Tell George Allen: U.S. Coal Exports to Europe Reaching Record Highs

By Peter Galuszka

This just in from the trenches of  “The War on Coal.”

How can it be that the U.S. coal industry is heading towards extinction because of Barack Obama’s “war” on the sector when American coal exports to Europe are approaching record highs?

Yes, I have that right. It’s actually an unusual flip side of the natural gas market and it has nothing to do with Obama, the Environmental Protection Agency or nefarious plans to keep Bristol, Va., from becoming the Saudi Arabia of black diamonds, regardless of what George Allen and others say.

Exports of U.S. coal to Europe are now approaching record highs. This year, exports may break a record 112.5 million tons set in 1981 just after the Iranian crisis sent oil prices soaring. You may not remember this, but back then about 100 colliers were swinging at anchor in Hampton Roads waiting for dock space to load up for coal to take back to the Continent.

This time it’s a little different. What’s happening is that natural gas prices in Europe are extremely high — roughly three times what they are here. Utilities that can switch to another fuel are doing exactly that — to American coal.

Why? Simple, hydraulic fracking of shale formations in the U.S. has flooded the utility market with cheap gas. More gas is also being produced in record amounts in the Plains and Southwest along with oil. How can this be when Barack Obama is doing everything he can to break the fossil fuel industry? Gee, I don’t know, let’s ask the Koch Brothers.

Whatever, U.S. coal prices are approaching their lowest prices in 40 years thanks to gas. They were about $160 a ton for thermal product four years ago and now are around $60 a ton. That’s bad news for U.S. coal firms operating in the high cost Appalachians where they may spend more to mine coal than what they can now get for it on the market.

A double whammy hits producers such as Bristol’s Alpha Natural Resources which has rich reserves of coking coal. Alpha had hoped that metallurgical sales to China would continue to be robust but China’s economy is sputtering. So, Alpha lost $2 billion in this second quarter and is laying off 1,200.

But bad news here can be good news somewhere else — namely in Europe. They love America’s cheap coal and can’t get enough of it. True, this may be short lived, but anyone who’s been around the coal industry knows it is always boom-bust. Coal will start to recover domestically next year when natural gas prices start to rise.

As for Mitt Romney, Paul Ryan, George Allen and the rest — it just so happens that their election cycle coincides with the down side of coal’s cycle. Lucky for them it isn’t two years ago. They’d have a hard case to make.

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  1. The one thing about the GOP these days is that not only is Obama the enemy but so is the truth.

    Obama will tell you what his plans are for coal and coal plants

    Folks like Allen will pander and tell outright lies.

    But Allen may well win Virginia which makes me wonder just what the heck is going on with folks who believe the pablum that folks like Allen shovel on a daily basis.

    1. DJRippert Avatar


      Just a smidge of research would so enhance your credibility.

      “So, if somebody wants to build a coal fired plant, they can. It’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted.”.

      Barack Obama
      Jan 17, 2008

      The quote is from an audiotape of Obama. He said those words.
      Now, if you believe the comment was taken out of context, I’d be pleased to hear the context.
      If you believe that Obama has changed his mind on this, I’d be happy to see or read something from the Obama Administration that documents his change of heart.

      However, if the audio was taken in context and he hasn’t changed his mind then it’s pretty easy to understand why coal miners might have a bone to pick with the man. Wouldn’t you say?

  2. DJRippert Avatar

    “As for George Romney, Paul Ryan, George Allen and the rest … “.

    George Romney died in 1995.


    Unfortunately for your thesis, Barak Obama was very clear in an audiotape that he would pursue legislation and regulation that would bankrupt new coal fired plants built in the United States.

    You must believe that Obama was only kidding (i.e. “progressive” for lying) or that the loss of coal sales to electrical generation plants in the United States will be covered by new demand for American coal elsewhere.

    If you don’t believe that Obama was kidding or that long term alternate demand will consume excess coal supplies then you have to believe that Obama’s stated policy on coal use in electrical generation is bad for the coal mining industry.

    Neither you nor President Obama can have it both ways.

