Who Killed Coal?

The Libertarian Party convention is going on this weekend.  The party is choosing, among other things, their candidates for president and vice president.  The eventual nominee, Gary Johnson, was booed on stage for suggesting the free market, not government intervention killed the coal industry in the United States (the Libertarians are rabidly anti-regulation).

But was he wrong?  I don’t think so.  I think the evidence suggests that it is free market competition that killed coal; the EPA regs have been largely coincident, not causative.

The crux of this argument relies on the notion of substitute goods in the US power generation sector.

According to the EIA, the US power generation industry is powered largely by coal (38.8% as of 2014), Natural Gas (27.4%), and nuclear power (19.5%).  The remaining 14.7% is renewables and “other.”  Further, the majority of coal consumption in the US is for power generation. However, it is important to note coal has been losing share of power generation noticeably since about 2005.  (the actual peak was about 1990, but the decline was very moderate/nonexistent until about 2005).

The year 2005 is important.  Why?  Because that’s the year natural gas prices reached their peak and began their decline.  Since December 2005 (the month natural gas prices hit their all-time high), natural gas prices have fallen 84.5% thanks to fracking. Over that same time, natural gas’ share of power generation has risen 15 percentage points, from ~18% to ~33%.  The rise has come entirely at the expense of coal.  Coal’s share has fallen 18 percentage points, from ~50% to ~32%.  Nuclear power has stayed flat.  Renewables gained the remaining three percentage points.

Natural gas is a substitute for coal.  With such a precipitous decline in natural gas prices, natural gas became the better option for power generation, forcing coal to the back burner, especially considering it’d be three more years before coal’s price peaked.

It certainly is true the Obama Administration’s EPA has passed new regs on coal and coal power plants.  But these regs occurred too late to have been a causative factor in the coup against King Coal by Prince Natural Gas (keep in mind Obama wouldn’t be elected for three more years, and his regs wouldn’t be approved until 2014). They’re more likely the final nail in the coffin.

It seems to me this is just another case of the free market doing something good (reducing carbon emissions), causing creative destruction (death of King Coal), and the credit/blame going to government.  Unfortunately, this time it was the Libertarian delegates mis-attributing the actions of the market.

41 thoughts on “Who Killed Coal?

  1. There are many things that markets start, and government tries to claim credit for. And, if natural gas prices skyrocket for some reason, markets (or should I say people) will try some additional air pollution for cheap energy, which is why markets (people), not government, ought to decide.

    Liked by 1 person

    • >—“markets (people), not government, ought to decide.”

      Aren’t governments made of people too?

      Were they made of something else when you were in what you like to call “government service”?

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      • “Aren’t governments made of people too?”

        “Power tends to corrupt, and absolute power corrupts absolutely.” Government power changes people.

        Greg G, why do you have to be such an angry troll?

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          • “How did it change you?”

            It opened my eyes as to why politicians and government officials cannot be trusted with too much power or other people’s money>

            Now, answer my question: “why do you have to be such an angry troll?”

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          • I’m not angry at all. I am interested. And amused. You are projecting your anger onto me.

            I’m genuinely interested in whether you think you were immune to this corruption from wielding governmental power. Because I’m pretty sure I’ve previously seen you claim that regulators have a lot of power.

            So your eyes got opened to the merits of going through the revolving door to profit from working for the same type businesses you used to regulate. Was that the result of the corruption or a display of your special immunity to it? I want to make sure I am clear on what the claim is here.

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          • Drat! As I read this BoG (Battle of Gregs) I was looking forward to the answer to that question about corruption vs immunity. I guess I’m out of luck.

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          • Ron_H., it is not a battle. I am amused by the fool named Greg G. No one should get immunity for corruption. I am certain that Greg G will disagree as corruption is okay if done by a democrat.

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          • GW

            I am familiar with GG from other blogs, and while I don’t agree with him on many issues, he DOES ask some interesting questions, and causes occasional discomfort.

