CHARLESTON, W.Va. -- The London-based Financial Times says U.S. natural gas prices are in "freefall" because of ever-greater production from the Marcellus Shale field in West Virginia and Pennsylvania. Prices have dropped from $4 per million BTUs in 2009 to about $3.30 today.
"The Marcellus field is enormous," the international business journal said. "The U.S. Energy Information Administration last week more than doubled its reserve estimate for the region . . . as companies use horizontal drilling and hydraulic fracturing to break open shale rocks and liberate trapped gas. This is nearly a quarter of total U.S. shale gas reserves."
Cheaper natural gas hurts West Virginia's coal industry. Low-cost gas is capturing a larger share of the power plant market. Coal production in Central Appalachia (southern West Virginia and eastern Kentucky) keeps shrinking as easy-to-reach seams are mined out and cheap Wyoming coal undercuts Appalachian prices. Federal analysts predict that Appalachian tonnage will drop to half by 2040.
Statistician Jeff Green of Workforce West Virginia says natural gas employment is rising and coal employment is declining as market factors take effect. His office is to release an updated report on the trend later this month.
These economic changes inflict suffering on West Virginia coal communities. For example, Consol Energy laid off 465 workers in Clay County during the past year -- blaming the shutdown on an environmental lawsuit. Such a loss in a rural region is devastating.
West Virginia politicians and the mining industry rarely mention economic factors crimping Appalachian coal output, but blame the decline solely on federal pollution controls. A delegation of top Democrats went to Washington this month for a White House showdown with the new chief of the Environmental Protection Agency.
Various national reports say coal's decline is caused chiefly by ruthless, dog-eat-dog, free-market factors: Cheap gas grabs energy sales away from coal. Last month, billionaire investor Warren Buffet commented:
"Coal will gradually decline in importance, and of course when natural gas prices get low enough, you have a big switchover."
A recent National Center for Policy Analysis report said:
"Natural gas is poised to replace coal as the most cost-effective fuel for electricity generation. . . . Over the last decade, net coal-fired electricity generation decreased 10 percent, while natural gas-fired generation increased 50 percent. Proven gas reserves have increased 80 percent since 1990. Oil and gas extraction employment has increased by 27.5 percent since 2008, whereas total non-farm employment is down 3.4 percent. Natural gas production increased from 0.38 trillion cubic feet in 2000 to 4.8 trillion cubic feet in 2010."
Pollution rules undoubtedly are a factor in coal's worsening status -- but other factors loom larger. Instead of focusing blindly on pollution rules, West Virginia leaders should launch a major study into all aspects of coal's future, to chart an intelligent course through the profound economic shift that is occurring.