  3. Peter Galuszka Avatar
    Peter Galuszka

    Thank you for catching the George Romney typo which I have fixed.
    As for the Obama tape from 2008, my response is underwhelming. That was back in the days when cap and trade was in the wind and many people backed some form of it, including influential CEOs at major coal-burning utilities like Duke Energy.
    Nothing has happened since on cap and trade and is unlikely to in the U.S.
    Otherwise, you kinda miss the point of my post. I’m not talking about what the regulatory climate was in 2008. Since then things have changed and in my opinion Obama has done too little in terms of the environment during his first term. I doubt you would agree with that.
    It’s a side issue in this post — what I am saying is don’t believe all the doom and gloom from the coal industry as they pour money in this race. The reality is that coal will be around for a long time. Whether its many problems are somehow mitigated is another issue entirely. The big reason coal is taking its lumps in electricity generation is that gas is suddenly so much cheaper. Does this affect future coal-fired plants. Hell yes! Especially if you are a financier and you want to be certain of some return from your $10 billion or so investment some years down the road. You are not going to get a return if you need state utility commissions to approve electricity rate hikes and they are bound by law to go with the cheapest fuel available. You aren’t going to have the money for ultra pulverized coal, ammonia CO2 extraction or gasification.
    If you want to invest in coal-fired plants, maybe look at China which plans a whole lot more of them. There’s a theory out there that the Chinese might do well with them since they have the money and can build new ones with advanced technology, rather than slap some retrofits on a 1955 version the way they do here.

    1. DJRippert Avatar


      The second sentence of your article is, “How can it be that the U.S. coal industry is heading towards extinction because of Barack Obama’s “war” on the sector when American coal exports to Europe are approaching record highs?”.

      Well, listening to Obama in 2008 might give you the idea that the sector is “headed to extinction”.

      “Since then things have changed and in my opinion Obama has done too little in terms of the environment during his first term. I doubt you would agree with that.”.

      Actually, I do agree with that. Obama started strong – especially with the EPA – but then he seemed to back down. Maybe a recession is the wrong time for environmentalism. However, if he is re-elected, I hope he gets back on the “Green Train”.

      Coal miners and coal mining communities take “the long view”. Many families in the community have had family members mining coal for generations. From a long term perspective, the coal industry looks pretty bleak to me. That pessimism has a variety of sources, not just Obama. However, I think it’s fair to say that Obama is no friend of the coal industry.

      The bigger question is whether Romney getting elected will make any difference to the coal industry. I doubt it. Fracking for natural gas is the biggest issue and that’s not going away regardless of who is elected.

      Some industries just end. It’s sad but it happens. The problem with coal is that it is the lifeblood of whole communities. If coal mining seriously declines, then what? Will the coal communities morph into something else or become ghost towns?

      I thing the handwriting is on the wall for coal. The decline has started and will continue in coming decades. There will be temporary improvements but the secular trend is down.

      This issue should be addressed by The Imperial Clown Show in Richmond. But … guess what? It isn’t being addressed by The Imperial Clown Show in Richmond.

  4. re: coal plants and “context”

    DJ – do you also acknowledge this context?

    now tell me how one statement applies and the other does not unless you are a partisan?

    Only a partisan would deceive, right?

    so what’s the truth here?

  5. didn’t Romney say the same thing about coal plants than Obama did?

    why do we say this is something DIFFERENT between Obama and Romney when it sure looks like shape-shifter Romney uttered very similar words?

    dealing with partisans is tough work now days – we’ve had a massive infestation.

    1. DJRippert Avatar

      I haven’t said anything about Romney. Neither did Peter’s article. The article referenced Obama.

      1. But Allen is allied with Romney and the GOP in portraying Obama as anti-coal – when, in fact, Romney – a GOP guy – has expressed very similar sentiments.

        There are GOP ads from out-of-state financed by Coal and folks like Karl Rove arguing that Obama is anti-coal and Romney is a better choice.

        George Allen is part of this.

  6. of course the other Romney quote is not be missed either:

    ” Romney in 2003: “I Will Not Create Jobs That Kill People”

    I thought the man has been saying the govt can’t create jobs?

    Shouldn’t he have said instead: “I Will Not allow private industry Create Jobs That Kill People”

    that sounds like “job killing” regulation

    that sounds even worse!

    What you can say about Romney is that he’s like the weather – if you don’t like what he says, just stick around a while.


  7. The expansion of the Panama Canal could also serve to drive down the cost of coal available to China and increase traffic at the port. As you allude to, Hampton Roads has a competitive advantage in shipping coal, largely due to the rail infrastructure leading from the coalfields.

  8. Hokie adds some significant insight.

    and please note – for Va – how much of our exports are manufacture/container and how much is bulk and how much is moved over roads and how much by rail?

    this ought to be a part of the ROI justifications for US 460, right?

    or is it chicken/egg?

    good points Hokie!

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