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          • I have a lot of experience with Greg G from Cafe Hayek. He name calls, uses frequent logical fallacies, makes false conclusory statements, and lies regularly. I find that he is the typical shill for corrupt bigger government democrats like Hillary Clinton and for disingenuous socialist old codgers like Bernie Sanders. He bad months Trump, but cannot make a logical argument supported by evidence to do so. He is, in my experience, an ideological idiot.

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          • Greg W.

            Interesting. As a fairly regular visitor to the Cafe, I can’t say that I recall seeing comments by either Greg G. or Greg W. What am I missing?

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          • Funny that you should say that, but, as a frequent commenter of Cafe Hayek, I never saw a comment by Rnn H.

            And you probably never will, nor a comment by Ron H. I’m not on Facebook – required to comment at CH – because I’ve seen the terrible loss of brain cells others have suffered. I’m not very interested in what everybody I know is doing at this very minute, nor even what they’re doing today, and I’ve seen more than enough pictures of their new dog.

            I’m a frequent reader at the Cafe, however.

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          • BTW, my frequent commenter days at Cafe Hayek ended when Don and Russ changed to a FB format. I still commented during that period until about 6 months ago. Then, I closed by FB account. I opened again recently to say congrats to Don and Russ for the longevity of their blog, but I will soon be closing it again.

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          • Grege W. you’re using a complex question fallacy by assuming by making controversial or unjustified assumption.

            An example I can give is to ask you one to get the point. When will you stop beating your wife and raping your son? When will you stop hating the Jews?

            Sure these are far more extremes, but they get the point across.

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          • Dickie, you are making an unjustified assumption about Greg W’s statements.

            Instead of giving irrelevant examples, you should make a valid argument and support your contentions with actual quotes of Greg W’s comments that you feel are controversial or unjustified assumptions.

            The fact that you did not do this indicates the silliness of your comment.

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  2. “. . . regulators have a lot of power . . .”

    Senior executives in regulatory agencies do have a lot of power. Everyone else is an employee.

    “I’m not angry at all.”

    Sure you are. Envy fuels your anger. Now, answer the question: “why do you have to be such an angry troll?”

    And, answer another question: why did you like about Donald Trump receiving federally guaranteed student loan funds when it was obvious that he wasn’t?

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    • GW,

      >—“And, answer another question: why did you like about Donald Trump receiving federally guaranteed student loan funds when it was obvious that he wasn’t?”

      Unlike you (who plans to vote for him over the Libertarian) there is nothing I “like” about Donald Trump.

      I assume you intended to ask why I originally claimed that Trump fraudulently profited from government guaranteed student loans when I should have claimed he fraudulently benefitted from bank guaranteed student loans.

      The answer is, I mistakenly assumed Trump University was more of a genuine university than it ever was. I thought it was like Jack Welsh’s Phoenix University and had a real campus and qualified for federally guaranteed student loans.

      When you correctly pointed out this was not the case, the very first thing I did in my very next comment was admit the error. Anyone who doubts this can see it in the comment history which is all time stamped. It was not a “lie.” I had absolutely nothing to gain by getting it wrong like I did. It was a simple error immediately admitted and corrected.

      As compared with you, who has never admits an error or a deception no matter how transparently obvious.

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  3. “As compared with you . . .”

    Your envy is showing again.

    “. . . never admits an error or a deception . . .”

    I do not need to lie or make stuff up. That is why I caught yours a provided proof that you were wrong (again). You, however, can never provide any evidence to back up your claims.

    “. . . who plans to vote . . .”

    Ah, predicting the future….or just making stuff up again. I doubt I vote this election because both the democratic and republican party candidates are egotistical windbags who promise that, if only given enough power and other people’s money, they can save the world. Such has been proven nonsense many times (Obama the most recent). Now, why do you hate one of these windbags and not the other two?

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    • GW,

      from the last time we discussed this on 5/28:

      >—“Luckily for you there is a Libertarian candidate to vote for.” (GG)

      >—“As much as I would prefer it, Gary Johnson is unlikely to win.” (GW)

      AND

      >—“Unless you think your vote has a chance to change the outcome, you will vote for who you think is best. (GG)

      >—“No, Most people vote for the lesser of two evils. Why do you like lying so much?” (GW)

      So then, clearly I thought your reference to what “most people” do was an attempt to justify what you intended to do.

