Whose energy future?

Shipping it out!

Courtesy morguefile


By Bob Flatley

As America looks for ways to become energy independent, coal companies are spending a good deal of money to convince us that they have the answer. Their argument is that coal can forestall a domestic energy crisis because American reserves are abundant and cheap. They’re also suggesting that liquefied coal could, in time, replace imported oil. However, in an ironic twist, America’s big coal companies are scrambling to export our supposed “energy future” out the door as quickly and cheaply as possible. That’s because the price of exported coal is selling for nearly double the price of domestic coal.

As noted in the Financial Times, coal prices in Asia reached an all-time high this January due to acute shortages in Australia, South Africa, and China. This overseas demand is increasingly being met by American companies, which are expanding their production of coal, as well as their capacity to export it. In February, the largest U.S. coal exporting terminal in Houston announced that it is expanding operations and staff to meet the increased demand for exports. They expect to export almost double the amount of coal this year than last.

All this is great news for coal companies, but bad news for consumers. That’s because worldwide demand for our nation’s coal is expected to result in industry pressure to weaken environmental regulations, increase the number of environmentally destructive mines, and raise costs for domestic coal, which will inevitably result in higher electricity bills.  

American coal exports peaked in 1990 at over 105 million tons, but then steadily decreased afterwards because of the availability of cheaper supplies in Europe and Asia. The recent and drastic reversal in this situation has proven the coal market to be as volatile and unstable as the market for oil—yet another reason why coal is an unlikely candidate for anyone’s energy future.

Bob Flatley is the chair of the Kittatinny Group and serves on The Sylvanian’s advisory committee.

Published April 2008