CHAPMANVILLE, W.Va. — The Tug Valley Mining Institute held a dinner meeting Thursday, September 15, at the Logan County Club. Speakers at the meeting were Robert E. Murray, Chairman, President and Chief Operating Officer of Murray Energy Corporation, and Bill Cole, West Virginia Gubernatorial candidate
Murray spoke on the troubled coal industry in West Virginia and gave some staggering facts in a prepared speech which he titled “The Destruction of the National and West Virginia Coal Industries and Actions That Must Be Undertaken to Preserve What We Have Remaining.” Murray summarized his remarks at the dinner, but a printed copy of the speech was available to guests.
The following excerpts were taken from the Murray’s speech:
— “The carnage in the American coal industry is, by far, the worst that I have seen in my nearly six decades in it. Not only are coal companies financially reeling, but electric power producers cannot discharge their coal-fired generating stations. Capacity utilization at coal-fired plants was only 54.6 percent in 2015 and 46.3 percent in the first quarter of 2016.”
“United States coal production is now the lowest since 1978. Our industry produced 1.163 billion tons in 2006. But, according to the Energy Information Agency, it is only projected to produce 732.8 million tons in 2016. Of this, 672.9 million tons will be for electric power generation. Coal exports will be 58.7 million tons this year.”
“In Central Appalachia, including West Virginia, the destruction has been far worse. The Central Appalachian region produced about 184 million tons of coal in 2011, and only 90 million tons in 2015, with continuing declines this year.”
“While American coal industry employment has been nearly cut in half in the last five years, from about 97,000 miners in 2011 to 52,000 today, the job loss rate in West Virginia has been far worse. The State had 24,765 coal industry workers in 2011, but has only 11,628 coal miners today. Coal production has been reduced over this time from 34 million tons per quarter to 19 million tons in the second quarter of this year. Remember, each coal mining job creates an additional up to 11 jobs in our communities to provide the goods and services required by each miner. So, the devastation in West Virginia has been tremendous.”
“There are currently 52 bankrupt coal companies in the United States. This year, the prestigious McKinsey and Company issued a study showing that, as whole, the United States coal industry is not only bankrupt, but that it also lacks $45 billion in the funds needed to cover its debt and employee-related and reclamation liabilities.”
“Fitch ratings just reported that an ‘unprecedented peak’ of 43 percent of the coal sub-section has been drawn into financial default. These bankruptcies are dominos in the entire coal industry collapse. In this historic rout, over the past five years, the coal industry lost 94 percent of its market value, from $69 billion to about $4 billion. This valuation has rebounded in the second half of 2016 to $7.7 billion.”
— “Prior to the election of Barack Obama as the President, 52 percent of America’s electricity was generated from coal. Six years ago, I predicted that this percentage would drop to 30 percent, and I was chided for this. The percentage is currently 29.9 percent. If we do not overturn the Obama Administration’s so-called Clean Power Plan (CPP), against which Murray Energy Corporation (“Murray Energy”) has achieved a stay in the United States Supreme Court against the United States Environmental Protection Agency (“EPA”), the amount of electricity generated from coal in America will drop to 18 percent, with the loss of 56 more coal-fired generating stations (49,000 megawatts) on top of the 411 plants that Mr. Obama and his Democrat supporters have already closed.”
“Why have we been besieged by this destruction of our industry and livelihoods? There are two reasons, natural gas and Democrats in the Federal government.”
— “But, the increased use of natural gas is only one of the reasons for the drastically decreased utilization of coal for electricity generation. The primary reason is the war on coal from the regal, outlaw Obama Administration, with its appointed, unelected bureaucrats and Democrat political supporters. They have been bypassing the States and their electric utility commissions, United States House and Senate, Constitution, and the law by promulgating endless regulations that will drastically increase electricity costs, reduce the reliability of its supply, and greatly damage our Country. In 2008, Mr. Obama stated that he would “bankrupt” our industry. With the help of radical environmental organizations, liberal elitists, and political supporters, the Administration has accomplished this.”
— “The Obama Administration added 81,700 pages of new regulations in 2015. Rules from the Obama EPA alone now total over 25 million words, 38 times more than those in our Holy Bible. Nineteen of the 30 regulations from the Federal government over the past 15 years, which each cost Americans more than $1 billion, came from the EPA.”
— “Unfortunately, past West Virginia leadership, including recent Governors, have carried the State’s finances on the back of coal. The industry now pays 60 percent of the State’s business taxes through the five percent severance levy, together with the utilities that burn the coal, and real property, sales and use, payroll, commercial activity, personal property, and income taxes. Based on its seven percent contribution to the State’s Gross Domestic Product, coal pays 10 times its fair share in taxes.
“On an assumed low State average coal selling price of $45.00 per ton, f.o.b. Mine, the West Virginia severance tax amounts to a very high $2.25 per ton, which is unbearable in today’s coal markets.
