Blame Cheap Natural Gas for Coal’s Woes

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Keep in mind that when you hear Republican Senators blasting the President for a War on Coal, the big threat to the coal industry is cheap natural gas, not the EPA. While it’s true that the EPA has done a fair amount to put the squeeze on older coal-fired plants, the effect of those policies is to make coal energy more expensive. Reduce the number of coal energy suppliers and you drive up the price.

What’s different about the natural gas glut is that it’s attacking coal from the demand side – gas energy is so cheap right now that people want gas instead of coal, and the reduced demand for coal is hurting its value.

Scott Detrow explains this in the context of what’s happening to Greene County’s tax base:

Greene County is covered in natural gas drilling rigs. But in an odd twist, the Marcellus Shale boom is indirectly putting a dent in a portion of the county’s tax revenue.

Here’s why: the domestic shale gas boom — specifically the cheap natural gas prices it’s created — has undercut the coal industry. Coal layoffs and reduced production has hurt the value of coal, and as the Observer-Reporter reports, that’s now impacting tax base.

Interestingly, the article notes that land values in Greene County have gone up, probably due to natural gas speculation bidding up land prices. Greene County might do well to shift their property tax onto land, and grab some of that speculative windfall to fund public services.

This entry was posted in Budget, Economy, Environment.

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