Behind Coal's Decline: Cheap Natural Gas Threatens Industry, Despite Trump's Promises

Murray Energy's bankruptcy filing on Tuesday underscored the continuing decline of the country's coal industry. The nation's largest privately owned coal producer became the eighth producer to file for bankruptcy since Donald Trump took office, emphasizing the contrast between the president's rhetoric about restoring jobs and his actual ability to revitalize the industry.

A half-century ago, coal supplied almost half the country's electricity, but it provided only 27.5 percent last year, according to the U.S. Energy Information Administration (EIA). The agency projected earlier this month that the proportion of U.S. electricity fueled by coal will continue declining in the coming years, providing 25 percent of energy in 2019 and 22 percent in 2020.

On average, more coal capacity has been retired during each year of Trump's presidency than during each year of Barack Obama's tenure. While an average annual capacity of 5.6 gigawatts was retired each year Obama was in office, 9.6 gigawatts have been retired each year under Trump, Rhodium Group, an independent research company, told Newsweek.

The decline in coal, experts told Newsweek, is being driven by the natural gas boom and the rise of renewable energy sources.

"The bankruptcy filing is based [on] the economics of coal—it is getting out-competed by inexpensive natural gas, during both administrations," Samantha Gross, a fellow in the Cross-Brookings Initiative on Energy and Climate, told Newsweek.

"President Trump promised to bring back coal, perhaps because he believed the narrative that regulations were harming the industry. The truth is that the U.S. natural gas boom, which the Trump administration supports, dealt the deadly blow," she said.

The U.S. surpassed Russia as the world's largest natural gas producer in 2011, and the upward trend is continuing. U.S. natural gas demand reached a record high in August. The EIA said in August that U.S. production of natural gas and petroleum had risen significantly in 2018 and set a new production record. At the same time, the amount of energy provided by renewable sources has been rising.

Even as the energy configuration in the U.S. continues to shift, rising exports to other countries have helped boost the coal industry.

U.S. coal exports increased 61 percent in 2017 and in 2018 reached their highest level in five years. But those exports dropped 18.1 percent in the first half of 2019.

"In 2017 and 2018, coal companies were generating a lot more cash flow than many would have anticipated," Benjamin Nelson, a coal analyst at Moody's, told Newsweek. "As export prices dropped in 2019, it in effect had a double whammy, by creating fewer opportunities outside the U.S. but also magnifying the impact inside the U.S."

Coal
Miner Doug Rutherford takes a break after his shift at a small coal mine outside Welch, West Virginia, on May 19, 2017. Spencer Platt/Getty Images
Behind Coal's Decline: Cheap Natural Gas Threatens Industry, Despite Trump's Promises | News