Can Trump Really Revive The U.S. Coal Industry?

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With the election of Donald Trump as President, forecasters and analysts are dashing to determine how his policies are likely to affect global energy. It’s likely that his measures will benefit oil and gas, though his consistent vagueness and apparent confusion over industry fundamentals makes that somewhat unlikely.

But where Trump has been somewhat vague on oil and gas, he’s been positively exuberant about coal. A key point in the Trump campaign’s energy and economic plan was the rejuvenation of the American coal industry. This position was a component of Trump’s broader attempt to appeal to white working class American voters. But can he deliver?

As many analysts have observed over the last year, coal is in trouble. Rising production costs, environmental regulations and heavy competition from cheap natural gas has cratered coal profits. The largest coal companies in America, including Peabody Energy, have filed for bankruptcy. American coal production in 2016 was 746.5 million short tons, down from over a billion in 2014 according to the EIA. Coal consumption fell over the same period from 917 to 736.9 million short tons, while coal exports fell by 50 percent, from 97 to 57.9 million short tons. If forecasts hold, 2016 will be the worst year for US coal production since 1978. The EIA has predicted that production will grow in 2017, however, by 3 percent.

Expectations that coal can make a comeback were certainly running high in the wake of Trump’s victory on Tuesday. The next day, Peabody’s stock price leapt up by 50 percent, from $8.50 to nearly $13. Global coal trader Glencore saw a 7 percent rise on Wednesday, along with the prices of struggling coal companies Anglo American, BHP Billiton and Rio Tinto, according to Bloomberg. Renewables fell across the board, a clear reaction to what many expect to be tepid (to nonexistent) support by a Trump Administration for a clean energy policy.

Trump wants to bring back coal. But can he deliver on his promise? Coal has been stuck in a decline that even a pro-coal president, with assistance from Congress, may not be able to reverse. In 2015 some 80 percent of energy retirements were of coal-burning power plants. Environmental regulations have led to the closure of older, smaller coal plants or driven their conversion to natural gas, which has become abundant and cheap in the wake of the fracking boom. Trump has vowed to loosen all regulation on oil and gas production, opening up federal lands to drillers and freeing up pipeline and offshore projects. But to do this would only increase the competition to coal and make it more difficult to retake market share in electricity production.

That leaves exports. A significant market exists in the Pacific for coal and spot prices have spiked recently, in part due to actions by the Chinese government to control its own coal production and consumption. Exporters are anticipating a spike in American exports that will drive prices back down, with one prominent executive noting that the demise in US coal production has been “greatly exaggerated.” But US coal exports will have to compete with Australia, and there are still long-term indications that India and China, the two largest coal markets, will work to keep imports low, for security and fiscal reasons.

Related: U.S. Oil Rig Count Inches Up As Production Jumps

And of course, while candidate Trump has been pro-coal and pro-energy, he has made it a point of railing against US trade deals with East Asia, particularly China. Oil and gas are confident that a Trump presidency will aid them in the long-term, but financial markets overall are unsure, with some worrying that Trump’s attacks on international trade could lead to global economic instability, declining demand and even a global recession. For oil, it could mean greater pressure on prices, making OPEC’s job of stabilizing production much harder.

Some industry analysts are skeptical that Trump can make good on his promises. Even coal advocates have some doubts over whether rhetoric can translate into gains for their industry. With so much about Trump uncertain, from his actual positions on issues to his preparedness to deliver on his campaign promises, many will simply have to wait and see.

This was originally published by Oilprice.com.