Fracking has been a boon to the national economy, but the national economy doesn’t buy groceries.
Grocery bills, just like paying rent or making payroll, fall to individual families and businesses, just as paving streets and building schools falls to local communities. And while fracking’s natural-gas boom has left some people — and some communities — flush with the cash they need to pay their bills, for others fracking has made life all the more difficult.
Such is the case in eastern Kentucky, a hardscrabble swath of coal country that has long teetered on the brink of destitution. Now, an influx of cheap natural gas, combined with an avalanche of new regulations from Washington, is threatening to send it over the edge.
Kentucky is the third-largest coal-producing state in the nation, trailing only Wyoming and West Virginia, but the industry has fallen on hard times in recent decades. Twenty years ago, Kentucky’s annual coal output totaled more than 150 million short tons. By 2011, the last year for which the federal Energy Information Administration had final data, that total had fallen by a third.
A struggling coal industry is not unique to Kentucky; production totals have leveled off across much of Appalachia.
In other Appalachian states, however, coal’s struggles have been offset by a burgeoning natural-gas industry, where new fracking technologies have allowed gas drillers to develop gas out of the Marcellus Shale formation. In neighboring West Virginia, for example, gas production is rising so quickly that state officials are hoping to use the resulting tax revenue to pull their state out of its dire poverty.
But through a cruel confluence of geology and geography, the shale boom is likely to leave Kentucky behind.
The Marcellus formation stretches across West Virginia, but — as if by design — it makes a cookie-cutter neat stop at the Bluegrass State’s border. Consequently, West Virginia is producing four times as much gas as Kentucky, and there is little evidence that Kentucky will catch up.
As of 2011, Kentucky had 41 billion cubic feet in proven shale gas reserves, which sounds promising until one considers that West Virginia is sitting on more than 6 trillion.
Unable to change their geology, Kentucky’s state and coal industry officials have trained their focus on coal’s other major challenge: the Obama administration.
In the president’s push to green the nation’s energy sector, coal has often been on the receiving end of some of the toughest regulations. Shortly after taking office in 2009, President Obama and then-Environmental Protection Agency Administrator Lisa Jackson imposed tougher standards on mountaintop removal and other surface coal mining. Upcoming EPA greenhouse-gas regulations for power plants also threaten the industry, as coal is among the most carbon-intensive power sources.
Those regulations, more than the fracking boom, are threatening coal, industry advocates say.
“Our industry is fine to compete against natural gas. We have throughout our existence,” said Bill Bissett, president of the Kentucky Coal Association. Bissett said coal has more long-term price stability than natural gas, and that it would do fine in a “fair playing field” free of excess regulation.
And as for a comeback to raise eastern Kentucky’s economic tides, “the first thing we have to do is find a market,” Bissett said. “A place [where] that coal we have in the ground in eastern Kentucky can be sold.”
Such customers, however, are primarily coal-fired power plants, and those may soon become harder to come by, as old plants are retired and utilities make decisions on what types of power to turn to next.
Coal has never been the prettiest of fossil fuels: It contains nasty compounds and produces nasty by-products, and getting it out of the ground requires practices that strain the environment and miners alike. The fuel built its dominant role in the economy — it still produces more electricity than any other source — because it has long been the cheapest.
Now, thanks in part to the decreased production costs of natural gas, that calculus may be changing. The EIA produces an index of the cost-effectiveness of energy from new power plants. Coal has long led that field, but in the agency’s latest projection, which sought to measure which power source would be the most cost-effective for plants coming online in 2018, its advantage had been all but eroded by natural gas.