A coal mine in Gilette, Wyoming. (Photo: Greg Goebel; Edited: LW / TO)
Eight years after we bailed the big banks to the tune of $14 trillion, US taxpayers could soon be on the hook again — this time to help out the coal industry.
Just a few years ago, Big Coal was riding high on the crest of a nice little boom. Energy prices were high, as was demand from China’s rising economy.
And so Big Coal started doing what big industries always do when times are good: consolidated and expanded. Alpha Natural Resources bought Massey Energy. Peabody Energy bought Macarthur Coal. Walter energy took over Western Coal, and so on and so on.
See more news and opinion from Thom Hartmann at Truthout here.
At the time, the debt-fueled consolidation wave looked like a smart business decision. The world showed no sign of backing off its addiction to coal, and energy giants like like Alpha had every reason to believe that gobbling up the competition would bring home the big bucks for decades to come.
Well, things didn’t really turn out that way.
A combination of slowing demand from China, competition from renewables and natural gas, and tougher regulations, has pushed coal production to its lowest levels in three decades.
Big Coal is now in big trouble.
Lower production and lower energy prices have turned those expansions from the earlier part of the decade into liabilities, especially because they were almost all paid for with debt — these companies took out massive loans to fund the acquisitions and all the executive bonuses that go with them.
As a result, Arch Coal, Patriot Coal, Walter Energy and Alpha Natural resources have all filed for bankruptcy in the past few years.
Peabody Energy, meanwhile, is pleading with its creditors for extra time to pay off its debts.
And, both morally and legally, when coal companies like Peabody go under, they’re supposed to clean up the mess they made at their mining sites.
A 1977 law actually requires them to do this.
But even so, many of the big coal…
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