Politics & Government

After small upswing, coal production and jobs dip again in Eastern Kentucky

After an upswing this year, coal production declined in Eastern Kentucky in the July-through-September quarter and dragged employment down with it.

Statewide, however, production rose for the third quarter in a row because of growth in Western Kentucky, according to a report released Friday by the state Energy and Environment Cabinet.

Tonnage had gone up in nearly every county in the state's eastern coalfield from April through June as companies filled orders after a hard winter, temporarily stanching the loss of coal jobs in the region.

That trend reversed in late summer, and Eastern Kentucky production dropped 4.3 percent from July 1 through Sept. 30, according to the report. Coal employment in the region was down by 205 jobs, a loss of 2.8 percent from the previous quarter, the report said.

Deanie Davis and his employees are living the downturn. Davis, who operates MD Trucking, a coal-hauling business in Floyd County, has had to idle trucks and cut hours for lack of business.

"It picked up a little bit, but it went right back down," Davis said. "The market's bad. It's a whole lot less than it was four, five years ago."

The job losses in the third quarter continue a long slide that has wiped out about half the coal employment in Eastern Kentucky in recent years.

In 2008, the number of coal jobs in the region averaged 14,402 for the year. In the third quarter of this year, an average of 7,229 people had jobs in the coal industry in Eastern Kentucky.

The losses have rippled through the economy. The labor force in a 23-county area of Eastern Kentucky dropped by 18,295 people from August 2013 through September 2014, said Michael Cornett of the Eastern Kentucky Concentrated Employment Program.

"You see how every coal job that's lost translates to additional jobs in other sectors that are also lost," Cornett said.

Many people in the region blame the drop on tougher federal regulations aimed at protecting water and air quality, though analysts say competition from natural gas and from less expensive coal mined elsewhere in the country also have played key roles in the industry's decline in Eastern Kentucky and southern West Virginia.

Still, federal rules have played a role in decisions by utilities to close older coal-fired power plants, which produce more pollution than other generating options, including natural gas.

Persistent attacks on the Obama administration's "war on coal" by U.S. Sen. Mitch McConnell and other political leaders have furthered the argument that environmental rules are killing coal in Eastern Kentucky.

McConnell's re-election win last week and Republicans gaining control of the U.s. Senate — which will put McConnell in charge of that chamber — have raised hopes of better times for Eastern Kentucky's battered coal industry.

"Maybe Mitch McConnell and them can straighten things out a little," Davis said.

Bill Bissett, president of the Kentucky Coal Association, said there was reason for optimism in the industry with the change in Senate leadership.

McConnell and Senate Republicans will be able to push debate on regulations, appoint committee leaders friendlier to coal, have greater control through the budget process, and require roll-call votes on legislation, Bissett said.

No issue worries the coal industry more than the effort by the U.S. Environmental Protection Agency to place new limits on carbon-dioxide emissions from existing power plants, Bissett said.

"I have every confidence that Senator McConnell is going to do everything he can" to counter the Obama administration's stance, Bissett said.

McConnell has criticized current Senate Majority Leader Harry Reid for refusing to allow votes on measures McConnell has introduced to block EPA limits on carbon-dioxide emissions from power plants.

In an interview with the Herald-Leader last week, McConnell said preventing the EPA from putting such regulations in place would be one of his top priorities.

Most scientists agree that carbon is a key greenhouse gas contributing to climate change, which they say will cause problems such as coastal flooding, more droughts and more severe storms.

Opponents of tougher limits argue they would hurt the U.S. economy while accomplishing little benefit for the environment, however, because plants in China and some other countries still would spew carbon-dioxide into the atmosphere unchecked.

McConnell acknowledged it could be hard to rein in the EPA because the only good tool to do that is through the federal budget, an area where President Barack Obama will have considerable power even with the GOP in control of Congress.

And tougher regulations aren't the only challenge facing coal in Central Appalachia, which includes Eastern Kentucky.

Lower productivity and higher coal costs put Central Appalachian mines at a disadvantage against coal from other areas where it's cheaper and easier to mine, said Sean O'Leary, an analyst with the West Virginia Center on Budget and Policy.

O'Leary said government policy wouldn't create a resurgence for Central Appalachian coal.

"Even if you do away with all environmental regulation, they're just gonna mine coal somewhere else," where it's cheaper, he said.

That's being reflected to some extent within Kentucky. Eastern Kentucky had been the state's biggest producer of coal every year since 1911, but companies pulled more coal from the thicker seams in Western Kentucky in 2013, according to the Energy and Environment Cabinet's annual energy profile.

Through the end of the year, production in Western Kentucky had gone up 90 percent since 2003 as Eastern Kentucky dropped, the report said.

Western Kentucky coal was once at a disadvantage because it contains more sulfur, but utilities have installed scrubbers to deal with that pollutant, helping push up production in Union and nearby counties.

At the end of October, the spot-market price for Western Kentucky coal was almost $12 a ton less than for Eastern Kentucky coal, according to the U.S. Energy Information Administration. The price for Wyoming coal was nearly $45 a ton less than coal from Eastern Kentucky.

Federal analysts project that production will increase during the next 25 years in the coal basin that includes Western Kentucky but continue to slide in Central Appalachia, from an estimated 132 million tons this year to 80 million in 2040.

The Energy Information Administration makes projections based on a variety of scenarios. None predicts a return to the production levels in Central Appalachia of even a few years ago.

As it has been for some time, the quarterly report released Friday told a tale of two Kentuckys.

Production in the state's western coalfield increased 5.3 percent from the second quarter, buoyed by the reopening of a large mine in Union County that had been closed for a time in the second quarter.

With the decrease in Eastern Kentucky production, however, total tonnage mined in the state went up just 0.3 percent.

Employment in Western Kentucky was essentially unchanged during the third quarter, rising 0.4 percent.

With the losses in Eastern Kentucky, the number of coal jobs declined 1.6 percent statewide from the previous quarter.

Related stories from Lexington Herald Leader