Study Finds Surprising Reason for Appalachian Coal's Decline — and It's Not Natural Gas
View on Pittsburgh Business Times website"A new study finds that the high costs of production is helping to sink Appalachian coal.
The working paper, 'Coal Demand, Market Forces and US Coal Mine Closures,' was published by Resources for the Future, a Washington, D.C.-based nonpartisan environmental think tank, and funded in part by the National Science Foundation. Its finding about coal mining production costs being a larger factor in mine closures differs from the conventional wisdom in the industry, which generally centers on low natural gas prices squeezing out coal.
Joshua Linn, senior fellow of Resources for the Future and a co-author of the report, said he and co-author Ian Lange of the Colorado School of Mines set about to perform a rigorous analysis of what was driving the closures. Thirty-one percent of the nation's coal mines, many of them in the East, have closed since 2008, and mining employment has dropped 23 percent.
Linn said the study found that as mines age and reserves are depleted, production costs began to rise and productivity declined in the early 2000s among Appalachian mines compared to other parts of the country. The study, using Energy Information Administration data, found per-ton extraction costs doubled since 2002."
