The Economics and Politics of Western Coal

Fortnightly Magazine - April 1 1996
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Wyoming and Montana

are cracking Midwest coal markets,

despite local protectionism.

As pressures build steadily toward deregulation and increased competition between electric power generators, Western low-sulfur coal is emerging as the most economical fuel option for an increasing number of companies. The low cost of delivered fuel and avoidance of capital outlays offer attractive savings. But more than that, Western coal can also provide a competitive edge.

Today, Wyoming has assumed the title of the nation's leading coal-producing state, having displaced West Virginia from second place in 1984, and Kentucky as the leader in 1988. Since the late 1980s, Wyoming and its neighbor, Montana (em which together form the Powder River Basin (PRB) region (em have come to challenge the Appalachian states for the title of "King Coal." Of the nation's 91 billion tons of low-sulfur coal reserves, 86 percent lie in the West. Given current consumption of low-sulfur coal (em about 300 million tons a year (em Wyoming and Montana could supply all the nation's requirements for 200 years. In fact, by year-end 1994, PRB coal generated approximately 20 percent of the coal-fired, steam-generated electricity in the United States.

This shift of coal production from East to West carries both short- and long-term implications for coal producers, coal transporters, and electric utilities (em in both the economics and the politics of competition.

Clean Air Strategies

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