President Obama Needs This Industry to Survive
Last year's election featured a pretty heated debate on the future of coal in America. Many living in the Pittsburgh area, where I reside, weren't too happy with President Obama's attitude toward coal, as evidenced by the yard signs. With so many jobs tied to its production, they simply wanted the war against coal to end so that the high-paying jobs that it produced would stay in the region.
While coal producers are feeling the pinch and the coal industry has been a job killer in terms of domestic consumption, there is some hope. Coal exporst have been booming. In fact, exports have more than doubled since 2008 and growth in coal exports are only expected to grow in the future thanks to demand overseas as well as the availability of additional export capacity.
As it turns out the coal export market is really carrying a lot of weight these days for one of President Obama's initiatives, the National Export Initiative. That initiative's goal was to renew and revitalize our efforts as a nation to promote and increase our exports around the world. Coal companies have taken full advantage of both demand overseas and our nation's increasingly pro-export stance. In fact, just this past February, the Bipartison Policy Center recommended that coal exports not be restricted because of the net economic benefits exports produced.
Not only is that great for U.S.-based coal producers but it's huge for jobs. According to Ernst & Young, exporting coal creates high value jobs with wages that are on average $96,100 per year. For perspective, the average U.S. worker rakes in about $64,000 per year. One thing job seekers should note is that many coal producers are finding it more difficult to find the skilled employees needed to replace its current workforce as it nears retirement. That could signal that wages will head even higher in the future.
Overall, coal exports contributed about 141,270 jobs to the U.S. economy in 2011. This included about 39,350 direct jobs at mines, transportation companies, and at our ports as well as over 100,000 indirect jobs. It's believed that for every million tons of coal we export the industry requires about 1,320 jobs.
For Pennsylvania, where I live, it's estimated that coal exports contribute about 12,500 jobs to the economy as well as about $1.5 billion in economic value. These jobs are found at major Pittsburgh-based employers like CONSOL Energy which is the largest producer of coal east of the Mississippi River. In Pennsylvania alone the company supports 2,635 employees in both its gas and coal businesses, some of which are employed to support the 10.3 million tons of coal that the company exports.
Just for some additional perspective on how important coal is to the economy we'll take a look just a little farther south in West Virginia. In that state, Alpha Natural Resources has about 6,700 employees but its coal business supports about 23,450 total jobs. The average worker in West Virginia takes in about $38,000 per year, whereas the average coal industry employee takes home $85,000 per year. Coal exports are a big economic driver for the state by supporting nearly 24,000 jobs and contributing $3 billion in economic value.
Not only do coal exports benefit coal producing states, but they are a big economic driver and job creator for states that export coal globally. Consider Virginia, which has a major coal export facility in Norfolk operated by the Dominion Terminal Associates. That entity, which is owned Alpha Natural Resources, Peabody , and Arch Coal , as well as others like it, help to contribute more than 19,000 jobs to the state as well as $2.5 billion in economic value. It's really a win-win situation, as coal producers have a market for their coal while the states gain high-paying jobs.
For additional color consider South Carolina which only has 700 jobs related to coal export, which produced just $56 million in related economic value for its economy. That state, which has the bustling port of Charleston, could see a big increase in coal-related jobs and economic value if Kinder Morgan Partners moves ahead with its plan to add coal export capabilities at its existing bulk facility at the port. The company is already spending over $450 million to expand its coal export capabilities elsewhere because demand for export capacity is high.
As you can see, the coal industry, despite not being as green as we'd like, is still critical to our nation's economic engine. It's sometimes the forgotten fossil fuel in "America's Energy Resurgence", considering the amount of press that oil and natural gas from shale get. However, we can't forget about the fact that the U.S. possesses the largest estimated recoverable coal reserves in the world. Exporting our excess coal has the potential to be a big economic driver and job creator, which is why President Obama really needs this industry to survive.
The coal industry in the United States has been in a state of flux since the arrival of a cheaper alternative for energy production: natural gas. Exports are becoming a much bigger part of the domestic coal landscape, and Peabody Energy has deals in place to get its cheaper coal from the Powder River and Illinois basins to India, China, and the EU. For investors looking to capitalize on a rebound in the U.S. coal market, The Motley Fool has authored a special new premium report detailing exactly why Peabody Energy is perhaps most worthy of your consideration. Don't miss out on this invaluable resource -- simply click here now to claim your copy today.
The article President Obama Needs This Industry to Survive originally appeared on Fool.com.Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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