Coal: Persistent Problems Delay Boom Era

The outlook for coal continued to improve in 1980, fueling expectations that a long-awaited boom is at hand. The surprising surge in coal exports contributed to the latest wave of optimism. Overseas exports hit 66 Mt in 1980, buoyed by a significant increase in demand for steam coal, up from 1979's 2.3 Mt to 15 Mt in 1980. US coal production rose 6.9% to 750 Mt in 1980 and total coal consumption increased 8.1% to about 725 Mt, due primarily to higher world oil prices and setbacks in the US nuclear power industry. Yet the industry is beset with problems-both internal and external. Although demand for US coal is growing, the industry's excess productive capacity is estimated at over 90 Mt/a. Public utilities, where real increases in coal consumption must come, are still moving slowly, blaming delays on antipollution equipment costs. Coal supplies are uncertain, subject to the vagaries of the UMW. For the sixth time since 1964, the coal industry and UMW failed to renew their labor contract without a national strike, reinforcing the perception held overseas that the US is not a reliable supplier. The expected boom in coal exports will, in part, depend on our ability to assure foreign buyers that US sources are dependable. The US industry is also plagued by inadequate facilities linking mines and consumers: inadequate rail systems, coal ports, and barges, For US producers to be competitive, ports must be expanded, rail lines improved, and harbors dredged to allow 136-kt ships to load coal. The im¬provements will require an enormous commitment and investment. Despite these major problems and unresolved issues, two factors continue to favor an increased reliance on coal as an energy source: abundant US reserves and coal's comparative price advantage. Coal's performance in the 1980s may at last exceed its promise.