Central Appalachian coal, especially in East Ky., may be at tipping point of being uncompetitive

"Unprecedented pressures on the U.S. coal industry and nearly two years of mine closures and layoffs are reshaping the heart of the Central Appalachian coalfields in ways that many experts believe could be permanent," Kris Maher and Tom McGinty report for The Wall Street Journal. "While the coal industry overall is losing market share to abundant natural gas, mines in Central Appalachia have become increasingly uneconomical. Natural gas is cheaper, and so is coal mined in two other big coal basins centered in Wyoming and Illinois."

Harlan, Ky. (David Stephenson for The Wall Street Journal)

The reporters learned from Mine Safety and Health Administration data that the bleakest part of the coalfield (it's singular, not plural) is Eastern Kentucky, and at least one of the writers went to Harlan County, which had 22 producing mines in the second quarter of 2013, exactly half the number it had at the start of 2011. "We're at a difficult crossroads," County Judge-Executive Joe Grieshop told the Journal. "I have to ground people in a reality where the jobs won't come back." The county's 16.3 percent unemployment rate is the 13th highest in the nation, and adjoining Knott and Letcher counties have lost an even higher share of coal jobs.

Nearly all the unemployed miners interviewed followed the lead of regional politicians and blamed President Obama's environmental policies, but "Most coal industry executives see the situation as more complex. They say the stepped-up regulations have exacerbated a market depression brought about by new fracking technologies that have revolutionized natural gas drilling and made it possible to tap massive reservoirs of gas from deep shale layers," the reporters write. Also, Central Appalachia's best coal seams have been mined out, and the field is the nation's most expensive to mine. Kentucky has less higher-grade coal, and less direct rail access.

The Rural Blog has reported much the same, but the Journal reporters offer a global perspective: "Analysts have started to compare Central Appalachia to other mined-out areas around the globe, such as Germany's Ruhr valley, or Great Britain, which employed 6,000 coal miners last year, compared with 150,000 in 1983, according to the British government." They quote Lucas Pipes, an analyst with Brean Capital LLC, a New York-based investment bank: "There are tipping points where the basin is simply uncompetitive against new supply sources, and one could argue that this may have occurred for Central Appalachia."