      But if it’s not, then why not vote for the candidate you say you really do prefer?

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      • Gary Johnson is unlikely to win. What do you want me to do? Say that Gary Johnson is going to win?

        Most people vote for the lesser of two evils, not for who they think is best because most people are not so ignorant as to think either of the two candidates from the major parties are the “best” of anything, except perhaps corruption.

        “an attempt to justify what you intended to do.”

        I do not have to justify anything, except where I am asserting something is true. You might want to try that.

        “why not vote for the candidate you say you really do prefer?”

        Why vote at all? As Don Boudreaux says it is not the most productive use of my time to choose between to egotistical idiots who claim that, with enough power and other people’s money, they can save the world.” They can’t. And, you know it. So why are you voting?

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        • GW,

          >—“What do you want me to do?”

          I want you to admit that if you were anything like a real libertarian you would vote for either Gary Johnson or no one at all.

          I am voting because I think that constitutional democracy is the least bad possible system – and by a lot.

          I am voting because I think that all responsible citizens should vote. I have to say though, you have done a lot to convince me that you shouldn’t.

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          • “I want you to admit that . . . ”

            . . . you think that Greg G is a disingenuous idiot.

            Okay, you got me. You are a disingenuous idiot.

            “I am voting because I . . .”

            . . . am okay with egotistical and corrupt politicians abusing excessive amounts of power and wasting other people’s money in order to pretend that they can save the world.

            And, that is why you should not be permitted to vote, which is the best case for bigger government.

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        • Gary Johnson is unlikely to win. What do you want me to do? Say that Gary Johnson is going to win?

          No, but you might consider voting for him if you honestly think he’s the best (not least bad) candidate.

          Each of our individual votes are “wasted” in any case, but feeling you’ve done the “right thing” might be satisfying – if in fact you believe Johnson is the right thing. You can do it from the comfort of your own home with a mail in vote, so the risk of being killed on your way to the polls doesn’t outweigh the possibility that your vote will make a difference, as it would if you drove somewhere to vote.

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  4. “. . . feeling you’ve done the “right thing”. . .”

    That would be difficult to do when choosing among a corrupt bigger government advocate like Hillary Clinton, an old, foolish socialist like Bernie Sanders, or an egotistical corporatist like Donald Trump. I like Gary Johnson, but he is not going to even be close. If he polls numbers improve radically between now and election time, I will reconsider.

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    • Is voting for Johnson only the “right thing” if he has some chance of winning?

      I agree with your assessment of the candidates, and like you, I’m unlikely to vote at all – but just saying.

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      • I don’t need to vote for someone to feel good. I will probably not vote in this election . . .unless Gary Johnson pulls close in the polling and gets some respect and air time from the MSM. If not, he does not stand a chance so I will choose to spend my time more productively.

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  5. Great post, Jon, although I don’t know if I would describe reducing carbon emissions as “doing something good”. Most likely it is inconsequential.

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  6. Greg W. what I find assuming about you is how you’ll go into far off rants to seeing a conspiracy on things that were never there. You also like attacking people by making straw mans in peoples arguments. For example, you have some really against anthropogenic climate change, by calling anything that comes from any body that doesn’t meet your approval to be shills, frauds, or puppets. This is amusing how you cherry pick what you wish to believe is true, to what actually is true. An outlier to you is to be taken more serious over the trend that shows otherwise. Any consensus that you take on this field or any other that has been politicized isn’t by anything else then basis of voting for it. The ‘facts’ that you post on Facebook to any other website is often by sources that have no sources of knowing where the source came from.

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      • >Calls to act logical, commits a fallacy in the next response by using an ad hominem.

        I don’t even know of the person you speak about. I only responded out of you being wrong and using loaded questions when you spoke to that other person.

        That’s nice, maybe you should give an actual response.

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