What Are The Implications Of Coal Models For Coal Producers?

The expanded role which coal has been assigned in the energy future of the United States has raised numerous policy questions. The very complexity of these questions makes them suitable to analysis by econometric models. However, as the Wall Street Journal indicated in its recent article, business' success with such models have been mixed. I have been asked to present my views as to how coal producers can use such models and in what ways the industry is likely to be impacted by such models. I do not presume to speak for the whole coal industry, but only to share with you the personal observations of one who has worked "both sides of the street", having been employed' both by government and a consulting firm prior to joining the coal industry. In my opinion, the use of econometric models to analyze the coal industry will impact the coal producers in two main ways. First, their use by government will have a profound impact on future government policies related to the mining, transportation and utilization of coal. Second, such models, when properly calibrated and refined, may become useful tools for the coal producers in doing market research and long-range planning. While the former has already begun to impact on the operating environment or the coal industry, the latter is still in the embryo stage.