With experts predicting coal prices and production to fall off during the next year, one has to wonder whether this is the result of the invisible hand of the market, or the lumbering fist of big government. Market prices and production reflect the subjective value consumers place on goods and services. Subsidies and output quotas reflect merely the outcomes of political jockeying.
Though there may be natural forces contributing to Appalachian mining companies cutting 21 million tons of production this year – like new sources of natural gas – there are undoubtedly artificially created forces at work as well.
The Environmental Protection Agency’s unilateral action against Appalachian coal mining has not only directly forced utility companies to switch to alternative energy sources, but has also indirectly resulted in reinvestment of resources through the apprehension of future sweeping regulations. This is not good news for Kentuckians who rely on coal for well over 90% of electricity needs and for some of the cheapest energy rates in the country.
As entrepreneurs predict future EPA action and markets adjust to such mandates, federal agencies end up affecting the Bluegrass State much more than initially predicted.