexes in Appalachia and the Illinois Basin and controls an estimated 1.9 billion tons of coal reserves, according to its website. It sells thermal coal to electricity generators and metallurgical coal to steel and coke producers.

Wilmington Trust Co., and U.S. Bank NA were among Patriot’s largest unsecured creditors, according to court papers. Wilmington is a trustee to $250 million in notes and U.S. Bank is a trustee to $200 million in notes. The filing listed BlackRock Inc. (BLK), State Street Corp. (STT) and Vanguard Group Inc. as entities that control 5 percent or more of the voting stock in the company.”

The Report continues:

“U.S. coal use in the first quarter was the lowest for that period since 1988, according to the Energy Information Administration. Utilities have switched some power plants to cheaper natural gas as regulations restricting emissions make coal costlier to burn. Gas fell to a decade low in April amid a surplus of the fuel.

This year, Patriot has reduced thermal coal production by more than 4 million tons, trimmed costs and laid off 1,000 employees or contractors, according to a May 9 filing with the U.S. Securities and Exchange Commission.”

In a companion report on energy Forbes reported that the Federal Energy Regulatory Commission (FERC) has filed a petition against the bank in the context of an investigation into the alleged manipulation of energy markets in California and the Midwest. The Forbes report states:

“A petition filed Monday at a federal court in Washington DC revealed that FERC is conducting an investigation into JPMorgan’s “abusive” bidding strategies in energy markets, possibly inflating prices by more than $73 million.

FERC has served JPMorgan with at least two subpoenas since April, as the bank headed by Jamie Dimon has refused to hand over at least 25 emails with potentially sensitive information. The regulator is now asking the court to force the bank to hand those over, while investigating the potential violation of JPMorgan’s “duty to make truthful and non-misleading communications to the Commission and regional energy market operators.”

The regulator is accusing JPMorgan of using at least four “abusive” bidding strategies that have helped it extract “exaggerated” payments from wholesale markets in the Midwest and California. Complaints coming from the California Independent System Operation (CAISO) and the Midwest Independent Transmission Operator (MISO) sparked an investigation into how JPMorgan was potentially gaming the system to its own benefit.”

Obama’s energy policy is a fraud at best. He is pandering to his radical left-wing environmental base. Every time the cost of energy increases it’s tantamount to a tax. Not only does the cost of you electricity go up but so does the costs for food stuffs, goods, and services you purchase that are dependent upon electricity. Supermarkets need electricity to refrigerate their perishable items. Hospitals need electricity to run all of their diagnostic equipment and monitors. In a recent heat wave on the east coast people had no air conditioning causing the deaths of babies and seniors.

Obama’s obsession with green energy, while placating his radical base, is killing the American people. It is causing rising prices and losses in jobs. How is this hope and change working out for you?

No comments:

Post a Comment