Decline of Coal

By Grace Zhang ‘23

It’s a coald, cruel, world. The diminishing role of coal in America’s energy sector has lead to the eighth coal industry bankruptcy over the past year. The victim this time was Murray Energy Corp. Murray Energy was the largest private coal producer in the United States, and its CEO Robert Murray had been self-dubbed the king of the coal industry. Robert Murray was just 16 years old when he started working in coal mines. At the age of 48, in 1988, he had earned enough to purchase a single mine in St. Clairsville, Ohio. He has since expanded his company to employ more than 7000 employees, and the company’s holdings included now 17 active mines in 6 states and 2 countries, making Murray Energy into the largest privately-owned U.S. coal miner. Despite its relative success, the company could not hold up to the tide of cheaper energy alternatives.

President Trump’s time in the Oval Office had seen to the rollback of many Obama-era environmental regulations and the installation of a former coal lobbyist to the Environmental Protection Agency. Robert Murray himself had been a close ally of the Trump administration, lobbying to the president for a federal bailout of the U.S. coal industry. His efforts, it seems, have been in vain, with Murray Energy having missed its payment to creditors late last month and entered into a forbearance agreement that bought it time to negotiate a restructuring. But time has long since run out, and Murray Energy was still unable to pay its bills. The company's credit rating was downgraded to "default" earlier this month.

Murray Energy had been one of the few big coal miners to withstand the broader industry downturn through financial engineering, including their 2018 bond exchange. However, now, some of their junior bonds were trading for mere pennies. This is a reflection of the broader industry’s declining role in the United States. Last year, demand for coal fell to its lowest point in 40 years, and production dropped to the second-lowest it has been. Its expected to drop by a further 17.3 million in exports by 2020, having already dropped 20.9 million in the third quarter of 2018, which is a 28% drop from its exports last year at this same time. Conversely, this past April, renewable energy resources like solar and wind power had, for the first time, made up more of the U.S.’s energy production than coal. As renewable energy becomes cheaper and more accessible, more American families and businesses are switching to using hydro-electric, wind, or solar farms to power their activities. It may be a coald, cruel, world for coal, but the future of energy is looking rather sunny.