“This compares to no coal severance at all in the States with which West Virginia coal directly competes, which are Pennsylvania, Illinois, and Indiana. Ohio’s and Maryland’s taxes are only $0.10 and $0.15 per ton, respectively.”
— “According to recent, expert studies by a major accounting firm, every coal mining job in West Virginia is responsible for $1.2 million in economic output and $656,000 in gross domestic product in the State. This is based on the very low multiplier used by the West Virginia Coal Association of 3.6 secondary jobs created by each coal mining job.
“This multiplier assumes that, for every 100 direct West Virginia coal mining jobs, there are an additional 60 jobs required to transport the coal by barge, truck, and rail. Another 86 jobs are needed to support the coal and transportation jobs, such as equipment sales and repair, financial, legal, accounting, mine food supply, and security services, as well as all energy requirements, including electricity and liquid fuel. Moreover, these workers use their paycheck to buy all sorts of goods and services for their families. This creates another 114 jobs, making a total of 360 positions for each 100 mining jobs.
“Murray Energy uses an 11 ton one multiplier of secondary jobs for each coal mining job. Using an average of the 3.6 and 11.0 multipliers yields 7.4 secondary jobs for each mining position. This produces and economic output of $6.3 million per coal mining job. Thus, depending on the assumed multiplier, at the very lowest, each coal miner generates a minimum of $1.2 million in economic output yearly, and, at the assumed average, $6.3 million in annual economic activity.”
— “The West Virginia rainy day fund has grown, and the coal industry accomplished this. But, the actions of the Obama Administration and his supporters in their war on coal, and the increased use of natural gas to generate electricity, are fatally “storming” on coal. And, an independent study has identified over $300 million annually in State government waste.
“The very high and unfair West Virginia coal severance tax is penalizing coal producers, exacerbating Mr. Obama’s war on coal, and destroying high paying, well- benefited jobs in the State. It is also yielding an unstable and untenable tax base for West Virginia.”
“The proposed severance tax reduction is the difference in making a coal sale or not. This reform will also extend the economic life of West Virginia’s coal-fired generating stations.”
“Even at the two percent severance tax rate discussed, the coal industry will still be paying West Virginia at a rate of at least $0.90 per ton, even on an assumed low coal price. This is against our surrounding states, which have no such tax at all.”
“West Virginia leadership must reduce the State’s coal severance tax to no more than two percent to help save what is left of our coal industry and jobs….”
“Ladies and gentlemen, this critically needed tax reform and the other changes that are needed in our Federal government are human issues to me. You see, I know the names of most of our employees whose jobs and family livelihoods are at stake.”
“Our employees do not want Mrs. Hillary Clinton’s proposed ‘expansion’ (her word) of the Obama policies toward coal or her proposed $30 million in welfare to support West Virginia communities after our miners’ jobs are destroyed. Our folks only want to work in honor and dignity.”
Murray urged guests to elect gubernatorial candidates Donald Trump for United States president and Bill Cole for West Virginia Governor.
“I am not giving up on the West Virginia coal industry or the people in it, nor should any of you. But, we must elect Donald Trump and Bill Cole, end the repressive Federal regulations of the Obama Administration, and enact immediate West Virginia coal severance tax relief to preserve what is left of our livelihoods,” Murray said.
Cole expressed his respect for Murray before giving some background information on him self.
“The man is a true hero and patriot in my book,” Cole said.
Cole said he was from Southern West Virginian and a car dealer. He grew up in Bluefield and continues to live there.
“I grew up in the coalfields. My family business was a truck dealership and selling coal trucks,” Cole said. “I went through all parts of Southern West Virginia and Kentucky and that’s where I grew up. This business is my heart and let me assure you, as a car dealer, I’m feeling the hurt too. I’m feeling the pain this industry is going through.”
Cole said he is dedicated to the coal industry but knows the state needs diversification in its economy.
Cole ended his speech asking for support from those attending.
“I want to create an environment that our kids can stay home, that we quit sending the next generation down the road to Charlotte or some where to find their future. We’ve become the oldest state in the nation because we’ve sent our youth camping away,” Cole said. “Obviously I’m going to ask for your support. I’m in this 100 percent for the right reasons… I have the skill set and I have the mind set… I have the grit and determination to do the heavy lift. A lot of things won’t be real popular, but we are in a crisis… I will do what is right for West Virginia and West Virginians, irregardless of how it looks in the polls for how it looks for a second term. That’s the only campaign promise I am going to make.”
The dinner meeting was sponsored by Cowin & Company Inc.
The Tug Valley Mining Institute represents southern West Virginia, eastern Kentucky, and southwest Virginia and currently has membership from Pike and Martin counties in Kentucky, Buchanan County, Virginia, and from Wayne, Mingo, and Logan counties in West Virginia.
Martha Sparks is a reporter for Civitas Media can be reached at 304-752-6950, ext. 1728.