This week's coal mine disaster in West Virginia brings with it grim but familiar images and headlines, a new chapter in American coal mining's sometimes tragic legacy.
The accident also reminds us that, despite federal and private-sector plans for adding alternative energy sources to the national grid, the nation's dependence on coal isn't going away. According to the U.S. Energy Information Administration (EIA), coal-fired power plants were responsible for nearly 45% of U.S. electrical power last year.
Until this week, many analysts had hoped the U.S. coal-mining industry -- while still dangerous -- had become safer. Overall, U.S. mining injuries and fatalities have been declining since 2001.
History of Safety Violations
And with the introduction of the the Mine Improvement and New Emergency Response (MINER) Act of 2006, the first federal law of its kind in nearly 30 years, "we thought that we had done better," says Professor K.K. DuVivier, who teaches mining and energy at the University of Denver's Sturm College of Law.
DuVivier notes that the site of the accident, Massey Energy's (MEE) Upper Big Branch mine, has had a history of safety violations. "There's always the issue of enforcement," she says. "The question is, is our regulation good enough? And maybe it would be good enough if we enforced it."
Massey Energy's shares dropped $6.24, or 11%, to $48.45 in New York Stock Exchange composite trading Tuesday after gaining on Monday. Trading volume surged to almost 40 million, compared with the three-month daily average of 5.4 million.
Underground vs. Open Pits
Stronger regulations have contributed to better safety records in the coal mines, but there's another factor at play. The center of America's coal-mining industry has shifted in recent decades, from central Appalachia to the Powder River Basin in Wyoming -- where coal is mined from open pits, rather than underground.
Wyoming is now the top coal-producing region in the nation. The Bureau of Land Management says Wyoming coal supplies electricity to about 20% of all homes and businesses in the U.S. Coal and gas reserves there are huge and have led some people to call Wyoming the "Saudi Arabia" of the U.S.
In Wyoming, as well as New Mexico, Arizona and other Rocky Mountain states, surface mining allows coal production "in much larger volumes, in much higher rates -- and the safety concerns are not as much," says Dr. Navid Mojtabai, chairman of the Mineral Engineering Department at the New Mexico Institute of Technology and Mining.
Not Always Cheaper or Safer
But that applies only if the coal seams are close to the surface.
"It's not that, no matter what, you always do surface [mining] because it's cheaper or safer," Mojtabai says. "Under some economic and geologic conditions it's not more economical." Appalachian coal also has the advantage of being closer to major Eastern cities, which reduces transportation costs compared to Wyoming coal.
In the meantime, despite the dangers, underground coal mining won't disappear from Appalachia or elsewhere in the U.S. in the near future. "It might be . . . as we deplete more and more deposits, we might have to go deeper and deeper," Mojtabai says.
Says DuVivier: "There's going to still be a lot of political pressure to develop [underground coal mining] wherever you are, because of the economics."
Small Cap Investing
Learn now to invest in small companies the right way.View Course »