Alpha Natural Resources Idling Coal Mines; Laying Off Over 300

Looks like the people described in this morning's post might actually have a good reason to drink. Back on October 12th of last year, in my post, "Peak Coal Hits Appalachia," I cited the following quote from a Huffington Post story:

Coal here is getting harder and costlier to dig – and the region, which includes southern West Virginia, Virginia and Tennessee, is headed for a huge collapse in coal production.

The U.S. Department of Energy projects that in a little more than three years, the amount of coal mined here will be just half of what it was in 2008. That's a significant loss of a signature Appalachian industry, and the jobs that come with it.

Well, as reported by the Columbus Republic on Tuesday, it looks like that prediction is coming true:

Alpha Natural Resources says its decision to scale back production and idle some coal mines will cost 152 West Virginians and 168 Kentuckians their jobs in the coming weeks.

Media outlets say the West Virginia mines being idled include the No. 2 Gas Mine in Kanawha County and the Randolph Mine in Boone County, both underground operations.

Hours are being cut at Boone's Black Castle surface mine and the Progress/Twilight surface mine, and at Logan County's Camp Branch surface mine.

The Alloy Powellton Mine in Fayette County is eliminating one underground section.

So tell me again what happened to the "two hundred years' supply of coal" America supposedly has?


Bonus: We are not men, we are...coal miners?

Household Electricity Bills Skyrocket

Does it feel like your electricity bill has been going nowhere but up lately? You're not alone in that feeling. Just as the Great Recession has been taking a huge bite of of the finances of tens of millions of American households, electricty costs have deviated from their historic norms and are also putting pressure on family budgets, as reported by the USA Today:

Electric bills have skyrocketed in the last five years, a sharp reversal from a quarter-century when Americans enjoyed stable power bills even as they used more electricity.

Households paid a record $1,419 on average for electricity in 2010, the fifth consecutive yearly increase above the inflation rate, a USA TODAY analysis of government data found. The jump has added about $300 a year to what households pay for electricity. That's the largest sustained increase since a run-up in electricity prices during the 1970s.

Electricty is consuming a greater share of Americans' after-tax income than at any time since 1996 — about $1.50 of every $100 in income at a time when income growth has stagnated, a USA TODAY analysis of Bureau of Economic Analysis data found.

Greater electricity use at home and higher prices per kilowatt hour are both driving the higher costs, in roughly equal measure:

•Residential demand for power dropped briefly in 2009 but rebounded strongly last year to a record high. Air-conditioners and household appliances use less power than ever. A new refrigerator consumes half the electricity as a similar one bought in 1990. But consumers have bigger houses, more air-conditioning and more electronics than before, outpacing gains in efficiency and conservation.

As in many other areas of the American economy, aging infrastructure is a big factor causing the increase in costs:

Duke Energy says the rate increase is needed to pay for replacing old power plants and making the transmission system more reliable. The Charlotte-based utility has reached a tentative agreement with North Carolina to raise rates 7.2% in February, lower than its original 17% request.

"The industry as a whole is facing higher costs because we're retiring our aging fleet" of power plants, says Duke Energy spokeswoman Betsy Conway.

All of which is going to be yet another drag on consumer spending, which makes up about 70% of the American economy. That means there are soon going to be more abandoned shopping malls like the one I wrote about this morning.

Peak Coal Hits Appalachia

image: West Virginia coal mine, circa 1908

For much of the past decade, coal has been touted by industry flacks and in the media as being the answer to America's future energy needs. Among the notions tossed about during these discussions is the laughable Orwellian concept of "green coal" as well as the idea that we have "a couple of centuries" worth of the stuff still in the ground.

Well, somone might want to review that second talking point, because as pointed out in a recent article that appeared in the Huffington Post, production in America's oldest coal region is dropping fast:

When business screeched to a halt at Jerry Howard's eastern Kentucky mine engineering company two years ago, he decided to call it quits after four decades in the coal industry.

"We were sort of forced out," Howard says of the former company, Walturn, where he was part owner.

Business owners like Howard, politicians and miners in the hilly coalfields of Central Appalachia blame the industry decline on tougher regulation from the Obama administration. They aren't as ready to talk about something a change in administrations cannot fix. The region's thick, easy-to-reach seams of coal are running out, forcing many operators to shift to cheaper and more destructive mining methods that draw heavier environmental regulation.

Coal here is getting harder and costlier to dig – and the region, which includes southern West Virginia, Virginia and Tennessee, is headed for a huge collapse in coal production.

The U.S. Department of Energy projects that in a little more than three years, the amount of coal mined here will be just half of what it was in 2008. That's a significant loss of a signature Appalachian industry, and the jobs that come with it.

"The seams of coal that are left in this area are harder and harder to mine, and they're thinner and thinner and thinner," said Leonard Fleming, a retired Kentucky miner and union leader in Letcher County who worked in the industry for 32 years.

Wow...a 50% crash in production in just seven years sure sounds like Appalachia has hit Peak Coal, all right. As we peakists say about oil, the peak comes when most of the easy to obtain and cheap to produce stuff is all gone, leaving the more expensive and difficult to extract portion behind. And that is clearly what is going on here, or as it was summed up at the end of the article:

Justice said when he was just getting into the business, an old veteran of the mines gave him some words to live by.

"He said, `The number one rule in mining is you mine the best and then what's left is the best,'" Justice said. "They've been mining coal here in the valley for about 100 years. And the first day the first guy mined the best lump of coal he could find – that was the easiest to get."