WASHINGTON: The coal-mining jobs that President Trump thinks were destroyed by government regulation—adopted to combat air pollution and global warming—were actually lost to old-fashioned competition from other American firms and workers. Eastern coal mines lost market share to Western coal, which was cheaper. And natural gas grew at coal’s expense because it had low costs and lower greenhouse gas emissions.
That’s the conclusion of a new study by economist Charles Kolstad of the Stanford Institute for Economic Policy Research, as reported on the Conversable Economist website. Kolstad’s conclusion mirrors the finding of Glenn Kessler—The Washington Post’s “Fact Checker”—who disputed the recent claim by Scott Pruitt, administrator of the Environmental Protection Agency, that Trump’s policies had increased coal employment by nearly 50,000. Pruitt had wrongly attributed most increases in “mining” jobs to coal when most occurred in oil and gas operations. The number of added coal jobs, Kessler estimated, was closer to 1,000.
According to Kolstad, the combined effect of cheaper strip-mined Western coal and greater supplies of natural gas has devastated the coal industry.
For years, coal was the dominant fuel for electricity production, accounting for 50 percent to 60 percent of generation. But the expansion of natural gas, made possible by “fracking” (technically: “hydraulic fracturing”—the opening of natural gas fields by injecting high-pressure water into gas seams), has displaced coal in many parts of the country. Since 2008, coal production has dropped nearly 40 percent, from almost 1.2 billion tons to about 728 million tons in 2016. The share of electricity fueled by coal fell to 32 percent in 2016, slightly behind the 33 percent for natural gas, estimates the US Energy Information Administration.
Employment losses are even more dramatic. In its heyday, coal mining accounted for nearly 400,000 jobs (to be precise: 388,000 in 1950). By 1979, that had already dropped to 227,000, and in 2015, the total was 75,000. Although natural gas explains most recent losses, the earlier declines reflected the inroads of cheaper Western coal into the markets long dependent on costlier Eastern coal. Indeed, Western coal has provided all of the increase in total coal output since the mid-1970s.
It’s not hard to see why. Strip mining is vastly more efficient than traditional deep mining, which is dangerous and unhealthy. By Kolstad’s calculation, a typical worker in the West in the early 2000s could mine 19 tons of coal an hour compared with about four tons an hour for Eastern miners. “The size of some of these mines is mind-boggling,” said Kolstad in an interview. “One mine supplies 8 percent of US production.”
Government regulation has had a mixed effect on coal—but probably not in the way most people imagine, Kolstad said. In the 1970s, Congress protected the industry’s traditional Eastern employment base by including provisions in the Clean Air Act that favored its coal over Western supplies. Later, Congress changed tacks by deregulating the railroad industry. This led to a 50 percent drop in freight rates for coal. The lower transportation costs “vastly expanded the market for Western coal at the expense of Eastern coal.”
The point here is simple. Even if environmental regulation and climate change didn’t exist, the coal industry would have faced intense pressures to change and adapt. Government isn’t killing the coal industry. “Progress is the culprit,” concludes Kolstad’s study.
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